In New Zealand, the following two points of due cause and procedural fairness are required for dismissal under the Employment Relations Act 2000 (EA), and employees are protected heavily. Meanwhile, grounds for due cause include downsizing due to oversupply, poor business performance, and serious misconduct, but companies may separately prescribe specific acts that would result in a dismissal and reach an agreement with their employees in advance, and dismiss employees if they correspond to such acts. Thus, companies can prescribe provisions that would work advantageously for them to a certain extent.

With regard to the employment of foreigners, while there are essential skill visas in which the company is required to certify that such worker's skills are essential for its business, highly skilled migrant visas based on a point system according to the worker's age and experience, and visas for entrepreneurs and investors, it could be said that New Zealand is somewhat restrictive.

Points to consider regarding labor management, characteristics of labor practices, and the status of recent labor policy in New Zealand

Combination of common law and statutes

Unlike Japan's civil law system, New Zealand has flexible employment laws regulated by a combination of statute and common law. While the main governing statutes, such as the Employment Relations Act 2000 ("ER Act") and the Holidays Act 2003 ("Holidays Act") serve as the basis for employer and employee's rights and obligations, contract law and case law created by the New Zealand courts (in some cases, by other commonwealth courts such as Australia and the United Kingdom) also have important roles. The Ministry of Business, Innovation and Employment (MB) is the main entity concerned with administering and enforcing these provisions.

*Overview of Common Law and Civil Law
Common Law is a legal system mainly in use in the UK and in nations formerly part of the British Empire (the USA, Canada, Australia, New Zealand, etc.), which emphasizes decisions based upon traditions, customs, and precedent.

On the other hand, civil law developed on the European continent in nations, such as France and Germany, and as a legal system compared to common law, civil law places emphasis on statutes. Japan uses a civil law legal system.

Good Faith

Section 4 of the ER Act imposes a duty of good faith on the parties of an employment relationship. This duty includes not doing anything to mislead and is wider than a mutual obligation of trust and confidence. This duty governs all interactions between the parties and is present for the entire relationship. The duty of good faith applies to the extent that if an employer proposes a decision that might adversely affect an employee, the employer must then provide that employee information and an opportunity to comment before the decision is made.

When making a decision that might adversely affect an employee, the employer must ensure that they are acting in good faith.

Employees have a minimum floor of protection under statute law

The ER Act provides a better framework for employment relations, and gives an extensive set of rights to employees that contract law alone did not provide before the enactment of the ER Act.

In New Zealand, there must be a written employment contract for all employment relationships. The legal framework provides for minimum rights for employees that cannot be contracted out of - mainly coming from the ER Act and the Holiday Act. These include minimum rights regarding salary and wages, annual leave, parental leave, and break entitlements that include breastfeeding breaks. Such rights require specific procedures to be followed for dismissals and redundancies. However, freedom of contract is still vital in the employment relationship: an employer and employee are entitled to negotiate what additional terms they decide to govern their relationship to be included in the mandatory written contract. These additional terms cannot be contrary to law or inconsistent with the ER Act.

Extensive procedural and substantive requirements for termination of employment

The ER Act provides three main ways an employment relationship can be terminated: (i) resignation, (ii) dismissal, and (iii) redundancy. There are strict procedures that need to be followed for dismissals and redundancy. If these are not followed, the dismissal can be considered unjustified, thus allowing the employee to bring a claim for unjustified dismissal under s103(1)(a). The bottom line is that there must be a legitimate reason to dismiss the employee unlike in Singapore, the United States, and other jurisdictions.

Similar to Japan, the employer must dismiss the employee on reasonable grounds for the dismissal to be considered substantively fair. However, additionally, an employer must prove a termination was procedurally fair. In assessing procedural fairness, relevant factors in the case of a dismissal include whether notice was given to the employee before termination, whether the employee had a genuine opportunity to be heard, whether a proper investigation took place, and whether the employee had a chance to bring a support person to a meeting prior to being dismissed. For redundancy, they include giving reasonable notice of redundancy, advising the employees that their work might change, and consulting with employees about the redundancy; this includes seeking employee input, considering redeployment, giving the employees a reasonable amount of time to make representations about redundancies, and selecting positions to be made redundant in a fair manner. As there is no law stipulating how much compensation is owing, dismissal and redundancy payments should be outlined in the employment agreement.

However, the above do not apply to summary dismissals for serious misconduct. The procedure for summary dismissals for serious misconduct differs from the above procedure.

Freedom of association, unions and collective bargaining

New Zealand used to be one of the most unionized countries in the world. However, now union members amount to around 14.30% of the workforce.1 The ER Act recognizes unequal bargaining power between an employer and employee. It promotes collective bargaining and dispute resolution between the parties. The ER Act also aims to promote the right to freedom of association in its provisions: it encourages employees to join unions and engage in collective bargaining. Unions are given formal legal recognition under Part 4, as long as they are registered. Imposing contractual conditions based on whether a person is a member or not a member of a union is prohibited.

Unions enable employees to engage in collective bargaining with employers to reach a collective agreement between union members and the employer. Part 5 governs the procedure regarding collective bargaining. The core obligation is a duty of good faith under section 32, and it imposes the basic requirements of the duty to supply information and to consider and respond to proposals. For instance, it would be a breach of good faith if an employer refuses to enter into negotiations to conclude a collective agreement. However, an employee is prohibited from free riding on a collective agreement if they are not a union member.

Under the Epidemic Preparedness Act 2006, the government issued the Epidemic Preparedness (COVID-19) Notice 2020 (“Epidemic Notice”) in March 2020, which enabled the use of a number of special powers in legislation by the government to act swiftly to counter the COVID-19 situation. The Epidemic Notice was extendable every three months, however it most recently expired on 20 October 2022.


New Zealand has a unique voluntary long-term government saving initiative called Kiwisaver. Employers make contributions, and deductions are also made from employee salaries and wages into what is essentially a retirement fund. If a respective employee is a Kiwisaver member, employers would be required to make compulsory contributions to the employee’s account. Alternatively, if an employee has opted out, the whole wage would need to be paid to the employee. Employer contributions, as well as all of the employer's obligations in relation to Kiwisaver shall be outlined in later sections of this report.

Recent reforms

The Fair Pay Agreement Bill, on 1 December 2022, became the Fair Pay Agreements Act 2022 and gave effect to a new bargaining system with respect to minimum employment terms for covered employees in an industry or occupation. Specifically, the following steps shall be followed to establish a Fair Pay Agreement:

  1. A union is to seek approval to negotiate a Fair Pay Agreement by applying to the chief executive of the Ministry of Business, Innovation and Employment.
  2. If the application is approved, employee and employer bargaining sides may form, and the bargaining process may commence.
  3. Upon approval of the form of the agreement, the covered employees and employers may vote on whether they support the proposed employment terms.
  4. If the majority of the stakeholders support the Fair Pay Agreement, it shall be finalized and set as law.

Importantly, employment terms that must be included in a Fair Pay Agreement include

  • setting the scope for the work covered by the Fair Pay Agreement,
  • standard hours,
  • minimum pay rates,
  • training and development,
  • leave entitlements, and
  • duration of the Fair Pay Agreement.

Another amendment concerns s4B of the ER Act, whereby employers have a general obligation to keep records related to minimum entitlement provisions. This came as a result of mass allegations of immigrant worker exploitation throughout New Zealand. Where there are deemed breaches, a Labor Inspector can impose improvement or infringement notices, take action against the employer, and/or impose a fine on an employer of up to $20,0002 (the currency symbol refers to New Zealand dollars, and the same shall apply hereinafter). This is expanded on later in this report.

Furthermore, a new clause in (Part 6A) was introduced in 2006 to protect certain classes of vulnerable classes of workers during restructuring. It is now harder to dismiss or make redundant an employee who is in a vulnerable class of employees, such as cleaners, homecare staff, and catering staff.

Overview of basic labor laws of New Zealand

An employment law system founded on common law

When interpreting relevant statutes, case law coming from the Employment Court and in some cases from the Court of Appeal and the Supreme Court are of paramount importance.

As explained in Part 1, freedom of contract is still vital; however, the minimum rights enshrined in the ER Act and other relevant Acts take priority. Where an employment contract is inconsistent with some specified minimum rights, such as freedom of association (s10), that provision in a contract has no effect.

Employment Relations Act 2000

The ER Act essentially shifted the landscape of employment law from contract law to one of minimum rights. It gave rights to individuals and union members to negotiate and enter into agreements. Additionally, it provided a platform to resolve employment problems.

  1. Applicable persons

    The ER Act governs all types of standard employment relationships, whether individual, collective, or fixed term. An employee is widely defined to capture homeworkers and persons intending to work; those who have accepted a job offer but have not started working yet. Therefore, employers have to take this definition into consideration.

    However, the definition of "employee" does not include independent contractors or volunteers. A contractor is by definition someone who performs services under an independent contractor agreement. The test for a contractor is substance over form; even if someone calls themselves a contractor, they could still be classified as an employee. There are a number of tests developed by the courts to determine whether a person is a contractor, which include (i) the intention test, which considers what each party intended for the relationship to be, (ii) the control test, which looks at how much control the person who requests the services has over the person, (iii) the integration test, how central the work performed by the person is to the employer's business, and (iv) the Fundamental/Economic Reality Test, which considers the total situation of the work relationship to determine its economic reality. Similarly, a volunteer is a person who does not receive any reward for working. However, note that the Human Rights Act 1993 includes volunteers in the definition of employee to offer them protection against discrimination.

    For employees who are considered employees under the ER Act, there are three main types of employment agreements: casual, fixed term, and permanent.

    This is the standard type of employment agreement. Such employees are afforded all rights. This includes part-time workers.
    Fixed term
    This is a contract that is limited in time. The limitation has to be for a legitimate reason and specify when the fixed term will end. For example if it is seasonal work or work to cover for someone on maternity leave. Such employees are also afforded full rights.
    Casual workers work intermittently or irregularly. The agreement should outline that the amount of work they will get will fluctuate, how the employee will let the worker know when they would like the employee to work, and that they are not obliged to make themselves available for work. Because causal employees do not work regularly, employers can agree to pay them an additional 8% on top of their wage in lieu of receiving annual leave. This 8% must be a separate line in the pay slip. They are entitled to the usual sick leave and bereavement leave.
    90-Day Trial Period
    An employer with 19 or fewer employees can employ someone for a 90-day trial period. Such employee can be fired within the 90 day period and is unable to bring a personal grievance claim. The 90 trial period needs to be specified in the employment agreement and the employee cannot have been previously employed. Such employees are afforded all the usual benefits of a permanent employee during their trial period.
  2. Requirement for an employment contract

    There are two types of employment agreements legally recognized in New Zealand: (i) an individual employment agreement, and (ii) a collective employment agreement. Sections 54 to 65 prescribe that both types of agreements need to be in writing and detail what must be in the provisions of such agreements.

    Employers must keep a signed copy of an employment agreement. A breach of this rule may result in the employer being fined by a Labor Inspector up to $1,000 per breach up to a maximum of $20,000 in any three-month period.

    The requirement for an employment contract does not, however, prevent an employee without a written agreement from enforcing their minimum rights. These minimum rights are enforceable in the absence of an employment agreement.

  3. Terms and conditions an employment agreement must contain

    1. the names of the employer and employee;
    2. description of the work to be performed;
    3. location of the employment and where the employee is to perform the work;
    4. agreed hours of work or any other arrangement relating to time;
    5. wages, salary, and other forms of compensation payable to the employee;
    6. a plain language explanation of how employment relationship problems are to be resolved, and these must include the employee's right to raise a personal grievance claim within 90 days; and
    7. an explanation that the employee is entitled to remuneration at a time and a half if they work on public holidays.

    Furthermore, for some employment arrangements, additional provisions should be included concerning employee protection provisions against business transfers/sales, contracting out, probationary arrangements, availability, and for fixed-term employments, the nature of the employment arrangement.

  4. Relevant minimum rights

    The minimum rights guaranteed by law are detailed below and throughout this report.

    Employment agreement
    There must be a written employment agreement.
    Minimum wage
    Employees must be paid a minimum wage that varies by age and whether the employee is in a trial period.
    Payment method
    Employers must pay employees in monetary form. For alternative methods, both the employer and employee must agree in the written agreement.
    Break entitlements
    Employers must give employees paid rest and unpaid meal breaks. The law does not prescribe when, where or for how long, and it often varies from industry to industry. This includes breastfeeding breaks for appropriate employees.
    Annual leave
    After one year of continuous employment with any one employer, the employee becomes entitled to 4 weeks’ paid annual leave.
    Public holidays
    Employees are entitled to 12 paid public holidays from work. If an employee works on a public holiday, they must be remunerated at time and a half (1.5 times the amount of gross wage).
    Sick leave
    After 6 months of continuous employment with any one employer, all employees are entitled to 10 days sick leave with pay.
    Work hours
    Employees cannot be required to work more than 40 hours per week unless overtime pay is given, or unless the parties agree otherwise.
  5. Break entitlements

    Pursuant to the enactment and enforcement of the Employment Relations Amendment Act, 2018, employees must be given statutory rest and meal breaks based on the number of hours worked. Employers must provide a 10-minute paid rest break for four hours of work, and a 10-minute paid rest break and a 30-minute unpaid meal break for six hours of work. Employers and employees can agree as to the timing of the breaks; however, if there is no agreement, the breaks can be taken at set times, so long as it is reasonable and practicable.

    Some limited exemptions may apply for some workers in specified essential services or national security services.

    An employer is further required to provide appropriate breastfeeding facilities and breastfeeding breaks for employees who wish to extract breast milk while at work.

    Noncompliance with these rules is subject to heavy penalties by a Labor Inspector; penalties of up to $50,000 against an individual, or for companies; the greater of $100,000 or three times the financial gain made by the company. The inspector may further order compensation or a banning order: this is detailed later in this report.

    An employer and an employee can agree to forgo meal and rest breaks in return for compensation. The compensation must be at least what they would be getting: for instance, equivalent to the pay they would have gotten, or they can take the time they would have had off at another time. In practice, it is not uncommon that an employee finishes early but is still paid for the length of time that a reasonable break would have been if taken in full.

  6. Collective bargaining and union rights

    The amendment in 2018 strengthened the rights of collective bargaining and labor union. For example, an employer's behavior can be seen as discriminatory if it occurs within 18 months of employees carrying out union activities, and union representatives can enter workplaces without consent.

    Employers must pass on information about the role and function of unions to prospective employees and must provide new employees with the prescribed form within the employee's first ten days of employment. The form gives employees time to talk to their union representatives before considering and indicating whether they intend to join a union or remain on the individual employment agreement. In addition, employers must allow for reasonable paid time for union delegates to carry out their union activities, such as representing employees in collective bargaining and can no longer deduct pay in response to partial strikes, such as wearing t-shirts instead of uniforms as part of low-level industrial disputes. However, employers can still respond to a partial strike action the same way as any other strike, which could include suspending employees without pay or a lockout.

    Regarding the collective agreements, it must include pay rates over the agreement's term, and new employees must be employed under terms consistent with the collective agreement for the first 30 days. Moreover, parties must conclude collective bargaining, unless there are genuine reasons based on reasonable grounds not to. Where an applicable collective agreement is already in force and before the collective agreement expires, unions can initiate bargaining 20 days ahead of employers.

Holidays Act 2003

The Holidays Act specifies that every entitlement provided in the Holidays Act is a minimum entitlement that must be written into in all employment agreements. The Act expressly states that enhanced or additional holidays can be provided, but a lesser number cannot be agreed between an employer and employee. The bottom-line of the Act is that employees are entitled to 4 weeks annual leave each year after one year of continuous fulltime work. If the employee works irregularly, it can be more practical to pay them an additional 8% of their gross wage in lieu of annual leave. This has to be agreed in the employment agreement.

  1. List of Annual Holidays in NZ

    There are 11 public holidays in New Zealand:

    January 1
    New Year’s Day
    January 2 (observed on 2 January)
    Day after New Year's Day
    February 6
    Waitangi Day
    April 7
    Good Friday
    April 10
    Easter Monday
    April 25
    ANZAC Day
    June 5 (First Monday in June)
    King's Birthday
    July 14
    October 23 (Fourth Monday in October)
    Labour Day
    December 25
    Christmas Day
    December 26
    Boxing Day
    Varies by province
    Anniversary of the province
    (e.g., Auckland Anniversary Day, Wellington Anniversary Day)
  2. Annual Paid Leave Entitlement

    After the end of each 12 months of continuous fulltime employment with any one employer, an employee is entitled to no less than four weeks annual paid leave. Continuous employment includes periods where the employee has taken sick leave, parental leave, or leave for injury, which are defined further in this report. This entitlement remains until the employee has taken such leave or has been compensated for not taking such leave. The employer must further allow the employee to take the leave within 12 months from the date the employee becomes entitled to it, and if the employee wishes, to allow the employee to take more than two weeks of the entitlement at one time. The employer cannot unreasonably withhold consent to an employee's request to take annual leave.

    The employer is entitled to make the employee take some of the annual leave during a workplace closedown period when the employer's business or a portion of it customarily closes. Christmas break is a standard closedown period for New Zealand businesses. Note that there are some customary shutdown periods depending on the industry.

    An employee is also entitled to receive cash for up to one week of annual leave a year. This means that the employee is paid one week of wages without taking the holidays. An employee cannot be pressured by an employer to take cash rather than their leave entitlement.

  3. Paid Sick Leave

    An employee that has been employed continuously for more than six months is entitled to paid sick leave. Sick leave may be taken when the employee, spouse, partner, or a dependent is sick or injured.

    An employee can take up to ten days of paid sick leave within 12 months. The number of paid sick leave days has increased from the previous five days from July 24, 2021, onwards. Sick leave not taken in a year may be carried over to the next year. An employee is not entitled to be paid for sick leave not taken. Employees can take more than ten days of sick leave, but the employer is not required to pay sick leave beyond ten days.

    If sick leave is taken for more than three consecutive calendar days, the employer can require proof of sickness in the form of a medical certificate, issued at the employee's expense. The employer can request a medical certificate for less than three days of consecutive sick leave, but the employer must pay for this certificate.

    Aside from the paid sick leave above, Domestic Violence Victims Protection Act, 2018, states that an employee who's been affected by domestic violence can request a paid leave from the employer—up to 10 days per year. This law was put into force on April 1, 2019.

  4. Paid Bereavement Leave

    An employee is entitled to three days of bereavement leave after the death of a spouse, partner, parent, child, sibling, grandparent, or grandchild. For any other person that the employee had a sufficiently close relationship with, the employee is entitled one day of bereavement leave. The sufficiently close relationship is difficult to judge and is usually considered in an employee-friendly manner. If the employee says the person was sufficiently close to the person, it is difficult and unwise for an employer to try prove otherwise. This bereavement leave can be added together in the case of multiple deaths in the same period of time.

Other Acts

  1. Parental Leave and Employment Protection Act 1987

    Parental leave in New Zealand is not limited to maternity leave, but extends to spouses and partners; thus including same-sex marriages and civil unions. Therefore, a parent of any gender is entitled to parental leave as paid by the Inland Revenue Department (IRD).

    While the employer is legally required to approve such leave, the pay comes from a government scheme, and not from the employer, unless specifically agreed in the employment contract.

    The parental leave may be transferred between partners and spouses. This extends to employees and their spouses or partners who are adopting a child under the age of six.

    Different amounts of leave may be taken depending on whether the employee is a primary carer or not, and whether the employee has worked for the same employer continuously for more than six months, or for more than twelve.

    Primary carer leave and amount

    From July 1, 2020, onwards, an employee that is a primary carer is entitled to up to 26 weeks paid leave (increased from the previous 22 weeks), which can start six weeks before the due date.

    The employee is further entitled to an unpaid extended leave up to one year if the employee has worked for the 12-month qualifying period, or for up to six months if the employee has worked for the six-month qualifying period. This one-year period is inclusive of the 26 weeks paid, and the employer has to keep the position available for the employee upon their return. For part time workers they have to have worked for more than 10 hours a week for those six months.

    Employees who are the mothers are further entitled to special leave for any screenings and doctors' appointments that need to be attended. This is limited to 10 days and is unpaid.

    Partner leave and amount

    A partner is someone who is either married, in a civil union or de facto relationship with the primary carer, and includes both different and same-sex partners. A partner is entitled to one week paid leave if they meet the six-month threshold, and two weeks paid leave if they meet the 12-month threshold. A partner can take this leave between the period 21 days before the due date of the baby, or the date the partner or spouse becomes the primary carer for a child under six years, and 21 days after the baby is born or the date the partner or spouse becomes the primary carer for the child. Furthermore, the extended leave can be taken by both parents; they have a combined entitlement of 12 months if they meet the 12 month threshold, and six months if they meet the six-month threshold.

  2. Human Rights Act

    The ER Act outlines grounds that the employer cannot discriminate against; these are also outlined in the Human Rights Act and include the following:

    • Sex
    • Marital status
    • Religious belief
    • Ethical belief
    • Color
    • Race
    • Ethnic or national origins
    • Disability
    • Age
    • Political opinion
    • Employment status
    • Family status
    • Sexual orientation

    If employers breach s 105 of the Human Rights Act they can be brought before the Human Rights Review Commission. The tribunal has the authority to award up to $350,000 for breaches.

  3. Accident Compensation Scheme (ACC)

    ACC is a one of its kind no-fault compensation scheme that is unique to New Zealand. It takes away the right to sue for personal injury, but ensures that those who suffer personal injuries, whether work-related or not, are compensated and supported, except in cases of gross negligence.

    Employers are required to pay Workplace Cover levies for current and future costs of work-related injuries that occur in the levy year, which is from April 1 to March 31. Different levy rates apply to different industries, as some industries are prone to more ACC claims. For a list of the levy rates for each industry is available on the ACC website.

  4. Kiwisaver Scheme

    Under the Kiwisaver Act, the employer has various obligations, such as making proper deductions, registering the employee with IRD, and providing information to new employees. Both the employer and employee contribute to the fund; the employee's being directly deducted from their pay.

    New employees who are eligible are automatically enrolled into Kiwisaver, and employers have an obligation to provide a Kiwisaver information pack to such employees within seven days from the day the employee commenced working. Therefore, employers have a responsibility to check whether new employees are eligible for the scheme. If they are, the employee must provide the employer with an IRD number, and all other relevant information required, such as name, address, and whether they are already part of Kiwisaver.

    The employer must provide this information to the IRD (on form KS1) no later than the date of the next Employer Monthly Schedule (i.e. the 20th day of the following month).

    An employer is responsible for making proper Kiwisaver deductions from the employee's pay. An employee can decide to contribute 3%, 4%, 6%, 8%, or 10% of their pay; if not specified then the default rate is 3%.

    If an employee has nominated KiwiSaver, an employer must also contribute a minimum 3% of the employee's pay into Kiwisaver. Both the employee and the employer can make further voluntary contributions to Kiwisaver at any time.

    Record keeping obligations apply to Kiwisaver deductions. Employers must keep a record of which employee is a Kiwisaver member, and pay slips must show how much of an employee's pay is deducted for Kiwisaver and how much the employer has contributed.

  5. Workplace Health and Safety

    The Health and Safety at Work Act 2015 governs the employer's responsibilities when it comes to workplace safety. The business has the primary responsibility for the health and safety of its workers and any other workers who are influenced by the business. This responsibility is broad and overarching. This needs to be translated to workplace specific policy, as there will be different hazards in each business.

    In practice, the employer must perform the following:

    • Provide and maintain a work environment that is without risks to health and safety. This includes the physical and psychological work environment.
    • Provide and maintain safe plant and structures. This includes machinery, tools, and buildings.
    • Provide and maintain safe systems of work. This includes examining the processes of work and reviewing them regularly.
    • Provide any information, training, instructions, or supervision that is necessary to protect all persons from risks to their health and safety arising from the work of your business.
    • Monitor the health of workers and the conditions at the workplace for the purpose of preventing injury or illness of workers when doing work for your business.

    The employee also has some obligations under the Act. They must take reasonable care for their own health and safety. They must also cooperate and comply with the safety policy of the business.

    The inspector can impose a fine on businesses or employees for breaching their duties. These fines can be very substantial but will depend what duty has been breached. Here are a few examples of the most serious offences with their maximum penalties:

  6. Offence
    Section 47 - Reckless conduct in respect of a duty that exposes an individual to a risk of serious injury or death
    Five years in prison or $300,000 fine, or both
    $3 million fine
    Section 48 - Failure to comply with a duty that exposes an individual to a risk of serious injury or death
    $150,000 fine
    $1.5 million fine
    Section 49 - Failure to comply with a duty
    $50,000 fine
    $500,000 fine

Express and implied contractual terms

Section 4 of the ER Act imposes an implied term of good faith in an employment agreement, similar to other common law countries like Singapore and Malaysia. Therefore, any actions the ER Act or a relevant court deem to be done in bad faith can be subject to an actionable remedy.

This obligation to act in good faith is fundamental and governs all aspects of the employment relationship. This obligation attaches to both employee and employer, and even includes being responsive and communicative. The aim is to create a mutual obligation of trust and confidence. A party should not do anything to mislead the other party. Good faith is a significant factor that a court or tribunal looks at if the dispute reaches such a level. Courts and tribunals will assess the conflict as a whole and ascertain if both parties have acted in good faith throughout the dispute. Good faith is an important factor when awarding fines and/or compensation.

Normal practices in the workplace and industry customs are enforceable implied terms in a contract. These are specific to each workplace and industry, and require an understanding of the industry practice and the case law surrounding it.

Labor inspectors

Labor inspectors are employed by the Ministry of Business, Innovation and Employment (MBIE). By investigating breaches of rights guaranteed in the preceding Acts under s223 and by enforcing the Act's provisions, inspectors ensure employers comply with their legal obligations.

They investigate compliance in breaches related to the following:

  • Minimum wage
  • Annual leave and holiday pay
  • Record keeping obligations
  • Wage deductions
  • Adequate breaks, breastfeeding facilities, and parental leave

If an employer is found to be in breach of any of the minimum right entitlements, inspectors' main powers in relation to the breach are to issue an employer with a compliance order, a compensation order, and/or various penalties depending on the breach. For a breach of record-keeping obligations, a penalty of up to $1,000 may be given; whereas for a breach of the minimum rights entitlements, the penalty can be up to $50,000 against an individual; or for companies, the greater of $100,000 or three times the financial gain made by the company.

An employee or any other person aware of any breaches may refer a problem to a labor inspector at any time. In practice, however, a Labor inspector is only brought in for serious breaches. Parties should try resolve the dispute before involving an inspector; involving a Labor inspector is often only used as a threat.

Duty to create workplace policies and procedures in New Zealand

Legal obligation to create workplace policies and procedures

Unlike Japan, there is no requirement imposed by law to create workplace policies and procedures in New Zealand. This is because every employment relationship requires a contract between the employer and employee.

However, while it is not mandatory, it is standard practice to create workplace policies and procedures. MBIE strongly recommends that employers put in place workplace policies and procedures to provide some guidance and clarity in the employment relationship and assist employers with complying with relevant laws and regulations. Dismissal and redundancy procedures, as well as steps to take for disciplinary action and issuing warnings, should be included. They also recommend unwritten customs and practices in the workplace should be written down for employees to follow.

It is standard practice to bring attention to workplace policies and procedures in the employment contract, which states that the employee must follow such documentation. If such a document were to be inaccessible, there would be issues enforcing the provisions of such a document when it comes to disciplinary action or when the company seeks to dismiss an employee. If there exists a written workplace code, it is highly recommended this is printed and given to employees.

Overview of the wage system (bonuses, retirement benefits, and overtime pay) in New Zealand

Definition of salary and wages

In New Zealand, payment to employees for work done can be done in wages or salary. Salary is yearly income, and wages are paid per hour of work. Wages are defined in the Wages Protection Act 1983 as "salary or wages; and includes time and piece wages, overtime, bonus, or other special payments agreed to be paid to a worker for the performance of service or work; and also includes any part of any wages." By definition, it does not include transportation, insurance, accommodations, or any other costs that are to be borne by the employee.

Minimum Wage

The government sets and reviews the minimum wage under the Minimum Wage Act each year. The minimum wage applies to all employees aged over 16, whether full-time, part-time, fixed-term, casual, or employees who work from home and whether they are paid by wage, salary, or commission.
The current minimum wage rate (before tax) applied to employees aged 16 years or older since April 1, 2022, is $21.20, which has been increased from the previous $20.00. The current minimum wage (before tax) applied to starting-out and trainee workers since April 1, 2022, is $16.96.

Adult minimum wage applies to all employees aged 16 years or older who are not starting-out workers or trainees.

Starting-out wages apply to workers under the age of 20 and can only last for six months and are subject to a number of limitations,

The training minimum wage applies to employees over the age of 20 who are completing recognized industry training; this usually applies to trade related employment.

There is no minimum wage for employees under the age of 16, but all other employment rights and entitlements still apply.

Payment method

The Wage Protection Act 1983 specifies that employees must be paid in monetary form unless agreed otherwise in writing. If payment is to be done through internet banking or otherwise, it is standard practice to have it in the employment agreement.

Payment to an employee must be made on the agreed day. There is no requirement in the law as to how often the employee should be paid, and this can vary across industries as monthly, fortnightly, or weekly.

To pay the correct amount to the employee and make appropriate deductions, the employer needs to know the employee's IRD number and Kiwisaver information.

Wages Protection Act 1983 further protects the employee by stating that the employer cannot make deductions from an employee's wages without written consent. The employer also cannot stipulate how the employee spends their wages. It is common for deductions to be made from the wages of migrant workers in the name of accommodation costs; these kinds of deductions are illegal and are targeted under the Act.

Overtime pay

If employees are required to work outside their normal hours, employers must at least their standard hourly rate as an overtime pay. Unlike Japan, there is no set rate that an employer is required to pay, but in any event, it cannot be less than the normal amount the employee is paid per hour.

It is common practice for employers to offer time and a half (1.5 times) or double pay for overtime work, but this is not required by law. Whether the pay will be paid separately or together with the salary is also to be decided in each individual employment agreement.

Payment and time records

Employers have an obligation to record the time employees have worked as well as how much they are paid, together with Kiwisaver deductions made from the payment. This new requirement came about as a result of mass immigrant worker exploitation. It ensures that employers are complying with the law and gives employees the minimum entitlements guaranteed by law. Employees can request to see these records at any time.

The record keeping requirement for pay records is seven years, even if the relevant employee has left the employer. Record keeping can be recorded electronically or on paper.

Penalties for not meeting minimum wage and bookkeeping requirements

If an employer breaches the Minimum Wage Act or the Wages Protection Act and is found to have paid employees less than what is required by law, they may subject to a penalty from a labor inspector. Depending on the nature and the seriousness of the breach, for instance, whether it was a one-off mistake or repeated exploitation of vulnerable workers, it can vary from an improvement notice or a fine to having the business removed from the marketplace. As stated above in Part 2, fines can be up to $50,000 against an individual, or for companies, the greater of $100,000 or three times the financial gain made by the company (in relation to the breach).

Equal Pay Act

The Equal Pay Act requires employers to pay the same amount of compensation to men and women doing the same work or substantially similar work. However, in determining whether there is a gender pay gap in female-dominated occupations, the requirement is to look to what men would be paid to do the same kind of work, looking at skills, responsibility, and effort required for that job. A personal grievance claim can be made by an employee if the employer does not comply with the requirement of equal pay.

The Equal Pay Amendment Act 2020 came into force on November 6 2020, which allows employees to make a pay equity claim via the existing employment relations bargaining framework. This lowered the bar for employees initiating the claim without the need to go through a court process.

Noncompliance with this Act will likely mean the employer has also breached the Human Rights Act and can therefore be brought before the Human Rights Review Commission.

Methods and points to consider regarding dismissal in New Zealand


  1. Methods of terminating an employment relationship

    There are several ways to terminate an employment relationship in New Zealand. Each method requires a different procedure and must meet certain conditions and criteria. Terminations include resignation, retirement, dismissal, redundancy, and constructive dismissal.

    For dismissals as a result of serious misconduct or redundancy, there are strict procedural and substantive requirements that need to be followed.

  2. Notice requirements

    The law requires that fair and reasonable notice be given when dismissing an employee. It does not specify a specific notice period, but it is standard for it to be specified in each individual employment contract. If there is no notice period in the contract, two to four weeks is standard practice and is considered fair and reasonable in New Zealand. An employer and employee is free to waive the notice period and cease the employment relationship immediately if they wish.

  3. Dismissal in general

    The employer must have a legitimate reason to dismiss an employee lawfully. These are as follows:

    1. Repeated misconduct or one-off serious misconduct;
    2. Performance issues, despite repetitive warnings and notices;
    3. The ending of a 90-day trial period and the employee has proven to be unsuited for the role
    4. Incapacity
    5. Very rarely, for incompatibility

    When dismissing an employee, the implied term of good faith in the employment contract becomes of paramount importance.

  4. Dismissal for Misconduct

    An employer can dismiss an employee for misconduct or serious misconduct. Misconduct includes absence from work, not wearing appropriate work attire, absenteeism, taking unauthorized leave, using offensive language, and sending offensive emails. General misconduct will require notices and warnings being served prior to dismissing the employee.

    Serious misconduct could be breaching work rules in relation to drugs and alcohol during work hours, disclosure of the company's confidential information, dishonesty, direct disobedience, and insubordination, which can warrant an on-the-spot summary dismissal. Serious misconduct could be turning up to work intoxicated, which can warrant an on-the-spot summary dismissal.

  5. Procedure

    To prove substantive fairness, the reason behind the dismissal must be fair. For this, the employer must prove that the misconduct actually existed and that it was serious enough to warrant termination of the employment agreement. It will need to be proven that the misconduct deeply impaired the confidence and trust of the employment relationship.

    Even if the misconduct did exist and it is serious enough to warrant a dismissal, if the employer does not follow the correct procedure, they may be subject to a personal grievance claim from the employee.

    To meet the required standard of procedural fairness, the employer must take the following steps:

    1. Give notice of the employer's intention to dismiss the employee. This includes giving written notice of the allegations that have been made and what the potential disciplinary action could be. The employer must give reasonable time to the employee to mount a defense, and the right to bring a support person to such meeting where the employee will be disciplined. Disciplinary procedures should be outlined in the employment contract, as well as in the employer's workplace policies and procedures if there is one.
    2. Properly investigate the alleged misconduct by the employee.
    3. Give the employee an opportunity to be heard as well as to allow a support person at a meeting prior to being dismissed. The employee should be shown the evidence and if the employee provides new information an employer should investigate.
    4. The employer must give an unbiased consideration of the explanation the employee gives. The decision must be one that a fair and reasonable employer could take. This means the employer needs to consider what other options are available, and the ultimate decision to dismiss the employee must be one that is a reasonable option given the alternatives.
  6. Dismissal for Serious Misconduct: (Case law Hudson)

    New Zealand case law has created the precedent that when dismissing an employee for serious misconduct, the employer does not have to prove the incident happened per se, but it must show that they carried out a full and fair investigation which lead the employer to believe the serious misconduct occurred. The employee must be given a proper opportunity to respond and be given timely notice of the alleged misconduct. The alleged serious misconduct must interfere with or prejudice the safe and proper conduct of the employer's business to be able to be considered as serious misconduct. Therefore, the key point in dismissing an employee is ensuring that the alleged misconduct was given a proper investigation.

  7. Performance related dismissals

    Dismissing an employee for poor performance is difficult, so extra care should be given. The following procedural steps need to be taken:

    1. If the employer has become dissatisfied with the employee's conduct, the employer must check whether there is any procedure in the employment agreement and confirm what is expected of the employee in the employment agreement.
    2. This dissatisfaction needs to be expressed to the employee, orally or in writing.
    3. The employee needs to be given a reasonable opportunity to improve and be provided extra training if needed. Appropriate warnings need to be given is an employee is still not improving; furthermore, this step must be repeated.
    4. Dismissal needs to be what a fair and reasonable employer could have done.


  1. Redundancy

    An employee can be made redundant if the position in the company is no longer required. For redundancy, the important aspect is the genuineness of the redundancy. If an employer terminates employment by making an employee redundant, but then hires a new employee to that position, the redundancy is not genuine. In such case, the employee can have a personal grievance claim against the employer.

  2. Procedure

    To meet the required standard of procedural fairness, the employer must take the following steps:

    1. Give reasonable notice (usually one month) to employees that the company is changing its corporate structure.
    2. Consult the employees with an open-mind before making redundancy decisions and ask for their contributions.
    3. Disclose the relevant selection criteria to all the relevant employees.
    4. Alternatives to redundancy need to be discussed between the company and all employees potentially subject to being made redundant. The alternatives are reappointment, retraining, redundancy, and voluntary redundancy.

    To prove the substantive fairness of the redundancy, the employer needs to prove that the position is no longer required in the company: it cannot be that the specific person is no longer required. There needs to be genuine commercial reasons for letting an employee go. For instance, the company trying to save money is seen as a legitimate reason. The key point in making an employee redundant is therefore the genuineness of the redundancy. This provision is very employee friendly.


Resignation is simpler in the sense the employee has the right to resign if they follow the relevant notice requirements. Once the employer accepts the notice of intention to resign, the employee may resign after the notice period has passed.


There is no set age for retirement in New Zealand. However, because Kiwisaver and superannuation entitlements are available at age 65, it is common for employees to retire when they turn 65. In calculating a retiring employee's final pay, superannuation calculations must be included if the account is held with the employer.

It is also prohibited by law to discriminate by age and force an employee to retire at a certain age. There are some exceptions in certain industries, such as pilots, judges, and coroners. Forced retirement is subject to a personal grievance claim.

Compensation for termination

Unlike in many other jurisdictions, there are no hard and fast rules on how much compensation should be paid to employees being dismissed. It depends on what has been decided between the employer and employee in each employment agreement. However, it should be noted that the obligation of good faith in section 4 underpins any decision of how much compensation needs to be paid. Standard practice in New Zealand is to give two weeks' wages to support the employee in finding a new job.

Protection of Employees

  1. Personal grievance claims

    If the employee considers that they have been unfairly dismissed, they can raise a personal grievance claim against the employer; this must be done within 90 days and can be done orally or in writing. If an employee raises a personal grievance claim outside of this timeframe, and the employer does not agree to an extension, they will be unable to have their claim determined by the ERA or the court unless there are exceptional circumstances. If a personal grievance claim is raised, the first step is to resolve the matter internally or engage in mediation. Matters that are not resolved are then referred to the ERA and finally to the Employment Court.

    While the employee on probationary periods is entitled to a personal grievance of unjustified dismissal, the employee on 90-day trial periods is immune to this right. According to the amendment of Employment Relations Act in 2018, 90-day trial periods are restricted to businesses with 19 or fewer employees to restore protections from unjustified dismissal for most employees when they start a new job.

    The amendment also states that, if requested, reinstatement must be the first course of action considered by the Employment Relations Authority for employees who were found to be unfairly dismissed.

    In addition, the employee can raise a personal grievance claim on a triangular employment relationship under the Employment Relations (Triangular Employment) Amendment Act 2019, which came into force on June 28, 2020. Triangular employment is a relationship between employees where the employee works for a third party (e.g. labor-for-hire, secondment). This amendment enables triangular employees to raise a personal grievance not only against the employer but also against the controlling third party.

  2. Additional protection when a business is sold or work is transferred or contracted out

    All employment contracts must have an employee protection provision for when their employer's business is being restructured as a result of being sold or work is transferred or contracted out. When restructuring the company, an employer must follow the procedures set forth in the employment contract. An employer cannot restructure their business without having this protection clause.

  3. Protection of vulnerable workers during restructuring

    The ER Act protects certain classes of workers, mainly in the catering and cleaning industries, from being easily dismissed or being made redundant. A full list of this class of vulnerable workers is found in Schedule 1A of the ER Act.3

    If an employee works in one of these industries, the employee can elect to have the same terms and conditions transferred to a new employer regardless of the size of the employer.

    If an employee is made redundant after being transferred, the employee is entitled to compensation from the new employer.


The ER Act places a lot importance on mediation. If a dispute arises and the parties cannot come to a resolution on their own, they should go to mediation before going to the Employment Court. The Court gives priority to parties that have already attempted mediation. Courts will often make parties attempt mediation before they will hear a case.

The Ministry of Business, Innovation and Employment provides a free mediation service for any employer or employee with an employment relationship problem.

COVID-19 and employment laws

In New Zealand, there has not been any change to the employer obligations under the employment law during the COVID-19 pandemic. This means that pay and leave arrangements must be in accordance with the employment agreement and general employment law obligations during the COVID-19 pandemic. If any change must be made to the leave and pay arrangements, employers and employees should seek to reach agreement in good faith on what approach will be taken.

However, employers should not require or knowingly allow workers to come to a workplace when they are sick with COVID-19 or required to self-isolate under public health guidelines. If they do, they are likely to be in breach of their duties under the Health and Safety at Work Act (HSWA). Alternative arrangements or paid leave must be negotiated in good faith and reduced to writing.

In New Zealand, various wage subsidy schemes were available to support employers and their personnel who were financially impacted by COVID-19. Most of the COVID-19 payment schemes were closed by 2022 with only the COVID-19 Leave Support Scheme remaining in place. This scheme provides the following relief payments to employees:4

  • NZD $600 for full-time workers who were working 20 hours or more per week; or
  • NZD $359 for part-time workers who were working less than 20 hours per week.

The COVID-19 Public Health Response (Vaccinations) Order 2021 was made by the Minister for the COVID-19 response under the COVID-19 Public Health Response Act 2020. The Order mandated vaccinations across sectors, including border and managed isolation, health and disability, educations, work in prisons, police and defense forces. The order has since been revoked on 26 September 2022.

Other businesses may also assess whether specific work needs to be done by vaccinated workers and impose a condition on the employees to be vaccinated so long as it is not unlawful nor in breach of any agreement between the parties.

Employees are entitled to reasonable paid time off to receive a COVID-19 vaccine (including a vaccine booster). If the date or time of the vaccine reported by the employee would be unreasonably disruptive, the employer should engage with the employee to agree on a different date or time. To avoid considering each employee’s notification, employers are encouraged to have a workplace policy to clearly set out a reasonable date and time off to be vaccinated.

The employer may ask the employee’s vaccination status if there is a lawful purpose to collect the information, and it is reasonably necessary for the work. The collection and handling of such information must be in accordance with the Privacy Act 2020. Though employees are not required to disclose their vaccination status, the employer may assume the employee is unvaccinated if the person refuses to disclose the status and the employer has sufficiently explained the consequences of making that assumption. However, disadvantaging the employees for not being vaccinated or refusing to disclose their vaccination status is prohibited unless their work cannot be done by unvaccinated employees. If that is the case, the employer should first engage in a good faith consultation with the employee to agree on alternative arrangements, and it is recommended to seek independent advice before taking action that may disadvantage the employee.

Wage subsidy schemes were available to support employers and their staff who are financially impacted by COVID-19. The application closed on September 3, 2020, and there are currently no wage subsidies. On the other hand, the COVID-19 Leave Support Scheme is currently available to employers to subsidize leave for some workers who have COVID-19 or similar symptoms, need to self-isolate, and cannot work from home. Under the Leave Support Scheme, an employer must make their best endeavors to pay employees at least 80% of their normal wages or salary, but never less than the minimum wage. Any change to their normal hours or pay rate requires good faith consultation and a signed written agreement. The subsidy rate is at $585.80 a week for fulltime employees (where they usually work 20 or more hours per week) and $350 a week for part-time employees.

Types of foreign national visas and acquisition requirements

Types of work visas

There are multiple types of visas available to foreign nationals intending to work or to look for work in New Zealand. These visas are categorized according to the nationalities, professions, skills, and other status of the applicants. In most instances, the applicant must have a job offer from an employer in New Zealand, and the applicant's profession must be on one of the four skill shortage lists. Jobs that are in the most demand are in the IT, construction, engineering, scientific and medical sectors, which Japanese nationals could apply for and obtain a visa.

    There are four skill shortage lists that extensively list all the professions for which a visa can be granted.

    1. Long term Skill Shortage List5
    2. Regional Skill Shortage List6
    3. Construction and infrastructure Skill Shortage List7
    4. Green Occupations List8

The Green Occupations List is a list of a limited number of highly skilled roles that are in shortage in New Zealand. Further, migrants with professions listed under the Green Occupations List has a clear pathway to residence in New Zealand. New Zealand recently announced that it is expanding the list to include more workers, with an intention to address the ongoing labor shortages in the country. Specifically, as of 15 December 2022, registered nurses, specialist doctors, and midwives were added to the Tier 1 (straight to Residency) list and registered auditors shall also be included as of March 2023.

Apart from this change, the New Zealand government has also made the following immigration changes:

  • A streamlined online process for the Skilled Migration Category (SMC)
  • A simplified variation process for holders of Accredited Employer Work Visas (AEWVs) and Essential Skills Work Visas (ESWVs)
  • Automatic extensions for some employer accreditations
  • Streamlined processes to enable Critical Purpose Visitor Visa holders to obtain Specific Purpose visas whilst remaining in their current role
Temporary work visas
Type of Visa
Accredited Employer Work Visa
This is the main temporary work visa valid up to three years. Employees who have been offered at least 30 hours work a week are eligible.
Student visa
On a student visa, the applicant must show an offer from an educational institution approved by the New Zealand Qualifications Authority, as well as evidence of sufficient funds to live whilst studying, and if the applicant does not have a return ticket, evidence of sufficient funds to purchase a return ticket.
Note that if the course intended to be taken by the applicant is 3 months or less, they can enter on a visitor visa.
On a student visa the amount of time you can work depends on your course. Typically, students are allowed up to 20 hours per week during the term and full-time during the summer holiday. In special cases like Master's degrees, some students may be allowed to work more than this.
Specific purpose work visa
This visa is for people who need to enter New Zealand for a specific purpose or event. In the visa application, applicants must specify how long they intend to be in New Zealand for. The visa will be valid until the specific purpose is fulfilled or the event is finished.
Post-study work visa
Applicants must have successfully completed their qualification(s) in New Zealand, and have an offer of full-time work in the same area as their qualification. This visa can be switched to skilled migrant residency visa after 2 - 3 years. This visa can be granted more than once, but the applicant must complete another qualification when they apply for the second time.
Permanent work visas
Type of Visa
Skilled migrant resident visa
Applicants must send an Expression of Interest (EOI) telling MBIE (New Zealand Immigration) about the applicant’s work experience, qualifications and ability to settle in New Zealand. The EOI is assessed on a points system, depending on how each section scores.
Straight to Residence Visa
Accredited Employer Work Visa holders may apply for this visa if the role of the employee is on a Tier 1 of the Green List (
Work to Residence Visa
Accredited Employer Work Visa holders may apply for this visa if the role of the employee is on a Tier 2 of the Green List and the employee has worked for the employer for 24 months or more.
Highly Paid Residence Visa
Applicants must have an offer of employment in a role that is paid at least twice the median wage (currently NZD55.52 an hour) or have been working for 24 moths in New Zealand in a role that paid at least twice the median wage.
Care Workforce Work to Residence Visa
Applicants must work in an occupation that is on the Care Workforce sector occupation list and have worked and been paid at a level 4 pay rate set in the Support Workers (Pay Equity) Settlements Act 2017 for at least 24 months.
Visas specific to Japanese nationals
Type of Visa
Working holiday visa (Japan working holiday visa)
The working holiday visa has different requirements depending on the nationality of the employee seeking the visa.
For the Japan working holiday visa, a citizen of Japan with at least NZ $4,200 to live on during their stay can be granted a visa. The visa is valid for 12 months, which includes up to 6 months of studying or training. Applicants must be aged between 18 - 30 years.
Japanese interpreters work visa
Japanese nationals that are qualified to interpret and translate Japanese and English apply for an interpreter's visa to work in the tourism industry in New Zealand. Applicants must have an offer of full-time work as an interpreter from a New Zealand tourism-related industry employer who can guarantee to cover the applicant’s costs. This includes wages or salary, accommodation in New Zealand, and a return flight home. Duration of the visa is up to 3 years.

A full list of visas can be found on Immigration New Zealand's website.9

Travel Restrictions due to COVID-19

On 20 October 2022, New Zealand removed all travel restriction and entry requirements.

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