Hiring Your First Employee in NZ: Complete 2026 Guide for New Companies

Hiring your first employee is a milestone that changes how your business operates, how much cash you need, and how much paperwork you handle. New company directors often underestimate the compliance requirements. This guide covers every step in order, so you can hire confidently and legally from day one.

Step 1: Register as an employer with IRD

Before your first employee starts work you must register as an employer with Inland Revenue. You will use your company's IRD number (if you do not have one yet, apply at ird.govt.nz first). Employer registration is done through your myIR account and is free. You will need it to file PAYE returns and pay deductions.

When to do it: Before your new employee's first pay day. IRD recommends registering at least two weeks before you need to file your first return.

Step 2: Write an employment agreement

Every employee must have a written employment agreement before they start. This is a legal requirement under the Employment Relations Act 2000. An individual employment agreement must include:

• The names of the employer and employee
• A description of the work to be performed
• The place of work
• The agreed hours or an indication of expected hours
• The wage or salary
• A plain-language explanation of the services available for resolving employment relationship problems

You must give the employee a copy of the proposed agreement and a reasonable opportunity to seek independent advice before signing. Employment NZ provides a free individual employment agreement builder at employment.govt.nz.

Step 3: Know the minimum wage and holiday entitlements

From 1 April 2025, the adult minimum wage is NZ$23.15 per hour. Starting-out and training minimum wages apply to specific categories of workers (16-17 year olds in their first six months, or workers in a recognised industry training programme).

From day one, employees accrue:

• Annual leave: 4 weeks per year (after 12 months' continuous employment, they can take it; they accrue it from day one)
• Sick leave: 10 days per year after six months' employment
• Public holidays: 12 public holidays per year on which they do not have to work (or get paid 1.5x if they do)
• Bereavement leave: 3 days for close family, 1 day for others

Step 4: KiwiSaver obligations

If your employee is eligible for KiwiSaver (NZ resident, aged 18-65, not already a member through another employer), you must enrol them automatically unless they opt out. Key obligations:

• Employee contribution: Default 3% of gross pay (employee can choose 3%, 4%, 6%, 8%, or 10%)
• Employer contribution: Minimum 3% of gross pay (compulsory, on top of salary)
• Employer superannuation contribution tax (ESCT): You deduct and pay tax on your employer contribution based on the employee's annual earnings bracket

KiwiSaver contributions are paid to IRD through your payroll, not directly to the fund provider.

Step 5: PAYE deductions and payday filing

PAYE (Pay As You Earn) is income tax deducted from each pay and remitted to IRD. Since 1 April 2019, NZ employers must file employment information with IRD on or before each pay day (payday filing). This replaced the old monthly IR348 returns.

For each pay run you need to calculate and deduct:

• PAYE (based on annual earnings bracket and tax code)
• KiwiSaver employee contribution
• Student loan repayments (if applicable)

Payroll software like Xero, MYOB, or PayHero handles these calculations automatically and files directly to IRD. For a single employee, many new companies start with a simple payroll spreadsheet and the IRD PAYE calculator, but dedicated payroll software pays for itself quickly in time saved and reduced error risk.

Step 6: ACC levies

ACC (Accident Compensation Corporation) covers workplace and off-work injuries. As an employer you pay:

• Employer levy: Based on your industry classification and total payroll. You are invoiced by ACC annually after you file your IR3 or IR4.
• Work levy: Your employee's share of their own ACC cover is deducted from their pay and remitted as part of PAYE (it appears as the "ACC earner levy" on their pay slip).

ACC classifies your industry on registration. Check your classification is correct as rates vary significantly by industry (office work is low; construction is higher).

Step 7: The 90-day trial period

If your company has fewer than 20 employees, you can include a 90-day trial period clause in the employment agreement. During the trial, you can dismiss the employee without having to follow the usual dismissal procedure, and the employee cannot raise a personal grievance for unjustified dismissal. However:

• The trial period clause must be in writing and agreed before the employee starts work
• You still cannot dismiss for discriminatory or unlawful reasons
• You must act in good faith throughout
• Notice requirements in the agreement still apply

Trial periods are a useful protection for new employers, but employment lawyers recommend treating them as a last resort rather than a substitute for good hiring and onboarding.

Step 8: Health and safety obligations

Under the Health and Safety at Work Act 2015 (HSWA), you are a Person Conducting a Business or Undertaking (PCBU) from the moment you employ someone. Your obligations include:

• Identifying and managing workplace risks
• Providing a safe physical environment
• Providing adequate training and supervision
• Having procedures for responding to health and safety incidents

WorkSafe NZ provides free guidance for small employers at worksafe.govt.nz. For most office-based new companies the requirements are straightforward (first aid kit, emergency procedures, ergonomic workstations). Construction, trades, and manufacturing companies face more detailed obligations.

Common mistakes new employers make

• Not registering as an employer with IRD before the first pay day
• Giving the employee the agreement on their first day instead of before they start
• Forgetting the employer KiwiSaver contribution in their wage budget (an extra 3% of gross)
• Using a sole-trader contract template that does not meet ERA requirements
• Treating a subcontractor as an employee (or vice versa) incorrectly

Getting professional help

Most accountants who work with new companies can handle employer registration and initial payroll setup. Employment lawyers and HR advisors can review your employment agreement and advise on the 90-day trial period. WorkSafe NZ has a free advisory line for health and safety questions.

If you are a newly-incorporated NZ company still finding your accounting, legal, and HR service providers, see our Connect directory for professional services firms in your region.

Summary: hiring timeline for a new NZ company

1. Decide on role, pay, and hours
2. Prepare individual employment agreement (use employment.govt.nz builder)
3. Give employee agreement + reasonable time to seek advice
4. Register as employer with IRD (via myIR)
5. Set up payroll software or IRD PAYE calculator
6. Employee signs agreement before start date
7. Enrol employee in KiwiSaver on their first pay day (or process opt-out)
8. File first PAYE return on or before pay day
9. Notify ACC of new employee (through your annual levy return)