NZ Company Minimum Wage and Employment Standards: What New Employers Must Know in 2026

Minimum Wage Rates in New Zealand for 2026

As of 1 April 2026, the adult minimum wage in New Zealand is NZ$23.50 per hour (check Employment New Zealand for the most current figure, as rates are reviewed annually). This applies to all employees aged 16 and over who are not in their first six months of employment with a new employer in a role that requires training. A starting-out wage of 80% applies in specific circumstances, but most new employers will simply pay the adult rate to avoid classification errors.

The minimum wage applies to both part-time and full-time employees and must be calculated on an hourly basis. Paying a weekly salary does not exempt you from the hourly minimum: if an employee works 50 hours and their weekly salary divided by 50 falls below the minimum hourly rate, you are in breach.

Holiday Pay Obligations

Under the Holidays Act 2003, all employees are entitled to a minimum of four weeks of annual leave after 12 months of continuous employment. During the first year, employees can take leave in advance by agreement, or receive 8% of their gross earnings as holiday pay on termination.

Calculating holiday pay correctly is one of the most common compliance mistakes for new NZ employers. The Act requires you to pay the higher of the employee ordinary weekly pay or the average weekly earnings over the previous 52 weeks. Errors here can accumulate over years and result in significant back-pay liabilities.

Sick Leave

From 24 July 2021, employees are entitled to 10 days of sick leave per year (up from 5 days). New employees qualify after 6 months of continuous employment, or after working for the employer for 6 months if they have worked an average of at least 1 hour per week and at least one hour a week for 6 months.

Employment Agreement Requirements

Every employee in New Zealand must have a written employment agreement before they start work. There are two types: individual employment agreements (IEA) and collective employment agreements (CEA). Most small NZ businesses use IEAs. The agreement must include the names of the employer and employee, a description of the work, the place of work, agreed hours or an indication of the arrangements relating to hours, the wage or salary rate, and information about what the employee can do if they have a problem with the agreement or their employment.

A 90-day trial period can be included for employers with 19 or fewer employees. This allows the employer to dismiss an employee within the first 90 days without the employee being able to bring a personal grievance for unjustified dismissal. The trial clause must be in the written agreement before the employee starts work: it cannot be added later.

Public Holidays

New Zealand has 12 public holidays per year. Employees are entitled to these days off on pay if they would otherwise have been working on that day. If an employee works on a public holiday, they must be paid at least time and a half and given a day off in lieu.

KiwiSaver and PAYE

From the first pay day, you must deduct PAYE (Pay As You Earn) income tax from employee wages and remit it to Inland Revenue. You must also enrol all new employees in KiwiSaver (unless they have previously opted out), contribute a minimum employer contribution of 3% of gross salary, and deduct the employee contribution at their chosen rate (3%, 4%, 6%, 8%, or 10%).

Common Mistakes by New Employers

• Treating employees as contractors to avoid PAYE and KiwiSaver obligations (the IRD and Employment Court look at the actual nature of the relationship, not the label)
• Not providing a written employment agreement before the first day of work (invalidates the 90-day trial clause)
• Paying a fixed salary without checking it meets the hourly minimum across actual hours worked
• Miscalculating holiday pay by using only the base rate rather than the higher of ordinary or average weekly earnings
• Forgetting to pay public holiday entitlements for part-time employees who would have worked on that day

Where to Get Help

Employment New Zealand (employment.govt.nz) provides free templates and guidance. An HR or employment relations consultant can review your employment agreements and holiday pay calculations before your first hire, which is far less expensive than fixing a breach after the fact. FreshFirms connects service providers with new NZ companies at the exact moment they are hiring for the first time. If you advise on employment standards, payroll, or HR compliance, explore the feed at freshfirms.nz.