New Zealand

Labor Compliance Guide

Labor Requirements

The main legislation governing labor and employment is the Employment Relations Act 2000, which combines a market model for employment with greater obligations on the parties to the employment relationship to demonstrate “good faith” behaviors.

Hours & Pay Regulations

Normal Working Hours

The workweek is generally defined as 40 hours and five days in length unless otherwise negotiated and included in the employment agreement.

Overtime

Overtime rates are negotiated between the employer and employee. There is no legal requirement to pay overtime at a premium rate, although employees on an hourly wage must be paid for all hours worked. The compensation of salaried employees need not be adjusted when they work more than their normal weekly hours unless this is provided for in the employment agreement.

Breaks

Amendments to the Employment Relations Act that took effect in 2015 make break requirements more flexible and practical for employers, allowing them to eliminate breaks altogether if employees are adequately compensated or the employer’s situation makes it unreasonable to give breaks.

 

The act says an employee is entitled to rest and meal breaks that:

  • Give the employee a reasonable chance during the work period to rest, refresh and take care of personal matters; and
  • Are appropriate for the length of the employee’s work period.

There are no specific requirements as to how long breaks should be or when they should be scheduled, which is left for employers and employees to negotiate as part of the collective bargaining process.

 

The employer must give an employee a reasonable chance to negotiate the timing and length of rest and meal breaks and try to reach an agreement in good faith. If the employer and the employee cannot reach an agreement, the employer may set reasonable times and lengths for breaks that allow it to maintain service or production.

 

What is reasonable will depend on the employee’s interests and the operational environment or resources.

 

The Employment Relations Amendment Act 2018 (the Act) introduces several employment law changes that aim to improve fairness in the workplace and deliver decent work conditions and fair wages. Below is some information on what the change to rest and meal break entitlements means for employees and employers when the Act came into effect on May 6, 2019.

 

Earlier the law required that employees receive a reasonable opportunity to take paid rest and unpaid meal breaks that are of appropriate duration for the employee’s work period, without specifying the number, duration, and position of the breaks within the workday.

 

The change in the entitlement requires that employees have set rest and meal breaks so that they have time to rest, refresh and attend to personal matters. The number and duration of breaks will depend on the hours worked. The Act provides an exemption from the set rest and meal break entitlements in certain circumstances for essential services or employers that engage in New Zealand’s national security. You can find more on the exemption below.

 

Requirement of Breaks

The employer and employee can agree when the rest and meal breaks are to be taken. Both employers and employees have an obligation to act in good faith when negotiating the timing for breaks. When determining the type of breaks to be provided and the duration and timing of the breaks, employers should take into account the length of an employee’s shift. Employers would need to consider their health and safety obligations in agreeing to the timing of breaks.

 

Exempt Employers

The Act provides an exemption from providing set rest breaks and meal breaks in certain circumstances for essential services or employers that engage in New Zealand’s national security. The exemption applies in the following two situations if all the conditions are met:

      • If the employer is engaged in an essential service (a service specified in Schedule 1 of the Employment Relations Act 2000) and continuity of service or production in the essential service is critical to the public interest; including (without limitation) services affecting public safety, or;
      • If the employer is engaged in the protection of New Zealand’s national security; and continuity of service is critical to New Zealand’s national security.

If an exempt employer and an employee cannot agree to alternative breaks, the employee is entitled to compensation. The compensation must be reasonable and designed to compensate for the failure to provide set breaks.

Public Holidays

There are 11 public holidays in New Zealand:

  • Jan. 1­2: New Year’s
  • Feb. 6: Waitangi Day
  • April 25: ANZAC Day
  • Good Friday and Easter Monday
  • Queen’s Birthday (first Monday in June)
  • Labour Day (fourth Monday in October)
  • Dec. 25: Christmas Day
  • Dec. 26: Boxing Day
  • Provincial Anniversary Day (date determined locally)

 

If they fall on a Saturday or Sunday – Waitangi Day, ANZAC Day, Christmas, Boxing Day, New Years’ Day and Jan. 2 – observance will be observed on the following Monday or the following workday.

 

If an employee normally works on the day a public holiday falls, the employee must generally be given compensatory rest time in the form of a day off with pay.

 

An employee, whether hourly or salaried, who works on a public holiday must be paid 1.5 times his or her normal wage. Salaried employees’ daily rates are calculated by dividing annual wages by 52 and then again by five. In addition, an employee who works on a public holiday is entitled to an alternative holiday (another day’s paid leave) if the public holiday falls on a day that would otherwise be a working day for the employee. Holidays’ Act, No. 129 of 2003 (as amended), §§ 44­55.

Annual Leave

All employees are entitled to at least four weeks’ paid vacation a year. Employees get their annual holiday entitlements on their first and subsequent anniversaries after starting work. This is meant to be paid leave and can only be converted into cash in limited circumstances.

 

Annual vacation can be taken at any time agreed between the employer and the employee, although employees must be given the opportunity to take at least two of the four weeks’ vacation continuously if they wish to do so.

 

Casual and fixed­term employees of under one year’s service can agree to receive annual leave pay as they work, calculated and paid as 8 percent of wages, without the requirement that the entitlement be taken as actual leave.

 

Employees can ask in writing to be paid out up to one week of their annual leave entitlement each year, but employers cannot pressure employees to be paid out and employment contracts cannot stipulate that employees be paid out.

Annual leave requests by employees must not be unreasonably refused but are subject to the operational requirements of the employer’s business. Employers can require employees to take annual leave during a shutdown period provided they give at least 14 days’ notice. If a shutdown period includes public holidays, employees must be paid for those days if they would normally be working days. Employees are entitled to receive their pay for annual vacations before the vacation commences unless the employer and employee agree that the normal pay cycle will continue undisturbed by the time off work. Holidays’ Act, No. 129 of 2003 (as amended), §§ 16­19.

Minimum Wage

Effective April 1, 2018, the minimum wage has increased to $16.50 per hour.

Special Leave

Paternity Leave

Under the Parental Leave and Employment Protection Act 1987, employed spouses/partners of an employee having a baby are entitled to unpaid parental leave for up to 52 weeks. In most cases, an employee is entitled to return to his or her previous position at the end of parental leave. Employees deemed to hold key positions need not be guaranteed a return to them following leave, although they must be given preference for similar jobs for six months after the end of the leave entitlement. To be eligible, the employee must during the previous 12 months have worked for the employer for an average of 10 hours a week and no less than one hour in every week or 40 hours in every month. Parental Leave and Employment Protection Act, No. 129 of 1987 (as amended), §§ 8­9, 23­ 28, 31­32.

Maternity Leave

Under the Parental Leave and Employment Protection Act 1987, pregnant employees are entitled to unpaid parental leave for up to 52 weeks. To be eligible, the employee must during the previous 12 months have worked for the employer for an average of 10 hours a week and no less than one hour in every week or 40 hours in every month. In most cases, an employee is entitled to return to her previous position at the end of maternity leave. Employees deemed to hold key positions need not be guaranteed a return to them following leave, although they must be given preference for similar jobs for six months after the end of the leave entitlement. Parental Leave and Employment Protection Act, No. 129 of 1987 (as amended), §§ 8­9, 23­ 28, 31­32.

Parental Leave

Paid parental leave extends from 18 weeks to 22 weeks on July 1, 2018. Maximum weekly payments are also increasing by 4.7 percent, in line with an increase in the nation’s average weekly earnings. The maximum rate for eligible employees and self-employed parents will rise from $538.55 to $564.38 gross per week. Parents of babies due or delivered from 1 July 2018 are eligible for the increased paid parental leave. The Inland Revenue Department processes paid parental leave payments.

There is also an increase in the number of Keeping in Touch days. These allow parents to do limited work while on parental leave, if they choose to, for example, to attend a team day or change announcement. The number of Keeping in Touch days will increase from 40 to 52 hours from Sunday.
Businesses are already required to provide a minimum 26 weeks in job-protected unpaid leave for eligible employees.

Sick Leave

The Holidays Act 2003 provides employees a minimum of five days’ paid sick leave a year after the first six months of continuous employment. The sick leave allowance can be increased by agreement between the employer and the employee. At any time, the employer and the employee can agree to the employee going into sick leave debt and any debt can be deducted from the following 12­month period. Unused sick leave is accumulated to a maximum 20 days, which can be extended by agreement. There is no legal requirement that unused sick leave be paid out on termination of employment. If an employee receives Accident Compensation Corporation (workers’ compensation) payments for more than five days, the employer and the employee can agree to top up the ACC payment from 80 percent to 100 percent by reducing the employee’s sick leave by one day for each five days’ ACC leave. Holidays’ Act, No. 129 of 2003 (as amended), §§ 65­68.

Domestic Violence Leave

Effective April 1, 2019, the new law entitles employees affected by domestic violence to up to 10 days of paid domestic violence leave per year, in order to deal with the effects of domestic violence. Employees will be able to take this leave as needed – similar to the existing sick leave and bereavement leave provisions.

They will also be able to request a short-term variation to their working arrangements (up to two months or shorter) to which the employer must respond to urgently and within 10 working days. The variation can include changes to hours of work, location and duties of work. This is similar, and in addition to, the existing rights employees have to make a flexible working request.

The law also explicitly prohibits an employee being treated adversely in their employment on the grounds that they are, or are suspected to be, a person affected by domestic violence.

Employees will be able to raise a dispute if they believe that their employer unreasonably refused a request made under the new provisions, and must do so within six months.

Volunteer Defence Force Leave

Under the Volunteers Employment Protection Act 1973, if an employee volunteers in the armed forces, the employer has to allow the employee to take unpaid leave for training. If the employee volunteers or is called up to a “situation of national interest,” the employer may be required to hold the employee’s job open for up to 12 months.

Caregiver Leave

Two spouses/partners who assume the care of a child under 6 years they intend to jointly adopt or an employee who assumes care of a child with the intention to adopt alone are entitled to the same parental leave benefits as biological mothers.

Force Majure Leave

After six months of employment, employees are entitled to three days’ paid bereavement leave following the death of an immediate family member, defined as the employee’s spouse, parent, child, sibling, grandparent, grandchild or mother/father­in­law. Where there is more than one death, the employee is entitled to an additional three days’ bereavement leave per death. For other deaths, up to one day paid leave may be taken if the employer accepts that the employee is bereaved. Factors for deciding bereavement include: 1) How close the association was between the employee and the other person; 2) Whether the employee is responsible for any aspects of the ceremonies around the death; and 3) Whether the employee has any cultural responsibilities to fulfil in respect of the death.

Last updated on: June 24th, 2019