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.

Employees on Call

Public holiday entitlements for employees depends on the type of call-out arrangement. If the employee:

      • Is called out, they are entitled to at least time and a half for the time worked (plus a full day’s paid alternative holiday if they would have otherwise worked on that day).
      • Has to limit their activities on the day to the extent that they haven’t enjoyed a full holiday, for example, if the employee is required to stay at home all day, but is not called out, the employee is entitled to a full day’s paid alternative holiday if they would have otherwise worked on that day.
      • Is on-call, but doesn’t have to limit activities, for example, if the employee can choose not to accept the call-out, then they only get an alternative holiday if they accept a call-out and they would have otherwise worked on that day (in this instance the employee would also get at least time and a half for the time they worked).
      • Is on call but is not called out or chooses not to accept the call-out, but they would have otherwise worked on that day, they would be entitled to their relevant daily pay or average daily pay, for the public holiday.

This doesn’t apply to an employee who is employed only to be on call on public holidays.

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 fixed­ term 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 is 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

Parental Leave

Employees who are having a baby or are going to take the permanent primary responsibility for a child under 6 years are entitled to parental leave. Parental leave can be taken by one parent or divided between the two. Employees who have worked for at least an average of 10 hours a week during the 12 months just before the expected birth of the child or the date they will assume responsibility for the care of the child are entitled to:

  • 52 weeks of unpaid parental leave and
  • 22 weeks of government-funded parental leave payment.

The entitlement to government-funded parental leave payments increases to 26 weeks on July 1, 2020. The amount of unpaid leave is halved for employees who have worked for at least an average 10 hours a week during the six months just before the expected birth of the child or the date they will assume responsibility for the care of the child.

Employees who intend to take parental leave must give their employer at least three months’ written notice before the due date. Up to six weeks of the leave entitlement may be taken before the expected date of birth or adoption. Employees on parental leave are allowed to work up to 40 hours for their employer while on paid or unpaid leave.

Special Leave

Pregnant employees can also take 10 days of unpaid special leave for issues related to pregnancy.

Maternity Leave

While on maternity leave employees may be allowed to work periodically to keep in touch with their employer. “Keeping-in-touch” work could include activities such as attending a team-building exercise or important meeting, as long as:

      • the employee only does a total of 52 hours or less of paid work for the employer during her parental leave payment period; and,
      • this work is not within the first 28 days after her child is born. 

The maximum number of keeping-in-touch hours increases to 64 on July 1, 2020. 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 the following leave, although they must be given preference for similar jobs for six months after the end of the leave entitlement.

Paternity Leave

Employees who are going to take the permanent primary responsibility for a child under 6 years are entitled to parental leave. Parental leave can be taken by one parent or divided between the two. Employees who have worked for at least an average of 10 hours a week during the 12 months just before the expected birth of the child or the date they will assume responsibility for the care of the child are entitled to:

        • 52 weeks of unpaid parental leave; and
        • 22 weeks of government-funded parental leave payments.

The entitlement to government-funded parental leave will rise to 26 weeks on July 1, 2020. The amount of unpaid leave is halved for employees who have worked for at least an average 10 hours a week during the six months just before the expected birth of the child or the date they will assume responsibility for the care of the child.

Employees who intend to take parental leave must give their employer at least three months written notice before the due date. In addition to parental leave, fathers are entitled to:

          • One week of unpaid leave if they have worked for the employer at least an average 10 hours a week for six months or
          • Two weeks of unpaid leave if they have worked for the employer at least an average of 10 hours a week for 12 months.

This leave can be taken in the period beginning 21 days before the expected birth or the date their partner intends to become the primary carer and 21 days after unless the employer and the employee agree otherwise. Employees are allowed to work up to 40 hours for their employer while on paid or unpaid leave.

 

While on parental leave, the father may be allowed to work periodically to keep in touch with his employer. “Keeping-in-touch” work could include activities such as attending a team-building exercise or important meeting, as long as:

            • The employee only does a total of 52 hours or less of paid work for the employer during his parental leave payment period; and,
            • This work is not within the first 28 days after his child is born.

The maximum number of keeping-in-touch hours increases to 64 on July 1, 2020. In most cases, an employee is entitled to return to his previous position at the end of parental leave. Employees deemed to hold key positions need not be guaranteed a return to the following leave, although they must be given preference for similar jobs for six months after the end of the leave entitlement.

 

Alternative Holidays

An employee gets an alternative holiday for working on a public holiday that is an otherwise working day.

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 and an additional five days paid sick leave after each subsequent 12 month period. 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 12-month period.

 

Unused sick leave is accumulated to a maximum of 20 days, which can be extended by agreement. There is no legal requirement that unused sick leave is 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 every five days’ ACC leave.

Bereavement 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/father-in-law. 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:

              • How close the association was between the employee and the other person,
              • Whether the employee is responsible for any of aspects of the ceremonies around the death; and,
              • Whether the employee has any cultural responsibilities to fulfill in respect to death.
Domestic Violence Leave

Effective April 1, 2019, employees who are victims of domestic violence will be able to claim up to 10 days of paid domestic violence leave in each 12 month period. Employees will also be able to request a short-term (two months or less) variation in their hours, days, or place of work in order to help cope with the effects of being subject to domestic violence. To be eligible, employees must have:

                • Worked for their employer for at least six continuous months, or
                • Over a six-month period, worked at least an average of 10 hours during that period and no less than 1 hour in every week or no less than 40 hours in every month during that period.

Employees must submit their request in writing, specifying the nature of their request, the date on which it will commence, and how it will assist them. The employer must notify the employee as soon as possible, but not less than 10 working days after receiving the request, of its decision to approve or refuse. If the employer refuses the request it must state in writing the grounds for refusing and explain the reasons for those grounds. Employers can request that employees provide proof of domestic violence to support their request for domestic violence leave.

Volunteer Defence Forces 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.

Stress Leave

An employer may provide an employee with sick leave if they have work-related stress.

Garden Leave

Is not referred to in employment legislation but is a term sometimes used to describe a period when an employee retains their employment, receives full pay but does not report to work.

Unpaid Leave

An employee can take leave without pay if their employer agrees. The agreement should be recorded in writing.

Voting Leave

Leave to vote in general elections or by-elections.

Employment During Disaster

During and after a disaster or emergency, employers and employees need to consider issues such as health and safety, emotional wellbeing and payment options.

Long Service Leave

The employee can negotiate long service leave and long service leave benefits with the employer.

Jury Duty Leave

Jury service is administered by the Ministry of Justice. If an employee has been summoned for jury service they can get more information about this from the Ministry of Justice.

Last updated on: September 30th, 2019