Becoming an Employer
A series of introductory modules designed to help first-time employers start off on the right foot.
Being an employer in New Zealand
The legislation that applies, the obligations you need to meet, and how to set yourself up to get it right.
First, the good bit
Hiring your first employee is a milestone. It means your business has grown beyond what you can do alone, and that's worth acknowledging before we get into the rest.
The rest is admittedly less exciting. Employing people in New Zealand comes with a set of obligations: some to the employee, some to Inland Revenue, some to employment law and other legislation requirements more broadly. None of them are individually complicated, but together they can feel like a lot when you're new to it.
The good news: you don't need to become a payroll or employment expert. You need a working understanding of what applies to you, the right systems to handle the mechanics, and the judgement to know when to ask for help. This course is here to give you the first two. The third you already have - you wouldn't be reading this otherwise.
What changes when you hire
Many small NZ businesses have operated as sole traders or worked with contractors for years before hiring their first employee. On the surface, it feels like a small addition: one more person, one more set of hands.
Legally, it's a bigger shift. The moment you have an employee, you're operating under a body of law that didn't apply before. You'll be deducting tax on someone else's behalf, you'll be tracking leave entitlements, you'll be obliged to act in good faith, and you'll be expected to keep records that hold up to scrutiny.
You don't need to read every Act cover to cover. You do need to know they exist, so you know where to look when a question comes up.
Worth knowing: The most common mistake new employers make is finding out about an obligation only after something has gone wrong.
Legislation that applies to you as an employer
Once you have employees, the following pieces of legislation become directly relevant. We'll cover the practical implications throughout the course — this is just the landscape.
Employment Relations Act 2000
Governs the employment relationship itself - good faith obligations, employment agreements, personal grievances, and the rights of both parties. Read more at employment.govt.nz.
Holidays Act 2003
Covers annual leave, public holidays, sick leave, and bereavement leave. The incoming Employment Leave Bill will update key provisions.
Minimum Wage Act 1983
Sets the legal floor for what you can pay any employee, regardless of what's in their agreement. Current rates are at employment.govt.nz/pay-and-hours.
Wages Protection Act 1983
Governs what deductions you can make from an employee's pay, and what is off-limits.
Health and Safety at Work Act 2015
Requires you to provide and maintain a safe working environment. Applies to every workplace, regardless of size or industry. WorkSafe's guidance is a sensible starting point.
KiwiSaver Act 2006
Sets out your obligations around enrolling employees in KiwiSaver and making employer contributions.
Income Tax Act 2007
Requires you to deduct PAYE (Pay As You Earn) from each employee's wages and pay it to Inland Revenue on their behalf, as well as other tax requirements.
Privacy Act 2020
Governs how you collect, store, use, and share personal information about your employees - from IRD numbers to medical certificates. The Office of the Privacy Commissioner has practical guidance for employers.
What happens if it goes wrong
Most employers who get things wrong didn't mean to.
They missed a deadline, miscalculated a leave entitlement, or didn't realise an obligation applied to them.
The system isn't designed to punish employers acting in good faith, and the bar for actually being penalised is higher than people often assume.
That said, the consequences for getting things wrong are real. Depending on the breach, they can include IRD penalties and interest, backpay orders, fines from labour inspectors, and compensation awarded to employees through the Employment Relations Authority.
In serious cases, criminal liability now applies. From March 2025, deliberately withholding wages or entitlements is a criminal offence under the Crimes (Theft by Employer) Amendment Act 2025. That law is aimed at employers who knowingly don't pay what's owed - not at anyone trying to do the right thing.
What you'll need as an employer
The complexity of employment law isn't designed to make life difficult for small employers (thought it can feel that way at times). Most of it is well-handled by good systems and reasonable judgement.
Here's the shape of what you'll need:
A payroll system that handles the mechanics
PAYE, KiwiSaver, leave calculations, minimum wage checks, payday filing. You need to be able to show what leave each employee has taken, what they have left, and how any payments were calculated. A payroll system will do this for you. These should be automated, not done by hand. Doing payroll manually in 2026 is how mistakes happen.
Written employment agreements
Every employee must have one. The Employment Agreement Builder on business.govt.nz is a free, government-provided tool that walks you through what's required.
A good day-to-day relationship
This is the part no software handles. How you treat your employees - communicating clearly, acting in good faith, dealing with problems early - is what makes employment work or not. We'll come back to this throughout the course.
You've got this
The employers who do well by their teams aren't necessarily the ones who can quote employment law back to you. They're the ones who pay people correctly and on time, treat people fairly, communicate clearly, and deal with problems early.
Everything else - the mechanics of payroll, the specifics of leave entitlements, the right way to draft an agreement - is learnable. That's what the rest of this course is for.
The next module walks through how to classify the people you engage — and why getting it right at the start saves a lot of grief later.
Further reading
Employment in New Zealand: an overview — employment.govt.nz
The Employer's Hub — PaySauce blog
Employee or Contractor?
A practical guide to classifying workers in New Zealand. The difference between an employee and a contractor, the new statutory gateway test, and the common law test.
Why classification matters
How you classify the person you're engaging shapes nearly everything that follows: what tax you deduct, whether KiwiSaver applies, what leave they're entitled to, and the process you'd need to follow if the arrangement ends.
It's not a paperwork decision. It's a decision about what the working relationship actually is. The label has to match the reality, because if it doesn't, the law looks past the label to what's really going on.
There are two questions to work through, in this order:
Employee or Contractor? This is the fundamental distinction.
If an employee, what type? Permanent, fixed-term, or casual. All three are types of employee with the same underlying employment rights.
This module walks through both questions.
The fundamental distinction
An employee and a contractor have fundamentally different legal relationships with you.
Employee
Works under an employment agreement. Entitled to minimum wage, annual leave, sick leave, bereavement leave, KiwiSaver contributions from you, and the full protections of employment law. You deduct PAYE from their wages and file with IRD every payday. The relationship sits under the Employment Relations Act and is governed by employment law.
Contractor
Works under a contract for services. Independent: they manage their own tax, their own ACC levies, their own business. Not entitled to employment benefits like leave or KiwiSaver contributions. The relationship sits under contract law, which means there's no requirement for the kind of fair process employment law demands if it ends.
The risk of getting it wrong
Because contractors are cheaper and easier to end arrangements with, some businesses have historically tried to label workers as contractors when they were functionally employees. Courts and the Employment Relations Authority have consistently seen through this. Misclassification can mean back-paying annual leave, KiwiSaver contributions, and PAYE going back years, plus penalties and interest. For more, see Employees vs Contractors: A Small Business Owner's Guide.
The gateway test
The rules for confirming a contractor arrangement got clearer in early 2026. A new statutory gateway test gives businesses an upfront, definitive way to confirm that a working arrangement is genuinely a contractor relationship.
If all four criteria are met, the worker is legally a "specified contractor". That classification can't be challenged through the Employment Relations Authority or Employment Court, which is the certainty the old system lacked.
Written agreement: The agreement states the worker is an independent contractor (or is not an employee).
Freedom to work for others: The worker is permitted to work for other businesses, including competitors. They just can't do that work at the same time as the work they're doing for you. Engaging someone for the equivalent of full-time hours doesn't by itself count as a restriction on working for others.
Flexibility in when they work, or the ability to subcontract: Either the worker isn't required to work at set times, set days, or for a minimum period, or they're allowed to subcontract the work to someone else. Businesses can vet subcontractors where it's justified by the nature of the work. The contractor can also decline additional work from you without the arrangement ending.
Reasonable opportunity to seek independent advice: The worker had a reasonable opportunity to seek independent advice before signing.
What to know about the gateway test
Important notes on the gateway test
All four must be met: If any one isn't, the gateway test doesn't apply, and the older common law test takes over.
It's not retrospective: The gateway test only applies to arrangements entered into from 21 February 2026. Anything before that date is assessed under the common law test. If a dispute spans both periods, different conclusions could apply to different timeframes. For example, someone might be found to have been an employee before 21 February 2026 and a specified contractor after.
It's not a loophole: The gateway test confirms genuine contractor arrangements. It doesn't repackage employment relationships as contractor ones. If the day-to-day reality looks like employment, the risk remains regardless of the paperwork.
The common law test (it's still relevant)
When the gateway criteria aren't met, the common law test applies. It looks at the overall reality of the working relationship across four factors.
Intention: What did both parties intend? The written agreement matters, but it's not conclusive if the day-to-day reality looks different.
Control: How much control do you have over how, when, and where the work is done? More control points toward employment.
Integration: Is the person genuinely operating their own business, or are they functionally part of yours?
Economic reality: Who bears the financial risk? Does the worker have their own business, multiple clients, and responsibility for their own profit or loss?
Spotting the difference
In practice, it looks like employment if:
The person works set hours or must be available at specified times
You provide the tools, equipment, or workspace
You pay a regular wage rather than receiving invoices
The person needs your permission for time off
You direct how the work is done, not just the outcome
They have no other clients or business activities
Looks like a genuine contractor arrangement if:
The person invoices you for services
They have their own business registration, IRD number, and possibly GST registration
They provide their own tools and workspace
They work for multiple clients
They set their own hours within agreed project requirements
They bear financial risk and can make a profit or a loss
They can subcontract or delegate the work
Mistakes to avoid
Some common mistakes to avoid:
Labelling someone a contractor when the reality is employment
The agreement doesn't make it so. The nature of the relationship does. A contract that says "contractor" at the top is worth very little if the day-to-day reality is employment.
Control creep
Starting with a genuine contractor arrangement, then gradually adding direction, set hours, or integration into the team without ever revisiting the legal structure. One of the most common ways arrangements drift into misclassification.
Going with what the worker prefers
If someone asks to be set up as a contractor because it suits their tax situation, that's not protection for you. The classification has to match the reality of the work, not the preference of either party.
Treating the gateway test as a workaround
It exists to confirm genuine contractor arrangements, not to repackage employment relationships. Tick-box compliance with the four criteria won't survive scrutiny if the underlying reality is employment.
What type of employee?
A practical guide to the three employee types in New Zealand (permanent, fixed-term, and casual)
You've confirmed they're an employee, but which type?
Three types of employment exist in New Zealand:
Permanent
No fixed end date. Continues until either party ends the relationship. The default for any ongoing role.
Fixed-term
Ends on a specified date or when a specific event occurs. For genuinely time-limited work, like covering parental leave, completing a defined project, or seasonal work with a clear end.
Casual
For genuinely irregular and intermittent work where neither party expects ongoing employment. Casual employees are employees. They have employment agreements, they're entitled to minimum wage, holiday pay, sick leave, and the protections of employment law.
The type you choose must reflect the reality of the work, not the most convenient option.
Permanent employment
No fixed end date. The employment continues until either party ends the relationship, with appropriate notice, or through a fair process in the case of dismissal.
This is the right choice for any role that's genuinely ongoing. Permanent employees can be full-time or part-time, and both have the same entitlements. The hours are different, the rights aren't.
The default position
When in doubt, permanent is the safer choice. Using casual or fixed-term arrangements to avoid permanent employment obligations is one of the most common (and expensive) mistakes small employers make.
Important: zero-hour contracts are illegal
Permanent employment agreements must include guaranteed hours of work. New Zealand prohibits "zero-hour" contracts, where an employee has no guaranteed hours but is required to be available. The only exception is genuine casual employment (see below). For more on contracted hours, availability clauses, and shift cancellations, see our blog: Contracted hours, availability clauses and shift cancellations.
Casual employment
Casual employees are employees. They have written employment agreements, they're paid at least minimum wage, they get KiwiSaver if they've opted in, they're entitled to leave (with some specific rules around how it accrues, covered below), and they have the same legal protections as any other employee.
What's different about casual is the pattern of work: genuinely irregular and intermittent, with no expectation of ongoing employment. You're not obliged to offer work, and the employee isn't obliged to accept it.
Casual is the most misused employment type in New Zealand, and the misuse creates real legal risk.
Genuine casual looks like:
No guaranteed hours or shifts
Shifts offered as needed, accepted or declined freely
No regular pattern develops over time
No expectation of ongoing work from either side
Casual in name only looks like:
Someone who works every Tuesday and Thursday
Someone rostered consistently week after week
Someone who's been part of your regular team for months
Someone you'd describe as "part of the crew" without a permanent agreement
If a pattern develops
If a pattern of regular work develops, the Employment Relations Authority can look past the agreement and find the person is effectively permanent, regardless of what the contract says. This happens regularly. For a deeper look, see our blog: Casual Employment Arrangements.
What casuals are entitled to
Because casuals are employees, they have the same minimum entitlements as any other employee. The specifics of how some of those entitlements work are slightly different given the irregular nature of casual work, but the entitlements themselves are the same.
Annual leave: Can be paid as 8% of gross earnings on top of each pay instead of accruing in the usual way, but only if agreed in the employment agreement and shown as a separate line on every payslip. It cannot be bundled into the hourly rate.
Sick, bereavement, and family violence leave: After six months of continuous employment, meeting the minimum hours requirements.
KiwiSaver: Casual employees are exempt from automatic enrolment, but if they've opted in to KiwiSaver, employer contributions apply from their first pay, at the same rate as for any other employee.
Public holidays: If the employee works on a public holiday, they're entitled to time and a half. Whether they're also entitled to an alternative holiday depends on whether the public holiday falls on what would otherwise have been a working day for them, which requires assessing their actual work pattern. This is the most complex area of casual entitlements. Employment New Zealand publishes factors for deciding whether a day is an 'otherwise working day'.
Minimum wage and breaks: Apply in exactly the same way as for any other employee.
Ending a casual arrangement
Ending a casual arrangement still needs to be fair and lawful.
Accepted shifts can't be cancelled without good reason
Once a casual employee has accepted a shift, it has the same protections as any other employee's shift. It can't be cancelled at the last minute without proper cause or compensation.
Repeatedly stopping work can trigger a grievance
If an established pattern exists and you repeatedly stop offering shifts, the employee can raise a personal grievance.
Get advice first if you're unsure
If the arrangement has gone on for a while and you're not sure how to end it, get advice before acting. Employment New Zealand's casual employees page is a sensible starting point.
Quick reference
Situation:
Ongoing role, no defined end
Covering parental leave for six months
Seasonal harvest work with a clear end date
Ad-hoc fill-in work, no regular pattern, no guaranteed hours
Works every Monday and Friday
Student who helps out unpredictably around study
Type:
Permanent (full or part-time)
Fixed-term, genuine reason documented
Fixed-term, genuine reason documented
Casual
Permanent part-time, not casual
Potentially casual. Assess the actual pattern
Getting it right
The classification decisions you make at the beginning shape every obligation that follows: the taxes you file, the leave that accrues, the process you'd need to follow to end the arrangement.
Getting this right isn't about picking the most convenient label. It's about understanding the work that's actually being done, and matching the legal arrangement to that reality. Do that at the start, and most of what follows takes care of itself.
Further reading
Casual Employment Arrangements - PaySauce
Employee or contractor? - Employment New Zealand
Registering as an employer with Inland Revenue
Step-by-step guide to registering as an employer with Inland Revenue, including what you need, how to find your BIC code, and how PAYE intermediaries work.
Why this matters
Before you pay anyone for the first time, you need to register as an employer with Inland Revenue.
Inland Revenue needs to know you're an employer before your first pay run so they can expect PAYE filings from you, set up your employer tax type, and send you the right correspondence.
The good news is it's quick. Ten minutes online, and you're done.
Before you start
What you'll need
Have these ready before you log in. It's faster to gather them now than to stop halfway through the form.
Your IRD number: Your business IRD number or your personal one, depending on your business structure.
Your business contact and bank account details: Current business contact information, and the bank account you want refunds or correspondence to use.
Your BIC code: Your Business Industry Classification (BIC) code, which is a number that tells IRD what industry you're in. If you don't already know yours, look it up at businessdescription.co.nz.
Your employment start date: The date you're starting to employ staff. If you haven't hired yet, use the date your first employee will start.
How to register
The registration steps
Registration happens through your myIR account at ird.govt.nz.
If you don't have a myIR account yet, you'll need to set one up first - it's straightforward and you'll use it regularly as a business owner anyway.
Once you're logged in:
Go to the 'I want to...' menu
Select 'Register for new tax accounts': Under Registration, applications and enrolment.
Complete the form: Enter your contact details, bank account details, BIC code, and employment start date.
Review and submit: After submitting, you'll see an EMP (Employer) tax type appear in your myIR account. That's how you know you're registered
What happens next
IRD will also send you a letter confirming your registration and outlining your employer responsibilities.
PAYE intermediaries
What is a PAYE intermediary, and why does it matter?
Once you're registered, you have two options for how PAYE gets filed and paid to IRD: manage it yourself, or use a PAYE intermediary.
A PAYE intermediary is an organisation authorised by IRD to handle PAYE filing and payments on your behalf. When you use one, they take on the actual legal responsibility for making sure your PAYE reaches IRD correctly and on time.
How it works in practice: When you close a pay run, the intermediary collects the PAYE amount from your bank account, files the employment information with IRD, and makes the payment to IRD by the due date. The funds are held in a dedicated trust account and can't be used for anything else.
What it means for you: One less thing to think about. You run your payroll, approve the pay run, and the PAYE side takes care of itself - including the legal liability for filing on time and paying the right amount.
Using payroll software as an intermediary: If you're using payroll software that operates as a PAYE intermediary, you'll need to link it to your IRD registration to activate this. It's usually handled as part of your onboarding setup, and your provider will guide you through it once you've confirmed your employer registration with IRD.
For more on the benefits, see our blog: Why using a PAYE intermediary is one of the best things you can do for your business.
Already registered?
If you're not sure whether you've already registered as an employer - perhaps because you hired contractors before, or took on someone briefly years ago - you can check in myIR.
Log in and look for the EMP (Employer) tax type in your account. If it's there, you're registered.
We hear from lots of new employers who think they must already be registered as an employer because they have an IRD number. It isn’t the same thing, and it is a separate process.
Further reading
Register as an employer with IRD — PaySauce Help Centre
PAYE intermediary services — PaySauce Help Centre
Find your BIC code — businessdescription.co.nz
Employer registration — Inland Revenue
Paying contractors: What you need to know
What every New Zealand employer needs to know about paying contractors — schedular payments, withholding tax rates, the IR330C form, and your filing obligations.
Why this matters
When contractor payments come with tax obligations
You've confirmed your arrangement is a genuine contractor relationship - good. But that's not quite the end of your obligations.
Depending on what the contractor does, you may still need to deduct tax before paying them. It catches a lot of businesses out, so it's worth understanding before your first contractor invoice arrives.
Schedular payments
Schedular payments and withholding tax
Some contractor payments require you to deduct tax before paying the contractor. These are called schedular payments, and they apply when the work falls into a specific list of activities defined by IRD.
When they apply, the process looks similar to PAYE for employees: you deduct withholding tax from the payment, then file and pay that tax to IRD on the same schedule as your other payroll obligations.
When it applies
The work must fall into a specific list of activities defined by IRD (see the table later in this module). If it does, withholding tax must be deducted before the contractor is paid.
When it doesn't apply (exemptions)
Withholding tax doesn't apply when:
The contractor has an exemption certificate or a 0% special tax rate certificate from IRD
Payments are being made to the contractor's company (and the work isn't under specific excluded labour hire arrangements)
The contractor's work isn't on the IRD activity list at all
If you're unsure whether withholding tax applies, check with IRD or your accountant before paying.
What rate to deduct
The rate depends on what the contractor gives you.
They give you an IR330C form
Use the rate they've declared on it. The minimum rate a NZ resident contractor can declare is 10% (15% for non-residents).
They give you a tailored tax rate certificate from IRD
Use the rate shown on the certificate. These are valid for a specific period only — the contractor needs to reapply when it expires.
They give you nothing
You must deduct at the no-notification rate of 45%. That's a deliberately high rate, which is exactly why most contractors make sure to give you the form. Download the form here: IR330C Tax rate notification for contractors.
What you don't deduct
What you don't deduct from contractor payments
When paying a contractor under a schedular payment arrangement, you only deduct income tax.
You do not deduct:
KiwiSaver contributions
Student loan repayments
ACC earner levies (the contractor handles these themselves)
A small but important detail
Calculate withholding tax on the whole dollar amount only, not including cents. It's how IRD specifies the calculation, and it's how payroll systems do it. Small detail, but it matters for filing accuracy.
A note on GST
If the contractor's invoice includes GST, don't deduct withholding tax from the GST portion. Withholding tax is only calculated on the labour portion of the payment. Good payroll systems handle this automatically.
Activity table
Schedular payment activities and prescribed rates
The table below shows some of the activities that attract withholding tax, along with the prescribed tax rate for each. The prescribed rate is the starting point for that activity - contractors can choose a different rate on their IR330C.
This isn't the full list. The complete table is on the IR330C form and in Schedule 4 of the Income Tax Act 2007.
Agricultural contracts for maintenance, development, or other work on farming or agricultural land (where a CAE code doesn't apply)
15%
Agricultural, horticultural, or viticultural labour contracts in connection with fruit crops, orchards, vegetables, or vineyards
15%
Cleaning of office, business, institution, or other premises (except residential); cleaning or laundering of plant, vehicles, or furniture
20%
Commissions to insurance agents, sub-agents, and salespeople
20%
Company directors' fees
33%
Contracts wholly or substantially for labour only in the building industry
20%
Activity table continued
Fishing boat work for profit-share (supply of labour only)
20%
Forestry or bush work of all kinds, or flax planting or cutting
15%
Gardening, grass or hedge cutting, or weed or vermin destruction (for an office, business, or institution)
20%
Honoraria
33%
Labour hire arrangements (payments by a labour hire business for work performed for its client)
20%
Caretaking or acting as a guard
15%
Mail contracting, milk delivery, refuse removal, street or road cleaning, transport of school children
15%
Modelling
20%
Shearing or droving where a CAE code doesn't apply
15%
If you're unsure about whether or not your contractor’s work falls into any of these categories, check with IRD or your accountant.
Filing and paying
Withholding tax is filed and paid to IRD on the same schedule as your PAYE. If you're using payroll software, contractor withholding tax is managed in the same place as employee payroll.
Same schedule as PAYE
File and pay withheld contractor tax on the same schedule as your regular payroll obligations. No separate process is needed if you're using payroll software.
Important change from 2026
IRD no longer accepts company IRD numbers for contractors through payday filing. Contractors must use their individual IRD numbers, so make sure you have the right one before your first filing.
Get the IR330C first
Always get the IR330C from your contractor before you pay them. Without it, you're required to deduct at the 45% no-notification rate — and refunding that later is harder than getting the form upfront.
The bottom line
Once it's set up correctly, the process is straightforward. The key is knowing which payments attract withholding tax, getting the IR330C from your contractor before you pay them, and using a payroll system that handles the filing automatically.
Further reading
IR330C Tax rate notification for contractors — Inland Revenue
Schedule 4, Income Tax Act 2007 — NZ Legislation
Record Keeping
What records to keep, how long to keep them, and how good systems take most of it off your plate.
Why this matters
Record keeping isn't the most exciting part of being an employer. It is one of the most important.
Good records protect your employees by making sure they're paid correctly. They protect you if a dispute ever arises. And they're a legal requirement.
The good news is most of it is straightforward once you have the right tools, systems and processes in place.
What you must keep
What you're legally required to keep
Under the Employment Relations Act, you must keep written records for every employee covering:
Employment agreements: All employment agreements and any signed variations.
Hours worked: Hours worked each day and each week.
Wages paid: Wages paid, including the rate and how it was calculated.
Leave records: Leave taken, leave balances, and any leave paid out — including when it was 'cashed up' instead of taken.
Deductions: Deductions made from pay, the permission to make them, and the reason.
Personal information you must keep: name, postal address, age, if under 20
Personal information records you should keep but are not required to: copies of employees’ personal contact details, emergency contact details, etc.
All employee types
This applies to all employees regardless of type - permanent, fixed-term, and casual. See Keeping employment records — Employment New Zealand for the full picture.
How long to keep records
The timeframe depends on the type of record.
Employment records: six years
Employment agreements, hours, leave, and wages records must be kept for six years after employment ends.
Tax records: seven years
Payroll records, PAYE filings, and anything related to your tax obligations must be kept for seven years.
A note on Privacy Act obligations
Under the Privacy Act 2020, you can only hold personal information for as long as you have a legitimate need for it. Once your legal obligation to keep a record has lapsed, you should no longer hold it. That means having a process for disposing of former employee records once the retention period is up - securely deleting digital files or shredding physical documents. Holding personal information indefinitely isn't just unnecessary; it creates privacy risk and puts you in breach of your Privacy Act obligations.
Why good records matter
What good record keeping actually does
Most employment disputes come down to a few questions: was this person paid correctly, did they take leave they weren't entitled to, was the process fair, what was agreed? Good records answer all of those questions quickly.
Signed employment agreements
Your starting point for almost any dispute. They establish what was agreed - pay rates, hours, any special arrangements. An unsigned agreement is better than nothing; a signed one is what you want. The Employment Agreement Builder on business.govt.nz is the free, government-backed tool for creating compliant agreements.
Hours records
Protect you against underpayment claims. If an employee says they worked 50 hours in a week and you paid them for 40, your timesheet records are what you rely on to show what actually happened.
Leave records
Protect you against claims that leave wasn't provided, calculated, or paid out correctly. Keep leave requests, approvals, balances, the payment rate, and how it was calculated. If an employee asks to cash out annual leave, the request and your agreement must both be in writing.
Pay records
Show what was deducted, what was contributed, and what the employee received. A clear audit trail for every pay run.
Records of conversations and decisions
Especially around performance management and any changes to employment terms. A brief, dated note of what was discussed and agreed can make a significant difference if something is disputed later.
What payroll software handles for you
A payroll system automatically maintains records of every pay run. This takes a significant chunk of the record-keeping obligation off your plate - payroll-related records are generated and stored as you run your pays.
Recorded in a payroll system:
Gross wages
Tax calculations
Deductions, including totals for debt repayment if relevant
KiwiSaver contributions, status
Payday filing submissions
Payslips
Leave requests, payments, and balances
Personal contact details
Emergency contact details
Employee access
Your employees can typically access their own payslip history through the system - useful when they need it for loan approvals, rental applications, or their own records.
Other records to manage
Records that sit outside payroll
Some records sit outside your payroll system and need their own home.
Employment agreements and signed variations
Store them somewhere secure and accessible. A locked filing cabinet, a secure shared drive, or a dedicated HR folder all work. The key is being able to find them when you need them.
Performance and conduct records
Notes from performance conversations, written warnings, and any related correspondence.
Health and safety records
Induction records, incident reports, and any health and safety documentation relevant to your employees' roles. See WorkSafe's guidance for small businesses for what's required.
A simple starting point
A simple folder per employee - physical or digital - that holds their agreement, any signed variations, and notes from significant conversations is all you need to get started. Keep it somewhere you can find it. Add to it as things happen, rather than trying to reconstruct it later.
Employing migrants
If you employ anyone on a visa, you have record-keeping obligations in addition to the standard ones.
For all employers of migrants:
Check the employee's right to work before they start
Keep records of what you checked, how you checked it (VisaView, for example), and when
Record any visa conditions - limits on hours, the type of work permitted - and how the role complies
Re-check work rights periodically on temporary visas, especially as expiry dates approach
If you're an accredited employer
Immigration New Zealand can audit accredited employers, so you need to be able to demonstrate compliance with your accreditation obligations.
Keep records showing the employee is being paid in accordance with the job check and employment agreement
Keep evidence the employee is doing the work the visa was granted for
Record any changes to the role, hours, or pay that may be relevant to visa conditions
Document any settlement services or support you agreed to provide as part of accreditation
Keep immigration-related records separately and make sure they're easy to locate and produce on request
Accreditation can be revoked if Immigration New Zealand finds you haven't met your obligations, which would prevent you from hiring migrants in future. Immigration New Zealand's employer guidance is the starting point, and an immigration adviser can help with more complex situations.
The takeaway
Good record keeping isn't about creating a paper trail for its own sake. It's about being able to answer questions clearly when they come up: what was agreed, what was paid, what was taken, what was decided.
A payroll system handles most of it automatically. The rest is a small amount of admin that takes minutes per employee per year - far less than the time it takes to reconstruct records under pressure when something goes wrong.
Further reading
Keeping employment records — Employment New Zealand
Privacy Act 2020 — Office of the Privacy Commissioner
Employing migrants — Immigration New Zealand
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