How to run payroll in New Zealand

In New Zealand, most employers pay employees monthly, typically on the 20th of each month. Here's the complete payroll cycle.

Payment frequency and dates

New Zealand doesn't mandate specific pay frequencies, but monthly payments on the 20th are most common. Many companies also use fortnightly cycles, particularly in retail and hospitality.

You must pay employees at least monthly. Weekly or fortnightly payments are fine, but anything longer than monthly violates employment law.

Payment timing requirements:

• Wages must be paid within one week of the agreed pay date
• Final pay must be processed within seven days of employment ending
• Holiday pay can't be held beyond normal pay cycles

Payment Type	Standard Timing	Legal Requirement
Regular wages	20th of month	Within 7 days of agreed date
Final pay	Within 7 days	Within 7 days of termination
Holiday pay	With regular wages	Can't be withheld

Holiday and vacation pay

Annual leave accrues at 4 weeks (160 hours) per year and must be paid at the employee's ordinary weekly pay or average weekly earnings - whichever is higher.

You can pay annual leave in advance or as it's taken. Many employers pay it with regular wages when leave is taken, but you can also pay it out quarterly or at year-end.

Sick leave is paid at ordinary weekly pay for up to 10 days per year. Part-time employees get pro-rated entitlements.

Public holiday pay gets tricky - employees working on public holidays earn time-and-a-half plus a day in lieu if it's an otherwise working day.

Payment methods

Bank transfer is mandatory for all employees earning over NZ$120 per week. You can't pay wages in cash above this threshold.

Employees must provide New Zealand bank account details. International accounts aren't acceptable for regular wage payments, though you can use them for final payments to departing overseas workers.

Payment currency must be NZD unless the employee specifically agrees to foreign currency payment in writing. Most employment agreements specify NZD payments.

Payslip requirements

Every payslip must include:

• Employee's name and pay period
• Gross wages and how they're calculated
• PAYE tax deducted
• All other deductions with descriptions
• Net pay amount
• Year-to-date totals for gross pay and PAYE

Electronic payslips are acceptable if employees can easily access and print them. You don't need written consent, but employees can request paper copies.

Payslips must be in English or include English translations of all key information. Keep copies for seven years - IRD can request them during audits.

Think you just withhold income tax? New Zealand adds ACC levies and KiwiSaver contributions that catch many employers off guard.

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Income tax brackets

New Zealand's income tax rates for 2026 remain progressive, with no tax-free threshold. Here's what you'll withhold from employee pay:

Annual Income (NZ$)	Tax Rate
NZ$0 - NZ$14,000	10.5%
NZ$14,001 - NZ$48,000	17.5%
NZ$48,001 - NZ$70,000	30%
NZ$70,001 - NZ$180,000	33%
Over NZ$180,000	39%

The top rate kicks in at NZ$180,000 annually (NZ$15,000 monthly). Most employees fall into the 17.5% or 30% brackets.

You'll also withhold ACC earner levies at 1.21% of gross pay (capped at NZ$142,283 annually). This isn't optional - it applies to all employees.

Withholding requirements

You're responsible for withholding PAYE from every pay period. No exceptions, even for part-time or casual workers earning under NZ$200 weekly.

Monthly filing deadlines:

• PAYE returns due by the 20th of the following month
• Payments due by the same date
• Late filing penalty: NZ$250 minimum

Annual reconciliation:

• IR3 employer reconciliation due by March 31, 2027
• Employee IR3 forms distributed by March 31, 2027

You'll file through myIR (Inland Revenue's online portal). Paper filing isn't accepted for PAYE returns.

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Tax registration

Before your first payroll, you need an IRD number as an employer. This typically takes 10-15 business days.

Required documentation:

• Company incorporation certificate
• Proof of business address
• Expected payroll start date
• Estimated annual wages

Register through myIR or call Inland Revenue at 0800 377 774. You can't run payroll without this registration - Inland Revenue will reject any payments.

Special tax considerations

Non-resident employees pay the same income tax rates, but watch the 183-day rule. Employees here longer than 183 days become tax residents with different obligations.

Tax treaty benefits apply for residents of countries with double taxation agreements. Common treaties include Australia, UK, USA, and most EU countries. Employees may need to file treaty claims separately.

No regional taxes exist - it's just national income tax and ACC levies. This makes New Zealand simpler than many countries.

Common tax mistakes

Wrong tax codes trip up 60% of new employers. Use 'M' for most employees, but contractors and second jobs need different codes. Getting this wrong means incorrect withholding all year.

Missing ACC levies costs you 10% penalty on the unpaid amount. Many employers forget this isn't optional - every employee pays ACC regardless of their work type.

Late PAYE payments compound quickly. The 1% monthly penalty plus interest charges can double your tax bill within a year.

Employer contributions in New Zealand add approximately 3% to every salary. Budget for it.

New Zealand keeps employer contributions refreshingly simple compared to other countries. You'll mainly deal with KiwiSaver contributions and ACC levies. There's no separate social security or unemployment insurance to worry about.

Contribution breakdown

Contribution Type	Employer Rate	Employee Rate	Cap (if any)
KiwiSaver	3%	3%	-
ACC Work Levy	0.67%	-	NZ$139,384
ACC Earner Levy	-	1.21%	NZ$139,384

Total employer cost example

For a NZ$60,000 salary in 2026:

• Base salary: NZ$60,000
• KiwiSaver contribution: NZ$1,800
• ACC Work Levy: NZ$402
• Total employer cost: NZ$62,202
• Cost multiplier: 1.037 (employer pays 3.7% more than base salary)

Contribution caps and ceilings

ACC levies cap at NZ$139,384 of annual earnings in 2026. High earners won't pay ACC on income above this threshold. This means your total contribution percentage actually decreases for senior roles.

KiwiSaver has no annual cap. You'll contribute 3% regardless of salary level.

Registration requirements

Register for IRD employer obligations before your first pay run. You'll need your IRD number and employee details ready.

ACC registration happens automatically when you register as an employer with IRD. No separate process required.

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Payment deadlines

Contributions are due by the 20th of the following month along with PAYE. Miss this deadline and you'll face 1% penalty for the first month, then 4% for each additional month.

File and pay through myIR for the smoothest process. Late payments compound quickly, so set calendar reminders well before the 20th.

New Zealand has 12 public holidays in 2026. Work on these days? Pay double.

The country's leave entitlements are generous but straightforward to calculate. Most leave accrues continuously, so you'll need to track balances monthly rather than granting lump sums annually.

Annual leave

Every employee gets a minimum of 20 days annual leave after 12 months of employment. That's four weeks of paid time off to calculate and pay out.

How vacation pay works

Annual leave accrues at 8% of gross earnings. This includes regular wages, overtime, commissions, and most allowances. Calculate it on each pay period - don't wait until year-end.

Pay annual leave at the higher of:

• Normal weekly pay (what they'd normally earn that week)
• Average weekly earnings over the last 52 weeks

Carryover and payouts

Employees can carry over unused leave, but you can require them to take it after reasonable notice. When someone leaves, you must pay out all accrued annual leave at the higher rate calculation above.

The 8% accrual makes this simple - if someone earned NZ$50,000, they've accrued NZ$4,000 in annual leave pay.

Sick leave

Employees get 10 days sick leave per year after six months of employment. This resets annually on their anniversary date, not the calendar year.

Payment responsibility

You pay sick leave at normal weekly pay or average weekly earnings (whichever is higher) - the same calculation as annual leave. There's no government reimbursement for standard sick leave.

Employees can use sick leave for their own illness, injury, or to care for dependents. After three consecutive days, you can request a medical certificate.

Unused sick leave

Sick leave doesn't carry over between years, and you don't pay it out when employment ends. Each year, employees start fresh with their 10-day entitlement.

Parental leave

Maternity and primary carer leave

The primary carer (usually the mother) gets 26 weeks paid parental leave at NZ$712.17 per week for 2026. This is paid directly by the government through Inland Revenue, not through your payroll.

You don't pay the employee during parental leave, but you do need to:

• Continue KiwiSaver contributions on the government payments
• Maintain other benefits if your employment agreement requires it
• Process the leave through your payroll system for record-keeping

Partner leave

Partners get two weeks paid leave at the same rate, also paid by the government. They can take this when the baby is born or later within the first year.

Unpaid leave

Beyond the paid entitlement, eligible employees can take up to 52 weeks total parental leave (including the paid portion). The additional unpaid leave doesn't affect payroll calculations.

Public holidays 2026

Date	Holiday	Notes
January 1	New Year's Day	Wednesday
January 2	Day after New Year's Day	Thursday
February 6	Waitangi Day	Friday
April 18	Good Friday	-
April 21	Easter Monday	-
April 25	ANZAC Day	Saturday - observed Monday April 27*
June 1	Queen's Birthday	First Monday in June
October 26	Labour Day	Fourth Monday in October
December 25	Christmas Day	Friday
December 26	Boxing Day	Saturday - observed Monday December 28*

*When a public holiday falls on a weekend, it's observed on the following Monday.

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Regional holidays

Each region has one additional anniversary day holiday. Auckland Anniversary Day (January 26, 2026) is the largest, affecting about one-third of the workforce.

You'll need to track which region each employee works in to apply the correct anniversary day and pay rates.

Mandatory benefits affecting payroll

KiwiSaver

KiwiSaver is New Zealand's workplace retirement savings scheme. Once an employee opts in (or is auto-enrolled), you must:

• Deduct 3%, 4%, 6%, 8%, or 10% from their gross pay (employee chooses rate)
• Contribute 3% of their gross earnings as the employer
• Pay both amounts to Inland Revenue monthly with PAYE

The minimum employer contribution is 3% of gross earnings between NZ$1,144.62 and NZ$63,604 annually for 2026.

ACC levies

You pay Accident Compensation Corporation (ACC) levies on all employee earnings. For 2026, the work levy is 0.67% of liable earnings up to NZ$142,283 per employee.

This covers workplace injury insurance for all employees. You pay it monthly with PAYE returns - employees don't contribute to the work levy.

Employment contracts in New Zealand must include specific mandatory clauses or they're legally invalid. Missing elements like notice periods, leave entitlements, or dispute resolution procedures can trigger penalties and leave you vulnerable during employment disputes.

Monthly filing requirements

You'll file PAYE returns through myIR by the 20th of each month for the previous month's payroll. This includes all income tax, ACC levies, and student loan deductions you've withheld from employees.

Submit your returns electronically through Inland Revenue's myIR portal. Paper filing isn't accepted for employers with more than five employees. You'll also need to pay any amounts owing by the same deadline.

Employer monthly deductions (EMS) must be filed if you provide fringe benefits, ESCT payments, or have other employer obligations. The deadline remains the 20th of the following month.

Annual reporting

IR348 Employer Annual Returns are due by 31 July 2026 for the tax year ending 31 March 2026. This reconciles all PAYE, ESCT, and fringe benefit tax you've paid during the year.

You must provide IR330 annual tax certificates to all employees by 31 July 2026. These show total earnings, tax deducted, and any other deductions for the tax year.

Inland Revenue audits approximately 15% of employers annually, focusing on PAYE compliance, minimum wage adherence, and accurate record-keeping.

Employee documentation

Employment agreements must be in writing and include:

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Payslips must show gross pay, all deductions (with descriptions), net pay, and pay period dates. You can provide these electronically if employees can easily access and print them.

Keep all employment records for seven years minimum. This includes timesheets, leave records, wage and salary records, and employment agreements.

Contracts must be in English, but you should provide translations in the employee's first language if they request it during negotiations.

Penalties and consequences

Violation	Penalty
Late PAYE filing (first offense)	NZ$250
Late PAYE filing (repeat offense)	NZ$500-NZ$2,000
Incorrect PAYE withholding	10% of underpayment + interest
Missing payslip elements	NZ$1,000 per occurrence
Invalid employment contract	NZ$10,000 maximum fine
Minimum wage violations	NZ$20,000 maximum fine

Interest charges apply to unpaid PAYE at 7.39% annually (2026 rate). Penalties don't stop accumulating until you file and pay in full.

Regulatory oversight

Inland Revenue handles all tax compliance through their myIR portal at ird.govt.nz. Contact them on 0800 377 774 for PAYE queries.

Ministry of Business, Innovation & Employment (MBIE) oversees employment law compliance. Their employment services team investigates minimum wage and contract violations.

WorkSafe New Zealand monitors ACC levy compliance and workplace safety obligations that affect payroll.

Register for myIR immediately when you start employing staff. You'll need your IRD number and bank account details for direct debit setup.

2026 brought several key payroll changes to New Zealand. Here's what you need to update.

Minimum wage increase - Effective 1 April 2026

• Adult minimum wage increased from NZ$23.15 to NZ$24.20 per hour (4.5% increase)
• Starting-out and training minimum wages rose from NZ$18.52 to NZ$19.36 per hour
• Update your payroll systems before the first April pay run

KiwiSaver contribution changes - Effective 1 July 2026

• Maximum annual contribution limit increased from NZ$27,500 to NZ$30,000
• Government contribution cap remains at NZ$521.43 annually
• Employer contributions stay at minimum 3% of gross salary

PAYE tax bracket adjustment - Effective 1 April 2026

• Top tax rate threshold increased from NZ$180,000 to NZ$190,000
• 39% rate now applies to income over NZ$190,000 (previously NZ$180,000)
• Update withholding calculations for affected employees immediately

Working for Families changes - Effective 1 April 2026

• Family Tax Credit rates increased by 3.2% across all brackets
• Best Start payment extended to children up to age 4 (previously age 3)
• Affects employees claiming tax credits through payroll

Holidays Act compliance update - Effective 1 January 2026

• New calculation method for irregular hours employees' holiday pay
• Must use 13-week average for all casual and part-time staff
• Payroll systems need updated holiday pay calculation logic

All changes require immediate payroll system updates. The April changes are particularly critical - test your systems in March to avoid compliance issues.