Employers
Hiring your first employee
What you need to know if you are becoming an employer for the first time.
Hiring your first employee is a big milestone for your business — good employees can help your business grow and diversify. But as a new employer, it’s important to understand that both you and your employees have rights and responsibilities under the law. Learning about these now will help you get things right from the start. And as things get busier, you’ll have good foundations in place to make sure:
- you’re meeting your obligations, and
- relationships in your workplace are positive and productive.
Here’s an introduction to the main things you need to know, and where to get more information when the time is right. To learn more about all your – and your employees’ – rights and responsibilities, visit:
Employer rights and responsibilities
Employee rights and responsibilities
Employee or contractor?
Before you hire someone, decide whether you need an employee or a contractor (a contractor is a self-employed person who invoices you for the work they do).
This is important because it affects your responsibilities about things like tax, leave and ACC levies. If you make the wrong decision, you could face extra costs and penalties.
There are 4 tests to help decide if someone is an employee or a contractor. These tests look at the actual work situation, not just what you think the arrangement should be. Find out more:
Permanent, fixed-term or casual employee
Once you know you’re going to employ someone, decide if they will be:
- permanent — full-time or part-time work with no end date
- fixed-term — full-time or part-time work with an end date
- casual — employees who work when required, can turn down work, and do not expect ongoing employment.
It’s important to get this right so that you hire the type of employee you need and everyone is clear about what the working arrangements will be. It also affects your responsibilities, for example, how you calculate leave.
Take the ‘Staff types’ quiz:
Hiring the right staff types — business.govt.nz(external link)
Give your employee an employment agreement (a contract)
You can use our Employment Agreement Builder to create a templated employment agreement.
Employment Agreement Builder - business.govt.nz (external link)
You must give every employee a written employment agreement. You should both sign the agreement before your employee starts work.
Employment agreements protect you and your employees by making things like hours of work and pay clear. They contain all the details about the employee’s rights and obligations. If there is a disagreement or something goes wrong at work, you can check the agreement to see what it says.
Keep the right records
The law says that employers must keep written records for each employee that cover their wages and time and holidays and leave. You must keep these records for 6 years. It’s a good idea to get systems set up early so you can keep on top of record-keeping as your business grows.
Good record-keeping protects you if there is a disagreement, and it will help you make sure your employee’s pay and leave are correct.
Find more information, including templates you can use:
Pay your employees right – and at least the minimum wage
It’s important to pay your employees appropriately for the work they’re doing. You must pay at least the minimum wage for each hour they work.
There are 3 different minimum wages: the adult minimum wage, the starting-out minimum wage, and the training minimum wage. The government sets and reviews the minimum wages every year. Find out more:
You can find information about pay rates and ranges for different jobs and industries on the careers.govt.nz website:
Job profiles – Careers NZ(external link)
Give employees their leave
Employees get certain amounts of holidays and leave each year. As an employer, you must give them their holiday and leave entitlements and pay them correctly for any leave they take. Calculating holidays and leave can be complicated, so be careful and take time to understand the rules so you can meet your obligations. Find out more:
Build positive working relationships
Good working relationships with your employees will help your business be successful because it’s more likely your employees will enjoy working for you and perform well. Acting in good faith and communicating regularly are part of this.
Acting in good faith means treating each other in a way that is honest, responsive and constructive. It’s required by law.
Talk to your employees regularly about how they are getting on. Open lines of communication help you both know what’s expected and resolve any problems early. Ignoring things like bullying or poor performance could harm your business. Employees might leave, or you could face expensive legal processes, so it’s important to raise and investigate any concerns quickly and properly to prevent longer-term problems.
Growing performance, training and development
We provide free early resolution and mediation services you can access if you — or your employees — need help to resolve a problem at work.
Put workplace policies in place
Policies help your employees know what’s expected of them at work and set the rules for your workplace. Even though you might be busy getting started as a new employer, try to get policies in place sooner rather than later. It’s best to get things in writing now rather than deal with issues that can arise if expectations are not clear.
What you need will depend on your business. You can get started using the information here:
Creating workplace policies and procedures
Having workplace policies in place also helps you comply with the law. There are several bits of legislation about employment that — over time — you’ll need to get to know, for example, the Employment Relations Act and the Holidays Act.
WorkSafe have guidance about how to write health and safety documents.
Writing health and safety documents for your workplace - Worksafe(external link)
Other information for new employers
You must register as an employer with Inland Revenue as soon as you know you are going to employ someone.
Register as an employer – Inland Revenue(external link)
Information for employers about making regular KiwiSaver deductions and contributions.
KiwiSaver for employers – Inland Revenue(external link)
Make sure anyone you employ has the right to work in New Zealand.
VisaView – Immigration New Zealand(external link)
Employers must provide a safe workplace under the Health and Safety at Work Act.
Primary duty of care – WorkSafe(external link)
Information for employers about paying ACC levies.
For business – ACC (external link)
For information and resources to help you start and grow a business, visit:
business.govt.nz(external link)