Hiring employees checklist: 11 steps for NZ small businesses

Published Thursday 25 September 2025

Table of contents

• Hire the right person for the job
• Understanding employee rights and your obligations
• Managing leave, holidays and breaks
• Your employees are your most valuable asset – choose wisely
• FAQs on employment law in New Zealand

Key takeaways

• Create comprehensive job descriptions with specific role requirements, compensation ranges, and key responsibilities, then maintain detailed records of all candidates throughout the hiring process to ensure fair and legally defensible decisions.
• Establish proper tax and payroll systems by verifying each employee's IRD number, setting up correct tax codes, and implementing payroll software that automatically calculates PAYE, ACC, and KiwiSaver deductions while meeting electronic filing requirements.
• Maintain accurate employment records for at least seven years after an employee leaves, including payroll records, employment agreements, leave balances, and tax forms to ensure IRD compliance and protect against disputes.
• Understand and provide all minimum employee entitlements including current minimum wage rates, annual leave (4 weeks after 12 months), sick leave (10 days after 6 months), and mandatory ACC coverage while tracking critical compliance deadlines such as employment agreement signing within 30 days.

Why it’s important to hire the right person

Hiring the right employee is one of the most important decisions a business owner in New Zealand can make. The right person brings skills, energy, and commitment that help your business grow, while the wrong hire can create costly setbacks, legal risks, and damage to team morale.

Getting hiring right from the start saves time, reduces turnover, and ensures you stay compliant with New Zealand employment law. It also sets the tone for how you manage staff, from onboarding to performance management. With clear processes in place, you’ll not only attract quality candidates but also build trust and long-term loyalty with your employees.

Hire the right person for the job

Finding and keeping the right employee starts with clear processes that protect your business, keep you compliant, and set your new hire up for success.

1. Create a clear job description

Clear job descriptions protect you legally and attract the right candidates. They must include:

• Role requirements: Specific skills, experience, and qualifications needed
• Compensation range: Salary or wage brackets to set expectations
• Key responsibilities: Daily tasks and performance expectations

Keep detailed records of each candidate throughout the process. Document their strengths, weaknesses, and interview responses. You’ll need these for fair, defensible hiring decisions.

You can get started today with our free job description template.

2. Determine who is doing the recruiting

Recruitment planning involves mapping out who handles each hiring task to ensure legal compliance and efficiency. The full process typically takes 4–8 weeks and includes:

• Job advertising: Writing descriptions, posting roles (2–3 hours)
• Candidate communication: Responding to applications, scheduling interviews (5–10 hours)
• Screening and interviews: Assessing candidates fairly and consistently (8–15 hours)v
• Decision communication: Notifying successful and unsuccessful candidates (1–2 hours)

Consider asking your team or a recruiter to help if you do not have time to check candidates carefully.

3. Ensure each employee has an Inland Revenue number

Inland Revenue Department (IRD) number verification is legally required for all New Zealand employees before their first pay. Without proper IRD numbers, you cannot process payroll legally and may face penalties.

Each employee must provide:

• Their IRD number: Unique 8-9 digit tax identifier
• Tax code declaration: Completed on official IR330 form
• Proof of eligibility: To work in New Zealand

You also need your own employer IRD number. Apply online through the IRD website if you don't have one.

4. Maintain accurate tax records

Tax record keeping requires maintaining specific employment documents, which the IRD states you must keep for at least 7 years after an employee leaves. Non-compliance can result in IRD penalties and audit difficulties.

Required records include:

• Payroll records: Wages, deductions, PAYE, KiwiSaver contributions
• Employment agreements: Signed contracts and any variations
• Leave records: Annual leave, sick leave, public holidays taken
• Tax forms: IR330 declarations and any IRD correspondence

Store records securely with backup systems. Cloud-based accounting software can help you meet most compliance requirements.

5. Understand your obligations

Employer obligations include ensuring new employees complete all legal requirements correctly. Even experienced workers may not understand current New Zealand employment law requirements.

Your legal duties include helping employees with:

• Tax setup: Ensuring correct tax codes and IRD registration
• KiwiSaver enrollment: Checking eligibility and processing applications is a key duty, as it's an automatic enrolment for eligible new employees aged 18 to 65. Inland Revenue has a guide for employers to help you out with this
• Employment agreements: Explaining terms, conditions, and rights
• Record accuracy: Verifying personal details and payment methods
• Talk to your accountant, tax agent or Inland Revenue to ensure you understand your obligations and get everything right

6. Remember key dates and tasks

Employment compliance dates include specific deadlines that, if missed, can result in penalties or legal issues. New employees initially increase your administrative workload until systems are established.

Critical deadlines to track:

• First pay date: PAYE and KiwiSaver deductions must be correct
• Employment agreement signing: Must be signed within 30 days of starting
• KiwiSaver enrollment: Must be completed within prescribed timeframes; for example, you must give the employee their KiwiSaver pack within 7 days of their start date.
• Holiday pay calculations: Annual leave entitlements begin immediately

Use Inland Revenue Department’s (IRD) tax due date calculator and set calendar reminders for all compliance deadlines.

7. Understand the rights of your employees

Employee rights are minimum legal entitlements that every New Zealand worker receives, regardless of what's written in their contract. Employment agreements cannot reduce these rights — only improve them.

Minimum rights you must provide:

• Minimum wage: Currently $22.70 per hour (April 2024)
• Maximum hours: 40 hours per week unless agreed otherwise
• Annual leave: 4 weeks paid leave after 12 months employment
• Sick leave: 10 days per year after 6 months employment
• Public holidays: 12 statutory holidays with time-and-a-half pay
• Bereavement leave: 3 days for immediate family members
• Safe work environment: Right to refuse dangerous tasks
• Fair treatment: Protection from discrimination and harassment

Find more information and free resources on the Employment New Zealand website.

8. Understand workers' protection and compensation

ACC coverage is mandatory workplace injury insurance that all New Zealand employers must provide. You cannot opt out, and failure to pay levies can result in penalties.

Your ACC obligations:

• Employee contributions: Deducted automatically from employee wages through PAYE
• Employer levies: Annual payment based on your industry risk and payroll size
• Injury reporting: Must report workplace accidents within 48 hours
• Coverage verification: Ensure all workers are covered before they start

Use ACC's levy calculator to estimate your annual costs. Rates vary significantly by industry type.

9. Set up a payroll system

Payroll systems calculate wages, deductions, and tax obligations while ensuring legal compliance. With electronic payday filing, for example, you must submit employment information within 2 working days of each payday, so incorrect processing can result in IRD penalties and employee disputes.

Your setup options:

• DIY payroll: Requires understanding of tax codes, leave calculations, and IRD reporting
• Accountant/bookkeeper: Professional setup with ongoing compliance support
• Payroll service: Specialized providers handle all calculations and filings

Essential compliance features:

• Automatic tax calculations: PAYE, ACC, KiwiSaver deductions
• IRD integration: Electronic filing of employment information, which is a requirement for many, as businesses with annual PAYE and ESCT of $50,000 or more must file electronically after their first six months.
• Leave tracking: Annual leave, sick leave, public holiday calculations
• Audit trails: Detailed records for IRD requirements

Look for accounting or payroll software, such as Xero Payroll, that meets these requirements.

10. Keep a file for each employee

Employee record keeping is a legal requirement under New Zealand employment law. Inadequate records can result in compliance issues, disputes, and inability to defend employment decisions.

Legally required information:

• Personal details: Full name, address, IRD number, visa status
• Employment terms: Signed contract, job description, pay rates
• Tax information: IR330 forms, tax codes, PAYE records
• Leave records: Entitlements, balances, leave taken
• Payment details: Bank account, preferred payment method

Retention period: Keep all records for seven years after employment ends. Digital storage through human resources (HR) or accounting software ensures compliance and easy retrieval.

You can find more details here on what information you should collect.

11. Be clear about goals and expectations

Clear expectations prevent employment disputes and create measurable performance standards. Undefined roles can lead to confusion, poor performance, and potential legal issues.

Essential elements to establish:

• Performance standards: Specific, measurable job outcomes
• Communication protocols: Reporting lines, meeting schedules, feedback processes
• Professional development: Training opportunities, skill building expectations
• Mutual obligations: What you provide (support, resources) versus what they deliver (results, commitment)

Document all expectations in writing and review them regularly during performance discussions.

Understanding employee rights and your obligations

New Zealand law provides minimum rights for every employee. These apply whether they're in an employment agreement or not. It's your responsibility to know these rights and ensure you're meeting them.

This includes things like minimum wage, paid leave, and providing a safe workplace. You also have obligations for things like KiwiSaver enrolment and ACC levies.

Getting these right from the start builds trust and helps you avoid problems later. You can find detailed guides and resources on the Employment New Zealand website.

Managing leave, holidays and breaks

Managing time off is a key part of employment law. All employees are entitled to different types of leave, including annual holidays, public holidays, sick leave, and bereavement leave.

The law also sets out rules for rest and meal breaks during the workday. Keeping accurate records of leave taken and owed is essential for both compliance and good employee relations.

Using payroll software can help you track these entitlements automatically, so you always know where you stand.

Your employees are your most valuable asset – choose wisely

Whether you're hiring one employee or several, it's important to follow the steps above. And don't forget to think about how you will retain and reward excellent work. There are many ways to do this other than salary and wages, for example incentives and non-financial rewards.

When you hire the right people and support them, your business will grow and succeed.

If you get the process right, you'll ensure you hire the right people. And if you look after your employees, they'll stay with you longer and your business will perform better.

For more information on hiring, see the Hiring guide.

FAQs on employment law in New Zealand

Here are answers to some common questions about employment law in New Zealand.

How do I get free employment law advice in NZ?

For free information and guidance, the Employment New Zealand website is a great starting point. They offer tools, templates, and detailed guides on your rights and obligations. Community Law Centres across the country also provide free initial legal advice.

How many breaks do employees get in an 8-hour shift in NZ?

For an 8-hour workday, employees are generally entitled to two paid 10-minute rest breaks and one unpaid 30-minute meal break. The specific timing of these breaks should be agreed upon between you and your employee.

What happens if I don't follow employment law correctly?

Not following employment law can lead to disputes, personal grievances, and financial penalties. It can also damage your business's reputation and employee morale. It's always best to be proactive about compliance.

Do I need a lawyer to create employment contracts?

While you don't legally need a lawyer, it's a good idea to get professional advice to ensure your agreements are compliant and fit for purpose. Employment New Zealand offers a free employment agreement builder to help you create a basic contract.

How often should I review my employment practices?

It's good practice to review your employment agreements and practices at least once a year, or whenever there are significant changes to employment law. This helps ensure you remain compliant and are following best practices.