11-step checklist for hiring employees

Hiring employees can be time-consuming, but get it right and they’ll become your most valuable asset.

A 'We're hring' sign on the front door of a small business

Hire the right person for the job

To make life easier, here are 11 steps to make sure you comply with New Zealand employment law before and after hiring employees. You can also read more in our Hiring guide.

1. Create a clear job description

Make sure you are clear about the type of person you want to hire, the skills they require and the amount (or the range) you are willing to pay. Throughout the hiring process, keep an accurate record of each candidate, including their strengths, weaknesses, expectations and interview notes. You’ll need to refer to this again when selecting your preferred candidate.

2. Determine who is doing the recruiting

How much time will it take to recruit each new employee? Think about all the tasks involved including:

  • writing the job description
  • advertising the job (online and offline)
  • communicating with prospective candidates
  • answering questions about the job and your business
  • interviewing and screening applicants
  • communicating with unsuccessful candidates

You may not have time to do all of this. It might be more efficient to outsource some or all of these steps to someone in your team or a recruiter.

3. Ensure each employee has an Inland Revenue number

Each new employee must have an Inland Revenue (IRD) number and must provide it and their tax code to you on the official form. An IRD number is a unique eight or nine-digit number used by Inland Revenue to identify employees for tax purposes. As an employer, you also need an IRD number. Anyone can apply for an IRD number online.

4. Maintain accurate tax records

You are legally required to keep proper tax records for seven years. It’s important that you keep them safe, secure and easily accessible. Your accounting software should be able to do this for you.

5. Understand your obligations

In many cases, your new employees may not understand all the things that need to be done unless you help them out. Don’t expect them to already know everything – even if they’ve had similar jobs in the past.

In addition to all the job-related information a new employee needs to learn, they also need to make sure their tax, pay and Kiwisaver details are accurate.

Here’s how you can help:

  • Ask your employee to complete a tax code declaration (IR330) – Inland Revenue can help you or your employee figure out the right tax codes
  • Check employee eligibility for KiwiSaver and enrol them if they are not yet – Inland Revenue has a guide for employers to help you out with this
  • Keep a wage record showing how much you pay your employee
  • Set up a holiday and leave record
  • 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

There are so many things to remember when you’re running a small business. Your new employee should make your life easier. But when they first begin, you may find your workload increases while they are coming up-to-speed with everything.

A good way to remember some of the most important dates is by using some of the freely available online tools that let you sign up for reminders.

Use the IRD tax due date calculator to save yourself time and stress.

7. Understand the rights of your employees

New Zealand law sets out minimum rights and entitlements for all employees, whether it is written in their employment agreement or not. An employment agreement can’t trade off or provide for less than these minimum rights.

The basic rights for your employees includes:

  • setting an employee’s minimum rights
  • paid time off
  • minimum pay
  • public holidays
  • sick leave
  • bereavement leave
  • an employee’s right to refuse to do work that could be unsafe
  • making sure they’re not unfairly discriminated against

You can find out more information, and download free resources and detailed guidelines, from the Employment New Zealand website.

8. Understand workers’ protection and compensation

The Accident Compensation Corporation (ACC) is the government agency responsible for administering New Zealand’s universal no-fault accidental injury scheme. This means that employers and employees put money into a fund that can be used when people get injured at work.

ACC is the only provider of accident insurance in New Zealand for all work and non-work injuries. When you are an employer or employee, it is compulsory to make contributions – you can’t opt out. It also means that anyone – regardless of how they were injured – is covered under the scheme.

Your employees pay ACC levies through their PAYE. As an employer, you also pay an ACC work levy every year. How much your business pays depends on:

  • your type of business
  • how much you pay your employees
  • your work-related injury claims history

You can work this out using the ACC levy calculator.

9. Set up a payroll system

Your options when setting up your payroll include:

Look for accounting or payroll software that:

  • makes it simple to stay compliant
  • can pay your employees efficiently
  • files reports with IRD

10. Keep a file for each employee

It’s important to keep up-to-date and accurate records for all your employees so that you can use them to figure out their pay and entitlements. You will also need records to give to your employee or their union/representative, or a regulator if requested.

Each employee’s file should include their:

  • full name, address and contact details
  • emergency contact details
  • a signed copy of their employment contract
  • tax details
  • preferred payment method and details, for example internet banking
  • any other important information about them

Consider using an HR system that includes these features. These records must be kept for at least seven years after the employee has left.

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

11. Be clear about goals and expectations

Even if you have just one employee, it’s important that you define and agree on what is expected of them from day one. They should already have a good idea about this from the interview process.

The reverse is also true. Let them know what you will provide in return. This is a professional relationship and it should be based on mutual trust, respect and honesty. The better you treat your employees, the harder they will work for your business.

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.

Remember that your employees are your company’s most valuable asset. Good people are hard to find. And hiring can be time consuming and expensive.

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 hiring information check out our Hiring guide.


Xero does not provide accounting, tax, business or legal advice. This guide has been provided for information purposes only. You should consult your own professional advisors for advice directly relating to your business or before taking action in relation to any of the content provided.

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