There are a wealth of reasons why more firms are choosing to do business in New Zealand. An extremely lucrative export industry built on impressive agriculture and services sectors is just one of the areas seeing increased investment. Furthermore, as the easiest country in the world to do business, the government is open to foreign trade and the political environment is stable and easy to navigate.
If you’re considering expanding down to the small Pacific nation, you may want to hire a staff member. However, if you’re based overseas, it is possible to hire staff without first establishing a legal entity in New Zealand. This is a less risky option to test the market before setting up a new office. Read on to find out how you can hire a New Zealand national for your business, from abroad, by using an International PEO.
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What is an International Professional Employer Organisation?
An International Professional Employer Organisation (PEO) provides outsourcing solutions for human resources. PEO provides business payroll services, human resources support and legal and tax employee requirements.
A PEO co-employs your staff member as specified in their contract. The PEO’s specific responsibilities are dictated through a client service agreement. The staff’s business continues to maintain control over everyday business activities and operations, with the human resources responsibilities outsourced to the PEO.
Step 1: How can a PEO employ a New Zealand worker from abroad?
An International PEO can help you employ a New Zealand national to work for your company while you’re operating outside New Zealand. Therefore, you can hire a staff member in a country where your company has not yet established a legal entity. The employee will be hired according to New Zealand employment laws and comply with all relevant regulations.
The employee will sign a co-employment agreement with the parent company and the PEO. When choosing your PEO, make sure to look at their previous clients, their human resource systems and any other extra employee benefits. Ultimately they need to be a good fit for your firm.
Step 2: What things will a PEO will take care of?
The exact responsibilities of the PEO are determined in the client service agreement between the parent company and the PEO. Each firm decides how many functions they want to outsource.
In terms of accounting and tax requirements, New Zealand employers have several financial corporate obligations. Failure to comply can result in large penalties. The following are some of the minimum employee entitlements in New Zealand:
- Four weeks’ paid annual holiday per year
- Eleven public holidays per year
- Payment of time and a half for working on public holidays
- Five days paid sick leave per year
- Three days paid bereavement leave
- Up to 52 weeks of parental leave
- Rest and meal breaks must be provided, rest breaks must be paid
- Relevant minimum wage paid (NZ$17.70 per hour for adults)
Payroll deductions include:
- Pay as you earn tax
- ACC levies
- KiwiSaver (superannuation)
- Student loan repayments
- Child support
Step 3: How can my firm benefit from outsourcing human resource functions?
Some small companies may not even have a human resources department, so using a PEO would be a cost-effective way of providing this service. As a result, using a PEO means small businesses can offer their employees the benefits larger companies can provide. That’s because PEOs can pool large numbers of staff and access services and discounts usually only offered to bigger corporations. Additionally, such services help attract better staff and lower employee turnover.
Using an International PEO to hire staff abroad makes the process a lot easier. Experts in recruiting and hiring, they are familiar with the country’s business culture, laws and regulations. What’s more, they have the economies of scale to complete the onboarding process much faster and cheaper than businesses abroad. Many firms experience setbacks during the recruitment process due to incorrect paperwork. Outsourcing this process leaves businesses more time to focus on their core activities. Using a PEO means you can get your New Zealand employee set up and working quicker.
Step 4: How can using a PEO mitigate the risk of expanding abroad?
Hiring an employee abroad, through a PEO, mitigates the risk and cost of setting up a new entity in a foreign country. Instead, by hiring staff, they can start business operations first and test the market, before your company makes a bigger investment. A PEO cannot mitigate all business risk but can operate in an advisory role in regards to tax and employee obligations. Additionally, given that the PEO operates in the country of expansion, they are constantly monitoring changes to national and state labour laws and employer obligations.
Once your employee is onboarded, they can work in New Zealand. Furthermore, you can rest assured they are receiving all of their employee entitlements and that the PEO is on call to provide any HR support. A New Zealand national employee is the first step in your business expansion to New Zealand. If you’re interested in exploring import and export opportunities New Zealand, sending an employee to test the market is a great first step. It’s less expensive than establishing a foreign office and less risky.
There are endless commercial opportunities for Latin American businesses wishing to operate in New Zealand, with agriculture of great interest for foreign businesses. Biz Latin Hub provides Professional Employer Organisation services which can help you hire staff in New Zealand, before establishing a legal entity.
To maximize your chances of success, we highly recommend hiring back-office support services from a business with local expertise. You can contact the team today for personalized advice and support about how a PEO can contribute to your business success.