New Zealand

Mandatory employee benefits in New Zealand

There are two key employee benefits in New Zealand that are mandatory.

• Retirement – KiwiSaver is a voluntary savings scheme available to every employee between the ages of 18 and 65 in New Zealand. Its purpose is to help set employees up for retirement. Legally employers must contribute at least 3% of an employee’s gross wage or salary (subject to ESCT) to their KiwiSaver.
• Accident Compensation Scheme – New Zealand provides accident insurance cover for accidental injuries to New Zealand citizens and residents, and to temporary visitors to New Zealand. This is a “no-fault scheme,” and coverage applies regardless of who caused the accident/ injury. The aim is to provide tailored support, such as treatment and rehabilitation costs, to get individuals back to everyday life. This scheme is managed by the Accident Compensation Corporation (ACC).

Supplemental employee benefits in New Zealand

• Group Life/ Total Permanent Disability (TPD) Insurance – Companies that operate in highly competitive sectors in New Zealand, such as technology, financial and professional services, and pharma, will commonly offer a structured group life/TPD insurance plan to their employees. This cover is highly valued by employees and provides a protective measure for an employee’s family, in the event they pass away. The formula of cover is based on a multiple of salary for group life/TPD cover, and the upper quartile approach would be 3-4 x annual salary, which is 100% funded by the company.
• Group Income Protection (Salary Continuance) – Companies that operate in highly competitive sectors in New Zealand, such as technology, financial and professional services, and pharma, will commonly offer a structured Group Income Protection insurance plan to employees. This is a benefit that is extremely meaningful to employees as a means of providing a replacement income if they were to be injured or fall ill and are unable to continue in their role. The formula of cover is always 75% of the annual base salary. The waiting periods and benefit periods will depend on plan competitiveness. The upper quartile approach would be a 30-day waiting period, with a 5-year up to age 65-year benefit period, which would be 100% funded by the company.
• Group Private Medical Insurance – All New Zealanders have access to the Public Health System in New Zealand, which provides cover for medically necessary inpatient and outpatient services at public hospitals, hospital care for accidents, and maternity care. It is common practice for companies in highly competitive industry sectors, such as technology, financial and professional services, and pharma, to offer structured group private health insurance as an employee benefit. Levels of cover will depend on plan competitiveness; the medium quartile approach is often a plan that includes a base hospital cover, which provides high levels of cover for many of the major healthcare expenses. Companies can then add a range of different options to further tailor the policy, including additional components such as serious condition lump sum, specialist options, dental and optical options, as well as a GP option. Companies will often adopt a co-contribution model where the company funds 100% of the employee cover and 75% of the cost of family cover (spouse and dependents). When looking at an upper quartile approach, a more comprehensive offering typically occurs where 100% of the cost is fully funded by the company for employee and family cover.
• Holistic Wellbeing Solutions – There has been an increasing trend for companies to provide comprehensive wellbeing and support solutions to their employees to look after their overall physical, mental, financial, and social wellbeing. The variety of unique and tailored wellbeing programs that can be implemented is extensive and will vary depending on a company’s overall wellbeing and engagement strategy.
• Employee Assistance Program (EAP) – It is common practice for companies to offer a structured EAP for all employees. EAPs have evolved into digital care platforms, where employees have 24/7 access to personal care and support from qualified counselors, practitioners, and specialists through an app with options for chat boxes or calls. EAP services now have strong data, analytics, and reporting capabilities for companies to understand employee health trends and adopt unique benefit strategies to respond to the needs of their employees. Other common wellbeing solutions include annual flu shots, annual health and skin checks, mole mapping, health and wellbeing days, mental health seminars, and financial wellbeing content and support.

Common employee perks

• Learning and development programs – It’s common for companies to support their staff in continued education in relation to their current role. The median leave policy for Study Leave is 5 days of paid leave and 5 days of unpaid leave. Only around 4% of companies offer unlimited unpaid leave for learning and professional development.
• Additional leave options – The additional leave options we are seeing being offered are charity-work leave, celebration leave, additional (to unlimited) holiday leave, and domestic violence or bereavement leave – if required. The majority of companies are providing the minimum statutory requirements, and only 10% of companies are looking at offering any form of additional leave.
• Extended parental leave – Approaches to paid parental leave differ significantly between employers and industry sectors. Organizations will be required to provide the minimum statutory requirements in this space, with 10% of companies offering some form of additional paid parental leave. Recently we are seeing the evolvement of parental leave policies to include more beneficial options for primary and secondary caregivers, as well as increases in the length of paid leave being offered.
• Flexible working arrangements – Post the Covid-19 pandemic, it is now common for organizations to have a Flexible Work Policy in place, which allows employees to have a hybrid work model that supports a blend of in-office and remote working. It offers employees the autonomy to choose to work however they feel they are most productive.
• Business travel insurance – It is common practice for companies to have a travel policy in place for their employees. This may cover either domestic travel, overseas travel, or both. It is common for companies to provide this for business-only travel, while some companies will include additional leisure travel to provide a more comprehensive benefit to employees. This is especially true for companies where employees travel regularly for work.
• Lunch/ beverages allowance – a limited number of companies are offering onsite lunches Monday-Thursday, in an attempt to get employees back into the office more often and increase company engagement.
• Mobile phones – It’s common for staff to have mobile phones allocated to them at the expense of the company. Around 97% of companies will allocate a mobile phone to staff, particularly for those employees in client-facing roles.

Nothing on this country page is intended to be legal, financial, or tax advice, and readers are advised to consult with their appropriate advisors regarding any legal, financial, or tax implications this information may address.