Offer & agreement (all data, nothing paid): a written employment agreement signed before day one (mandatory, and required before work starts for a valid 90-day trial), the IR330 tax code declaration, KiwiSaver enrolment (KS2 rate, KS10 opt-out, KS3 pack), and the IRD number, bank account and contact details.
First payday: the new-employee details — name, KiwiSaver status, IRD number, tax code, contact details — reach Inland Revenue before the first pay or with the first return; then the first payday filing goes in and the first net wages are paid.
Every pay (the rhythm): PAYE (income tax + ACC earners' levy in one deduction), the KiwiSaver employee deduction (default 3.5%) plus the compulsory employer contribution (min 3.5%) with ESCT on it, and student loan where it applies. Holidays Act leave accrues; a return is filed every payday; deductions are remitted to IRD by the 20th. ACC is not paid per pay — it is invoiced annually in arrears.
Exit: a final pay of outstanding wages plus holiday pay — unused annual holidays at the greater of ordinary weekly pay or average weekly earnings for the entitled, or 8% of gross where service is under 12 months or the worker is a genuine casual — the final payday filing with the finish date, and records kept 6 years (tax records 7).
- Offer & agreementbefore day 1
- First paydaythe first pay
- Every paythe rhythm
- Changesthe years between
- Exitthe last pay
Stage 1 — Offer & agreement
Everything in this stage is data collection. Nothing is paid yet — but every payment that follows is only as correct as what gets captured here, and one item (the signed agreement) has to be in place before the employee starts if a trial period is to hold.
Every employee must have a written employment agreement, and the employer must ensure it is in writing and retain a signed copy — with the mandatory contents the Employment Relations Act 2000 requires (s 65). Timing bites here: if you want a 90-day trial provision, the agreement must be agreed and signed before the employee starts work, or the trial is invalid. The mandatory clauses and the retention duty are in Employment agreements & wage records.
Data collectedAll new employees complete a Tax code declaration (IR330) when they start. The employee — not the employer — chooses the tax code, and it drives every PAYE calculation from the first pay onward. If the code later changes, they give you a new IR330. An incomplete IR330, or none at all, forces the non-notified rate.
Data collectedFrom the first eligible hire the KiwiSaver duties attach: auto-enrol eligible new employees (those aged 18–64 not already members), hand over the KS3 employee information pack, take the employee's chosen deduction rate on a KS2 (the default is 3.5% of gross salary or wages if they do not give you one), and accept a KS10 opt-out lodged between day 14 and day 56. The rate ladder and the employer-contribution mechanics are in PAYE & KiwiSaver, explained.
Data collectedThe employee's IRD number and contact details (Inland Revenue needs both for the new-employee information in stage 2), and the bank account net pay will be direct-credited to — New Zealand net wages ride bulk direct credit, so a verified account is a precondition of a clean first pay.
Data collectedStage 2 — First payday
The first pay run is where the collected data becomes reporting and money. Two things must line up: Inland Revenue has to know the employee exists before you file against them, and the deductions have to be right from pay one.
Before the employee's first payday — or at latest with the employment information return that includes their first pay — send Inland Revenue the new-employee information: name, KiwiSaver status, IRD number, tax code and contact details (date of birth if held). Channels are the add-employee flow in myIR, payroll software, or the paper IR346K. Miss it and the first payday filing has nothing to file against — the employee isn't in the account yet. See Registrations & employer IDs.
Data collectedThe first employment information (EI) return goes to Inland Revenue, keyed to the payday, carrying the employee's gross earnings, PAYE and the other deductions. Electronic filers file within 2 working days of payday. The full per-payday cadence lives in Statutory lodgement: payday filing.
The first wages land, with PAYE, the KiwiSaver employee deduction and any student loan already withheld, and the compulsory employer KiwiSaver contribution calculated. Every payment must clear at least the minimum wage — see Minimum wage & wage rules.
Payment madeStage 3 — Every pay & ongoing
This is the steady state — the same deductions, the same filing, the same remittance, on repeat, while leave accrues underneath. Payroll is doing both jobs at once now: paying money out and sending information in.
PAYE is deducted on the employee's tax code, and it is a composite: income tax and the ACC earners' levy are collected together in the one deduction, using Inland Revenue's tables or calculator. The bands and the levy mechanics are in PAYE & KiwiSaver, explained.
Payment madeDeduct the employee's KiwiSaver contribution (default 3.5% of gross for 2026–27; the employee may run 3.5%, 4%, 6%, 8% or 10%), pay the compulsory employer contribution (a minimum of 3.5% of gross salary or wages for 2026–27), and deduct ESCT from that employer contribution. Add student loan repayments where a loan code applies. Distrust older guidance quoting 3% — these are the post-Budget-2025 figures.
Payment madeAn employment information return is filed every payday, not monthly: within 2 working days of payday for electronic filers, or 10 working days for paper filers (with a twice-monthly aggregation option). Details in Statutory lodgement: payday filing.
The deductions — PAYE, KiwiSaver employee and employer amounts, ESCT, student loan and any child support — are remitted to Inland Revenue's EMP account. Small and medium employers pay monthly, by the 20th of the following month; employers with $500,000 or more of annual PAYE and ESCT pay twice monthly. Filing and paying are separate rails.
Payment madeIn the background, entitlements build under the Holidays Act 2003: 4 weeks' paid annual holidays after each completed 12 months of continuous employment (s 16), 10 days' sick leave after six months, plus public holidays. Annual holidays become real money at the exit in stage 5. The machinery — ordinary weekly pay, average weekly earnings, the daily-pay rates — is in Leave & the Holidays Act.
Do not look for an ACC line in each pay run. Beyond the earners' levy collected inside PAYE, ACC needs no per-pay remittance and no separate registration — it invoices the Work levy and Working Safer levy annually in arrears, using the payroll data Inland Revenue passes on from your returns. File payday returns correctly and the ACC invoice takes care of itself.
Stage 4 — Changes
Between the first pay and the last, the employee's details drift and the rates reset. Most of these are data-collection events; a few are annual resets the engine has to apply on a fixed date.
If an employee's circumstances change — a second job ends, a study loan is repaid — they must give you a new IR330 with the corrected tax code, and PAYE follows the new code from the next pay.
Data collectedAn employee may change their deduction rate (3.5%, 4%, 6%, 8% or 10%) at most once every three months unless you agree to a shorter interval, and may apply for a temporary rate reduction down to 3% for 3–12 months; you may choose to match at 3% for that employee. Payroll consumes Inland Revenue's notifications for the start and end of any reduction.
Data collectedSome things reset on the tax year, not on a payslip: the ESCT rate is fixed for each employee at the start of the year (1 April) on their prior-year income and not changed mid-year; the minimum wage is reviewed annually (adult $23.95/hour from 1 April 2026); and the PAYE tables and levy caps are re-issued. The current figures and the wage rules are in Minimum wage & wage rules.
Everything in stages 3 and 5 about how leave accrues and is paid is the Holidays Act 2003, and it remains binding. But an Employment Leave Bill to replace it was introduced in March 2026 and, as at this update, sits at select committee (report due by 13 July 2026). If enacted it is expected to commence after a 24-month implementation period — around 2028 — moving leave to an hours-based, day-one accrual model. Nothing changes for a pay run today; treat it as the biggest scheduled change to any New Zealand leave engine and watch the commencement date.
Stage 5 — Exit · resignation · dismissal · redundancy · retirement
The exit compresses the tenure's accrued balances into one pay run. However the employment ends, the mechanics below are the same — what differs is the notice and the reason, not the payroll shape.
The final pay is outstanding wages plus holiday pay, and the holiday-pay rule turns on service. An employee who has reached 12 months is paid their unused annual holidays at the greater of ordinary weekly pay or average weekly earnings (s 21). An employee who leaves before 12 months — and a genuine casual paid holiday pay as they go — gets 8% of gross earnings since starting, less any holiday pay already taken or paid (s 23, s 28). Unused sick leave is not paid out. The rates are explained in Leave & the Holidays Act.
Payment madeThe departure is reported in the payday filing: the finish date is the earlier of the day the employee finished or the date of their final pay, and the gateway has a dedicated Terminate operation for departing employees. It rides the same return the final pay is filed on.
Data collectedRetention runs on two clocks. The wages and time record (Employment Relations Act 2000 s 130) and the holiday and leave record (Holidays Act 2003 s 81) must be kept for at least 6 years — Employment New Zealand is explicit that this holds even after the employee has left. Inland Revenue requires all employment and wage records, including IR330 declarations and KiwiSaver forms, for at least 7 years. Design retention to the longer figure — seven years. See Employment agreements & wage records.
A retirement is, mechanically, the same exit — final pay with the holiday-pay payout, the finish date in the payday filing, the records kept. What happens next, turning a KiwiSaver balance into retirement income, is between the employee and their scheme provider, not a payroll obligation.
Quick answers
What does an employer collect from a new employee in New Zealand before the first pay?
Four things, and they are all data — nothing is paid yet. First, a written employment agreement, which the employer must ensure is in writing (Employment Relations Act 2000 s 65) and retain a signed copy of; if you want a valid 90-day trial provision, the agreement must be signed before the employee starts work. Second, a completed Tax code declaration (IR330), which every new employee fills in at the start and which drives their PAYE. Third, KiwiSaver enrolment: eligible new employees are auto-enrolled, you hand over the KS3 information pack, the employee picks a deduction rate on a KS2 (default 3.5% if they do not) and may opt out on a KS10 between day 14 and day 56. Fourth, the practical details — IRD number, the bank account net pay will be direct-credited to, and contact details. Separately, the new-employee information (name, KiwiSaver status, IRD number, tax code and contact details) must reach Inland Revenue before the first payday or with the employment information return that includes the first pay.
What is deducted and paid every payday for a New Zealand employee?
Every payday, PAYE is withheld — income tax and the ACC earners' levy are collected together as one composite deduction — along with the KiwiSaver employee deduction (default 3.5% of gross salary or wages for 2026–27) and student loan repayments where a loan code applies. On top of that the employer pays the compulsory employer contribution to KiwiSaver (a minimum of 3.5% for 2026–27) and deducts ESCT from that contribution. In the background, Holidays Act 2003 entitlements accrue — four weeks' annual holidays after each 12 months of continuous employment, 10 days' sick leave after six months, plus public holidays. Operationally, an employment information return is filed every payday (within 2 working days for electronic filers, 10 working days for paper), and the deductions are remitted to Inland Revenue by the 20th of the following month, or twice monthly for employers with $500,000 or more of annual PAYE and ESCT. ACC is not paid through payroll: employers are invoiced annually in arrears from the payroll data Inland Revenue passes on.
How is a final pay calculated when a New Zealand employee leaves?
A final pay is outstanding wages plus holiday pay, and which holiday-pay rule applies turns on length of service. An employee who has reached 12 months of continuous employment is paid out their unused annual holidays at the greater of ordinary weekly pay or average weekly earnings (Holidays Act 2003 s 21). An employee who leaves before 12 months — and a genuine casual who has been paid holiday pay as they go — is instead paid 8% of gross earnings since starting, less any holiday pay already taken or paid (s 23 and s 28). Unused sick leave is not paid out. The finish date reported in the final payday filing is the earlier of the employee's last day worked or the date of their final pay, and the gateway has a dedicated Terminate operation for it.
How long must New Zealand employment records be kept after an employee leaves?
Two clocks, and you design to the longer one. The employment-law records — the wages and time record (Employment Relations Act 2000 s 130) and the holiday and leave record (Holidays Act 2003 s 81) — must be kept for at least six years, and Employment New Zealand is explicit that this holds even after the employee has left. The tax-side records are kept longer: Inland Revenue's employer's guide requires all employment and wage records — including IR330 declarations, PAYE and wage information, and KiwiSaver forms — to be kept for at least seven years after the last wage payment. Because the seven-year duty is the outer bound, a payroll platform should retain the whole record set for seven years.
One employee record that knows which job each step is — collect, or pay
Ledra Pay's New Zealand country pack runs the lifecycle as a guided flow: it captures the agreement, IR330, KiwiSaver election and bank details at onboarding, pushes the new-employee details to Inland Revenue before the first pay, computes PAYE, KiwiSaver, ESCT and student loan and files payday returns every pay while Holidays Act balances accrue in the background, and drives a final pay that pays out holiday pay on the right rule — keeping every wage, time and leave record on the seven-year clock, with a receipt on every write.
See NZ coverage →Government sources
- Inland Revenue — IR335 Employer's guide (June 2026 edition, PDF) (IR330 at start; KiwiSaver auto-enrolment, KS2/KS3, 3.5% default deduction and 3.5% minimum employer contribution; ESCT set at 1 April; student loan; payday-filing due dates; remittance by the 20th / twice monthly at $500,000; records kept at least 7 years).
- Inland Revenue — Add new employees to your payroll account in myIR (new-employee information fields — name, KiwiSaver status, IRD number, tax code, contact details — before the first payday) and Starting employees in KiwiSaver (auto-enrolment for new employees 18–64; IR346K timing).
- Inland Revenue — Employer contributions to KiwiSaver and complying funds, Employee contributions, Opting out of KiwiSaver (KS10; opt-out day 14–56) and KiwiSaver changes (3% → 3.5% from 1 April 2026; temporary rate reduction to 3%; 4% from 1 April 2028).
- Inland Revenue — Payday filing (file employment information every payday; 2 working days electronic, 10 working days paper) and Paying deductions to Inland Revenue (EMP account covers PAYE, KiwiSaver, ESCT, student loan, child support; 20th monthly / twice monthly at $500,000).
- Inland Revenue — Tax rates for individuals (PAYE bands) and Non-resident employers filing employment information (register before the first return; shadow payroll).
- New Zealand Legislation — Employment Relations Act 2000 (s 64 retain signed copy; s 65 written employment agreement and mandatory contents; s 67A the 90-day trial; s 130 wages and time record — six-year access; consolidation as at 3 June 2026).
- New Zealand Legislation — Holidays Act 2003 (s 16 four weeks after 12 months; s 21 annual holiday pay at the greater of ordinary weekly pay or average weekly earnings; s 23 termination before 12 months — 8% of gross; s 28 pay-as-you-go 8% for casual/short fixed-term) and s 81 holiday and leave record (kept for not less than 6 years); consolidation as at 20 December 2023.
- Employment New Zealand — Employment agreements (every employee must have a written agreement), Trial periods (agreement signed before work starts or the trial is invalid), Hiring your first employee and Record keeping (wages/time and holiday/leave records kept 6 years, even after the employee has left).
- ACC — Understanding levies if you work or own a business and Understanding your levy invoice (no separate ACC registration; annual invoice in arrears from Inland Revenue data; Work levy and Working Safer levy; earners' levy collected inside PAYE).
Related
The written-agreement duty, the 90-day trial, and the six/seven-year record set.
The composite PAYE deduction, the KiwiSaver rate ladder, ESCT and student loan.
Annual holidays, sick leave, the pay rates, and the 8% termination rule.