Guide
The true cost of an employee in New Zealand (2025/26)
Updated
New Zealand's statutory on-cost is one of the lowest in the OECD: about 4.1% at the minimums. The real cost of a hire sits in the lines the statutes do not mention.
The statutory lines
- KiwiSaver employer contribution
- 3% minimum of gross pay for members, $2,450 on a $70,000 salary at the 3.5% minimum in force since April 2026. See the KiwiSaver guide.
- ACC work levy
- About $0.63 per $100 of pay at the 2025/26 average, $441 at $70,000, but industry-rated: see the ACC guide.
- Nothing else
- No employer payroll tax, no employer social security, no mandatory health insurance. PAYE and the employee's ACC earners' levy come out of the employee's pay, not yours.
The costs behind the statutory line
- Leave cover: 4 weeks annual leave, 12 public holidays and 10 days sick leave mean roughly 13% of paid time is non-working time; cover for it is a real cost in small teams.
- Casual and fixed-term staff: genuine casuals are paid 8% holiday pay on top of wages as pay-as-you-go (employment.govt.nz), which the calculator's casual toggle adds.
- Equipment and software: $1,000–$3,500 a year for a desk worker is a typical 2026 budget once laptop, licences and support are annualised; varies by role.
- Recruitment: agency fees in the low tens of percent of first-year salary, amortised over tenure, are often the largest hidden line; typical quotes vary by sector.
Worked example: $70,000 hire
| Line | Annual cost |
|---|---|
| Gross salary | $70,000 |
| KiwiSaver employer contribution (3.5%) | $2,450 |
| ACC work levy ($0.63 per $100) | $441 |
| Statutory total | $72,891 |
| + equipment, insurance, overheads (typical) | $2,000–$4,000 |
| Realistic first-year total | $74,500–$76,500 |
What that means per hour
Divide the true cost by hours actually worked, not contracted hours. A full-time employee on a 40-hour week is paid for about 2,080 hours but, after 4 weeks of leave and public holidays, works closer to 1,840.
| Salary | True annual cost | Per paid hour (2,080) | Per worked hour (approx. 1,840) |
|---|---|---|---|
| $50,000 | $52,065 | $25.03 | $28.30 |
| $70,000 | $72,891 | $35.04 | $39.61 |
| $100,000 | $104,130 | $50.06 | $56.59 |
Use the calculator for your own numbers; it itemises each statutory line and takes your actual ACC rate and KiwiSaver percentage.