Published: Jan 2026
If you run an Australian business with staff in New Zealand, there is a good chance you are paying far more than you need to for payroll. And despite those costs, you may still be dealing with errors.
This is a pattern that plays out regularly for Australian founders. They hire their first few people in New Zealand and sign up with an Employer of Record provider like Employment Hero, Deel, or Remote because it seems like the easy option. No entity setup, no foreign compliance to learn. Just pay the fees and let someone else handle it.
Then the problems start.
A developer in Auckland does not get paid on time. A salary increase does not flow through correctly. Someone only receives half their pay. Support tickets drag on for weeks because New Zealand is not the provider's priority market. Meanwhile, the monthly invoice keeps growing.
Employer of Record providers charge a base management fee per employee. Major providers like Deel and Remote typically charge around $599 USD per employee per month for EOR services. At current exchange rates, that works out to approximately $950 to $1,000 NZD per employee monthly.
But the base fee is just the starting point. On top of the management fee, you often pay:
To illustrate the total cost, consider an Australian company with ten team members in New Zealand. At $600 USD per employee monthly in base fees, plus insurance and GST, total monthly provider costs could reach $12,000 to $15,000 NZD. That is $150,000 or more annually in fees alone, before counting salaries.
The pricing varies by provider and country. Across the market, EOR fees can range from around $199 USD per month for basic models up to $1,500 USD for all-inclusive enterprise services. For a team of five to ten New Zealand employees using a mid-tier provider, total monthly fees commonly land between $8,000 and $15,000 NZD.
The fees would be easier to justify if the service was reliable. But these platforms process payroll across dozens of countries, and their systems are built for scale rather than accuracy in any single market.
Common issues Australian companies experience include:
The result is that your team members can lose trust. Your HR lead spends hours chasing fixes. And you keep paying premium fees for inconsistent service.
Most Australian businesses reach a decision point somewhere between three and five New Zealand employees.
At one or two people, the fees feel manageable and the occasional error is annoying but not catastrophic. But once you have a senior developer, a team lead, or an HR manager in New Zealand, the stakes change. When someone important does not get paid correctly, it becomes a real problem for retention and morale.
There is also a practical shift. At five or more people, New Zealand stops feeling like a satellite operation and starts feeling like a real part of your team. You want it to run properly.
This is usually when founders start asking whether there is a better way.
The alternative is often simpler than people expect. Instead of paying a third party to employ your staff on your behalf, you set up a New Zealand subsidiary and employ them directly.
This means incorporating a New Zealand company, registering with IRD as an employer, setting up KiwiSaver and ACC, and running payroll yourself or through a local payroll provider.
It sounds like a lot, but the process is straightforward. Incorporation costs around $130 NZD including GST and takes one to two weeks. The ongoing compliance is comparable to what you already manage in Australia.
The key difference is cost. Once you are set up, you are paying salaries plus standard employer contributions. No ongoing management fees. No insurance markups. No provider margins.
For a team of ten, the difference between $12,000 per month in EOR fees and a few hundred dollars in direct employment administration costs adds up quickly.
Beyond the cost savings, there is an important human element. When employees are contracted directly to your entity rather than through a third-party provider, they feel more secure.
Being employed by a staffing company or EOR can feel impersonal. Your team members receive payslips from a company they have never heard of. Their employment agreement is with a provider, not with you. If something goes wrong, they are not sure who to contact.
Direct employment signals commitment. It tells your New Zealand team that they are a real part of the company, not an outsourced arrangement. For senior hires especially, this matters. They want to know they are building something with you, not filling a contractor-style role through an intermediary.
Direct employment through a NZ subsidiary may be worth considering when:
If you only have one contractor in New Zealand and no plans to expand, an EOR might still be the right fit. But once you cross the threshold into a real team, the economics often shift toward direct employment.
Moving from an EOR to direct employment is not as disruptive as it sounds. The typical process takes four to six weeks and involves these steps:
You do not need a full NZ accounting firm on retainer. A New Zealand accountant handles the annual financial statements and tax returns while day-to-day compliance runs through your existing finance operations.
Here is a simplified comparison for a team of ten New Zealand employees:
EOR Provider (typical monthly costs)
Direct Employment (typical costs)
Even accounting for setup costs and ongoing administration, most businesses can break even within three to six months of switching. After that, the savings flow directly to your bottom line.
More importantly, you get control. When something goes wrong, you fix it directly instead of raising a support ticket and waiting. And your team knows they are employed by you, not by a faceless intermediary.
Major EOR providers like Deel and Remote typically charge around $599 USD per employee per month, which equates to approximately $950 to $1,000 NZD at current exchange rates. Additional costs include insurance, GST, and foreign exchange margins. For a team of ten employees, total monthly fees can reach $12,000 to $15,000 NZD. Fees vary by provider, with basic models starting around $199 USD and enterprise services reaching $1,500 USD per employee monthly.
Common issues include salary adjustments not being applied correctly, incorrect or unexpected fee charges on invoices, slow or unresponsive customer support, and compliance gaps with New Zealand-specific requirements like KiwiSaver, ACC levies, and Holidays Act calculations. These problems tend to occur because New Zealand is a small market for global providers.
Setting up a New Zealand subsidiary may be worth considering when you have three or more New Zealand employees, monthly EOR fees exceed $5,000 to $8,000, or you have experienced repeated payroll errors with your current provider. Companies planning to grow their New Zealand team over the next one to two years should also weigh the option.
Incorporating a New Zealand company costs approximately $130 NZD including GST through the Companies Office ($10 plus GST for name reservation and $118.74 plus GST for incorporation). The process takes one to two weeks. There is no minimum capital requirement, and 100% foreign ownership by an Australian parent company is permitted.
The current minimum KiwiSaver employer contribution is 3% of gross pay. This increases to 3.5% from 1 April 2026 and to 4% from 1 April 2028, as confirmed in Budget 2025. Employers must contribute for all eligible KiwiSaver member employees.
Not necessarily. Trans-Tasman director rules allow an Australian resident who is already a director of an Australian company to serve as a director of a New Zealand company. This can make it easier for Australian businesses to establish subsidiaries without appointing a local New Zealand director, though your specific circumstances should be reviewed.
The typical transition takes four to six weeks. This includes incorporating the subsidiary, registering with IRD, setting up KiwiSaver and ACC, and transferring employment contracts to the new entity.
Employees contracted directly to your entity typically feel more secure than those employed through a third-party provider. Direct employment signals commitment and makes team members feel like a real part of the company rather than an outsourced arrangement. This is particularly important for senior hires who want job security and a genuine connection to the business they are helping build.
Scale Suite provides operational support for Australian businesses employing staff in New Zealand. Our services include:
We partner with New Zealand-based accountants for annual financial statements and tax returns, giving you local expertise without the overhead of a full accounting firm retainer.
For structuring decisions and transfer pricing considerations, we recommend obtaining professional advice from a qualified specialist to ensure your arrangements are appropriate for your circumstances. We can help coordinate this process and handle the operational implementation.
If you are paying $8,000 or more per month in EOR fees and still dealing with payroll issues, we can help you evaluate whether direct employment makes sense. Contact us at hello@scalesuite.com.au or visit scalesuite.com.au to start the conversation.
This article provides general information about employing staff in New Zealand. It is not tax, legal, or accounting advice. Rates and rules are current as of January 2026; check official sources for updates. We recommend consulting qualified specialists for structuring decisions and annual tax obligations.
Scale Suite delivers embedded finance and human resource services for ambitious Australian businesses.Our Sydney-based team integrates with your daily operations through a shared platform, working like part of your internal staff but with senior-level expertise. From complete bookkeeping to strategic CFO insights, we deliver better outcomes than a single hire - without the recruitment risk, training time, or full-time salary commitment.
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