Published: April 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 Deel, Remote, or Multiplier 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. As of early 2026, 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 insurance charges per employee, GST on all fees, foreign exchange margins on currency conversion, and additional charges for benefits administration.
To illustrate the total cost, consider an Australian company with ten team members in New Zealand. At $599 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. Across the market, EOR fees range from around $199 USD per month for basic models (providers like Remofirst) up to $770 USD or more for enterprise-level services (providers like Papaya Global). 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.
Some providers also require a security deposit of one to three months' gross salary per employee. For a ten-person team, this can lock up $80,000 to $120,000 NZD in working capital before you have even run a single payroll.
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 following.
Salary adjustments not applied correctly. You approve a pay rise for an employee, but it does not flow through to the next pay run. Or it applies to the wrong pay period. Chasing these corrections takes time and creates friction with your team.
Incorrect fee charges. Provider invoices can include unexpected charges, insurance premiums that were not clearly disclosed upfront, or fees for services you did not request. Reconciling these against your contract becomes an ongoing administrative task.
Slow or unresponsive support. When something goes wrong, you raise a ticket and wait. New Zealand is a small market for global providers, so your issue sits in a queue behind higher-priority regions. Resolution can take days or weeks.
Compliance gaps. New Zealand has specific requirements that differ from Australia. KiwiSaver contributions work differently from superannuation, including the recent rate changes. ACC levies are calculated based on industry classification. The Holidays Act has notoriously complex leave calculation rules that even local employers get wrong. When your New Zealand team represents a small slice of a provider's global portfolio, these details can fall through the cracks.
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.
The process is more straightforward than most founders assume. Incorporation costs approximately $148 NZD including GST through the Companies Office and takes one to two weeks. The full setup, from incorporation to first payroll, typically takes four to six weeks.
For the ongoing compliance, here is what has changed as of 1 April 2026:
These are standard employer obligations. They are comparable to what you already manage in Australia with superannuation and workers' compensation.
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. Use our hire vs outsource calculator to model the specific numbers for your situation.
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.
Incorporate a New Zealand subsidiary, often with the Australian parent company as sole shareholder. Government fees total approximately $148 NZD including GST. There is no minimum capital requirement and no restriction on foreign ownership.
Register with IRD as an employer for PAYE withholding.
Set up KiwiSaver contributions at the new minimum of 3.5% (as of 1 April 2026). Employees can choose their own contribution rate and provider. Employees who prefer to stay at 3% can apply to IRD for a temporary rate reduction, and you as the employer can choose whether to match that reduced rate.
Register for ACC levies. The earner levy for 2026/27 is $1.75 per $100 of liable earnings (inclusive of GST), deducted from employee wages. The employer levy depends on your industry classification.
Sort banking, either through a dedicated New Zealand account or your existing NZD account temporarily.
Transfer employment contracts to the new entity. New Zealand minimum wage is now $23.95 per hour.
Line up a local accountant for annual financial statements and tax returns.
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. Our guide to setting up a New Zealand subsidiary covers each step in detail.
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 break even within three to six months of switching. After that, the savings flow directly to your bottom line. Use our employee cost calculator to model the full cost of direct employment.
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 an intermediary.
How much do EOR providers charge for New Zealand employees in 2026?
Major EOR providers like Deel and Remote 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, foreign exchange margins, and in some cases a security deposit of one to three months' gross salary. 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 $770 USD or more per employee monthly.
What are common problems with EOR payroll providers?
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.
When should an Australian company consider setting up a New Zealand subsidiary?
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.
How much does it cost to incorporate a New Zealand company in 2026?
Incorporating a New Zealand company costs approximately $148 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.
What are the KiwiSaver employer contribution requirements from April 2026?
As of 1 April 2026, the minimum KiwiSaver employer contribution is 3.5% of gross pay, up from 3%. This increases further to 4% from 1 April 2028. Both changes were confirmed in Budget 2025. Employers must contribute for all eligible KiwiSaver member employees, including those aged 16 and 17 from April 2026.
What is the ACC earner levy rate for 2026/27?
The ACC earner levy for 2026/27 is $1.75 per $100 of liable earnings (inclusive of GST), up from $1.67 in 2025/26. The maximum liable earnings cap is $156,641 NZD. This levy is deducted from employee wages and covers non-work-related injuries. Employers also pay a separate work-related injury levy that depends on industry classification.
Do I need a New Zealand director for my subsidiary?
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.
How long does it take to transition from an EOR to direct employment?
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.
What is the New Zealand minimum wage from April 2026?
The adult minimum wage increased to $23.95 NZD per hour from 1 April 2026, up from $23.50. The starting-out and training minimum wage is $19.16 per hour (80% of the adult rate). Minimum wage rates are reviewed annually by the New Zealand government.
Why do employees prefer direct employment over EOR arrangements?
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 real connection to the business they are helping build.
Scale Suite is a Sydney-based provider of outsourced finance teams and fractional CFO services for Australian SMEs. We deliver weekly bookkeeping, payroll, BAS/IAS lodgement, cashflow reporting, management accounts, and strategic fractional CFO oversight, all as a fully embedded team that works inside your business.
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We review and check this guide periodically. At the time of writing (April 2026), all information was current. Scale Suite is a registered BAS Agent, not a licensed tax advisor or financial advisor. This content is general information only and does not constitute professional tax, financial, or legal advice. Some details may change over time.
Scale Suite is a Sydney-based provider of outsourced finance and HR services for Australian SMEs. We deliver bookkeeping, financial reporting, payroll processing, fractional CFO support, recruitment, employee onboarding, people and culture support, and fractional HR oversight, all as a fully embedded team that works inside your business.
Employment Hero Gold Partner, CA-qualified, and Xero Certified, we replace fragmented finance and HR processes with one responsive, senior-level function at a fraction of the cost of full-time hires. We serve growing businesses across Sydney, Melbourne, Brisbane, and Perth, with packages starting from $1,500 per month and no lock-in contracts.
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