16 best employee benefits in 2026: Mandatory and supplemental benefits

Mandatory and optional benefits for New Zealand employees

New Zealand employers must provide seven benefits by law, covering paid leave, public holidays, KiwiSaver contributions, and ACC cover; four further compliance obligations, from rest breaks to record-keeping, also apply regardless of what you choose to offer. Everything else below, including workplace insurance, extra leave, and flexible hours, is optional.

Benefits every New Zealand employer must provide

Seven benefits are compulsory in New Zealand, and they apply whether or not they appear in the employment agreement. They cover paid leave, public holidays, KiwiSaver contributions, and ACC levies.

Four further compliance obligations, covered later in this section, apply regardless of what you choose to offer. Minimum rights cannot be reduced or traded off for something else.

Leave entitlements: annual, sick, bereavement and parental leave

New Zealand employees are entitled to four weeks' paid annual holidays after 12 months of continuous employment, 10 days' paid sick leave a year, at least three days' paid bereavement leave per bereavement, and up to 52 weeks' parental leave. Public holidays sit on top of all of these.

• Annual holidays and public holidays: Annual holiday pay is set at whichever is greater. It could be your ordinary weekly pay (OWP) at the time of the holiday, or your average weekly earnings (AWE) over the previous 12 months. Employment New Zealand's published list currently totals 11 nationwide public holidays, plus your region's anniversary day. If an employee works one that falls on a normal working day, you pay at least time-and-a-half and give an alternative holiday.
• Sick leave and bereavement leave: Sick leave starts after six months' service at 10 days a year, with up to 10 unused days carrying over to a maximum of 20. Bereavement leave covers an immediate family member, including a miscarriage or stillbirth, for a minimum of three days per event.
• Parental leave: Eligible employees can take up to 26 weeks' primary carer leave, and up to 52 weeks in total with extended leave. The payment itself is government-funded and paid by Inland Revenue rather than by you, at a maximum of $811.05 a week before tax.

KiwiSaver employer contributions

You must contribute at least 3.5% of an employee's gross salary or wages to KiwiSaver, for staff aged 16 to 64 who are contributing members and not in a defined benefit scheme. That minimum rises to 4% from 1 April 2028.

You also pay employer superannuation contribution tax (ESCT) on every contribution, including voluntary amounts above the minimum, so budget for the tax as well. New employees aged over 18 and under 65 must be automatically enrolled unless they are already members, and only those you enrolled automatically can opt out between day 14 and day 56 of starting.

You can also choose the scheme your employees are allocated to. Three months after Inland Revenue receives the first contribution for someone enrolled through you, that person is treated as having offered to join your chosen scheme.

Without one, they go to a default scheme instead. Setting one up takes an agreement with a provider and a notice to the Commissioner naming the employer, the provider, and the scheme.

Policywise advises on KiwiSaver as well as insurance and can talk you through providers and fund options with your workforce in mind.

ACC cover

ACC covers injury caused by an accident. However, treatment injury, and work-related gradual-process disease, infection, or injury are considered as complex cases where the outcome hinges on criteria, process, and requirements.

Beyond those, it does not cover illness, conditions from ageing, or emotional issues on their own. As an employer, you pay a Work levy on your payroll, and your employees pay a separate Earners' levy deducted from their wages.

Your Work levy is set by your ACC classification, claims history, and liable payroll, per $100 of liable income. If an employee is injured at work, you pay 80% of their regular income for the first calendar week, and ACC takes over from week two. Because ACC does not pay for illness other than treatment injury and work-related gradual-process disease, workplace health, trauma, and income protection cover can fill that gap.

Other employer obligations

Four further obligations apply to every New Zealand employer, from paid rest breaks to six years of record-keeping. Each is a legal minimum rather than a matter of company policy.

• Rest and meal breaks: these scale with hours worked, from one paid 10-minute break on a 2- to 4-hour shift to two rest breaks and a 30-minute unpaid meal break over 6 to 10 hours.
• Family violence leave: up to 10 days' paid leave a year for eligible employees who, or whose child, experiences family violence.
• Written employment agreement: every employee must have one, and not providing it carries a $1,000 infringement fee.
• Record-keeping: wage, time, holiday, and leave records must be kept for six years, including after the employee leaves.

Optional staff benefits that make the biggest difference

Employees rank extra annual leave as the benefit most likely to attract them to a new employer (29%), even though health insurance is the one they say they value most. Nine optional categories, from workplace insurance and flexible hours to training, bonuses, and recognition, round out what you can offer above the legal floor.

Insurance cover for your team

Workplace insurance typically falls into up to four categories, each available from different insurers: corporate health, group life insurance and income protection, and group trauma insurance. It fills gaps ACC leaves, including illness and shortfalls ACC's accident cover doesn't reach.

• Corporate health insurance: pays towards private diagnosis and treatment, so your staff are seen without waiting in the public system. Insurers such as nib, Southern Cross, and UniMed offer workplace health schemes: nib covers pre-existing conditions immediately for groups of 15 policies or more, Southern Cross lists possible cover for pre-existing conditions on workplace schemes, and UniMed's StaffCare and StaffCare+ plans are available through an employer group scheme agreement.
• Group life insurance: pays a lump sum to an employee's family if they die, often as a multiple of salary. nib sets its group life cover at two or three times annual salary.
• Group income protection insurance: replaces part of an employee's income when illness or injury keeps them off work. Several insurers, including Fidelity Life, Asteron Life, and Chubb, offer an employer-arranged version.
• Group trauma insurance: pays a lump sum if an employee is diagnosed with a serious illness such as cancer, heart disease, or paralysis. nib's benefit is up to $20,000.

Minimum group sizes vary by insurer:

Southern Cross requires five full-time employees, Fidelity Life and Chubb 10, and nib 15; Asteron Life sets no entry minimum but requires at least 10 members at each annual renewal to retain the automatic acceptance level.

Fidelity Life and Chubb are among the insurers that use an automatic acceptance limit, a level of cover employees receive without health questions; nib also applies an Automatic Acceptance Limit, though its terms aren't published.

Premiums for group life and medical cover attract fringe benefit tax, while income protection is exempt where a payout would be assessable income of the employee (s CX 31). Policywise can compare workplace cover across the market with you.

Flexible and hybrid working

One to two days a week at home is increasingly common across the organisations surveyed for the Southern Cross and BusinessNZ Workplace Wellness Report 2025, where close to four in five respondents believed it improved employee satisfaction and retention.

Any New Zealand employee can also ask to change their working arrangements from their first day, for any reason. You must reply in writing within one month, and you can decline only on specified business grounds, which you must state and explain.

Extra leave above the statutory minimum

You can offer anything above the statutory four weeks: a fifth week of annual leave, wellbeing days, birthday leave, or paid time on top of parental leave. An employment agreement can improve on minimum rights but cannot reduce them, so extra leave always sits on top of the floor.

Extra annual leave above the statutory minimum is offered to only 22% of respondents, despite ranking first among benefits that would attract them to a new employer, ahead of health insurance. Recruitment co-CEO Tony Pownall notes a fifth week costs around 2% of salary and, unlike a pay rise, does not lift the base future increases are calculated from.

Wellbeing programmes and employee assistance

Employers support wellbeing through more than one channel: employee assistance programmes, workplace vaccinations, and, especially among smaller organisations, flexible hours and working from home used specifically for wellbeing reasons. Almost all small enterprises surveyed report having at least one such approach in place.

An employee assistance programme (EAP) is a confidential, employer-funded service giving staff short-term counselling and support for problems affecting their health, wellbeing, and job performance. EAPs were offered to 51% of respondents, but 61% of those with access had never used one.

Among larger enterprises, EAPs and workplace vaccinations rank as the top two wellbeing benefits; smaller enterprises focus more on flexible hours and working from home.

A 2018 Stats NZ survey found one in five New Zealand workers report being always or often stressed by work, and work-related absence cost New Zealand 7.3 million working days and $1.85 billion in 2020.

Under the Health and Safety at Work Act 2015, your duty to protect workers' health extends to psychosocial risk (work-related stress and mental strain), not just physical safety.

Training and career development

Training benefits range from paid internal or external courses to tuition assistance and professional registration fees. Employment New Zealand guidance suggests setting out in a policy what you will pay for, particularly where an employee must keep a professional body or trade registration current.

Robert Half's survey of 250 finance, accounting, and IT/technology hiring managers found paid internal training was among the eight benefits used most by staff (19%), while tuition assistance was not offered at all by 55% of organisations.

Bonuses and performance incentives

Performance and project-completion bonuses are the most common incentive benefits in Robert Half's 2026 New Zealand survey, offered by 98% and 97% of respondents respectively.

They count as lump sum payments, or extra pay, and are taxed differently from regular wages: to work out PAYE, you annualise the employee's recent income, add the bonus, and find the combined total in Inland Revenue's extra pay table, which runs from 10.5% to 39%.

Bonuses often complicate holiday pay calculations for employers. Productivity or performance payments, including most commissions, bonuses, and incentives, count as gross earnings when you calculate holiday and leave pay, and true discretionary payments are rare.

Discounts, allowances and other low-cost perks

You can offer discounts, gift cards, subsidised services, and similar extras as unclassified fringe benefits, free of fringe benefit tax only up to a limit: $300 per employee per quarter, $1,200 per employee a year, and $22,500 across all employees a year.

Go over any of these limits, and FBT applies to the full amount, not just the excess. Reimbursing an actual work expense is not taxable, though anything above the real cost is, and a meal, uniform, or accommodation allowance usually is.

Recognition and reward programmes

You can reward effort with something other than a pay rise. It could be a public thank you, an extra day off, or a voucher. Gift cards and comparable non-cash rewards are unclassified fringe benefits, so the same thresholds as other unclassified benefits apply to them.

Across roughly 300 New Zealand organisations benchmarked by Culture Amp between July 2025 and June 2026, 68% of employees were engaged, placing New Zealand in the bottom 45% of regions, with feedback and recognition among the three dimensions scoring below average.

Share and equity schemes

Employee share schemes give staff shares, or rights to shares, as part of their pay. If you run one, you must file employment information about the value of the benefit, even where no tax is withheld, and failing to do so is treated as an employer tax shortfall.

You must withhold PAYE in some situations and may choose to in others, with the benefit valued on the share scheme taxing date. A YouGov survey found 80% of respondents would consider taking part of their pay as shares, though nearly two-thirds were unfamiliar with the schemes.

Why trust Policywise for KiwiSaver and group insurance advice

At Policywise, we make it easy for you to grow and protect your retirement funds. We provide independent KiwiSaver advice and help you choose funds that match your long-term goals. We also ensure you’re set up with the right insurance cover so your retirement plans don’t fall apart even if critical illness, injury, disability or death impacts your personal or family income.

Check out the reviews on our homepage for how other New Zealanders have found our service, because now is the time to get your retirement and insurance plans sorted. Give your family or someone you love the most outstanding financial support possible. Book a 5-minute callback with Policywise today; our service is fast and free.