NZ Payroll Compliance Checklist for 2026

Payroll compliance in New Zealand means applying tax, minimum wage, KiwiSaver, leave and record-keeping rules correctly to every pay run, and being able to show your working if Inland Revenue or the Labour Inspectorate asks.

2026 has been a bigger year than most. The usual 1 April changes to the minimum wage and Earner Levy rates landed.  But additionally this year, we had changes to minimum Kiwisaver contribution rates, and on the 6 August 2026 the Employment Leave Act received Royal Assent, replacing the Holidays Act 2003 from 6 August 2028.

This checklist covers what should already be correct in your payroll, how to check each one, and what changes when the new Act takes effect.

These figures apply to every NZ employer. Rate changes are the most common source of payroll errors, so if your system was configured before April, this is the first place to look.

How to check: verify when entering wage rates below the minimum wage rate a warning is shown and that new employees are unable to enter in minimum contribution rates of less than 3.5% unless a rate reduction certificate is in place. 

Check tax rates and earner levy rates are correct by running a pay and comparing against the IRD PAYE calculator. 

Payday filing means reporting PAYE information to Inland Revenue every time you pay staff. It applies to every NZ employer regardless of size,and a missed filing is one of the most common gaps in smaller payroll operations.

How to check: open myIR and confirm your last three pay runs each have amatching employment information filing, submitted within two working days ofpayday if you file electronically.

Our guide to payday filing covers what has to be filed and when.

NZ employers must keep accurate wage, time, holiday and leave records for every employee, and be able to produce them on request. Moving these into one digital system, rather than spreadsheets in several places, is one of the most effective improvements a growing business can make.

How to check: pick an employee at random and try to produce their hours, gross and net pay, deductions and leave balance for a pay run eighteen months ago. If that takes more than a few minutes, then review where these records are being stored so you can produce them easily if required to do so.

See our digital documentation guide for what good record-keeping looks like.

Until the Employment Leave Act takes effect, payroll still runs under the Holidays Act 2003. That means four weeks' annual leave after twelve months' continuous employment, plus sick leave, bereavement leave and public holiday entitlements, all calculated on rules that are notoriously easy to get wrong for staff on variable hours.

You also cannot move early. MBIE has confirmed that employers must keep following the Holidays Act until the new Act takes effect, so adopting the new accrual method ahead of the 2028 commencement date is not an option even if your system could supportit.

The Employment Leave Act received Royal assent on 6 August 2026 and takes effect on 6 August 2028, with a two-year transition so payroll systems and processes can be updated. The new rules apply from the first pay period starting on or after that date, rather than on the date itself.

The core change is a move from annual lump-sum entitlements to hourly accrual from day one. Annual leave accrues at a fixed rate per standard hour worked, sick leave accrues similarly up to a cap, and casual staff or staff that work additional hours to their standard hours of work receive a 12.5% leave compensation payment instead of separate leave or additional leave entitlements.

Public holiday pay also gets a clearer test. Whether a public holiday falls on a day an employee would otherwise have worked is currently judged case by case, which is where most of the difficulty sits for staff without a set roster. The Act replaces that judgement with a fixed rule for anyone without a set weekly schedule: the day counts if the employee worked, or was on paid or unpaid leave, on that same day for 50% or more of the last thirteen weeks. An employee who worked seven of the last thirteen Mondays is entitled to public holiday pay for a Monday holiday; one who worked six is not.

MBIE's Holidays Act reform pages set out the full detail.

MBIE's Labour Inspectorate can investigate suspected breaches of minimum employment standards, including minimum wage, holiday pay and record-keeping. Depending on severity, that can lead to an infringement notice and fines, to a case referred to the Employment Relations Authority and potentially being publicly named as a result of any decision being published.

Payroll non compliance frequently starts with not monitoring for changes rather than deliberate actions, which is why the checks above are worth doing on a schedule rather than when something surfaces.

• Minimum wage and training rates applied correctly since 1 April 2026 — run a test pay to confirm
• KiwiSaver deductions moved to the 3.5% default — check both the employee deduction and the employer contribution
• ACC earner's levy and PAYE calculated on current 2026/27 rates — confirm the ACC cap is applied for higher earners
• Payday filing submitted on every pay run, not monthly — check your last three runs in myIR
• Wage, time and holiday records complete and retrievable — try producing one employee's full record from eighteen months ago
• Annual, sick and public holiday leave calculated correctly under the Holidays Act — check a variable-hours employee, not a salaried one
• A plan in place to prepare your payroll and people admin systems for the Employment Leave Act before August 2028

Smartly checks for the current minimum wage, KiwiSaver and tax rates as they change, files PAYE information with Inland Revenue on payday, and calculates leave in linewith NZ legislation. This supports employers with their compliance tasks.

You are still the employer, and the legal responsibility for paying people correctly stays with you. Having good payroll software in place can help an employer keep up to date with changes so that they don't go by unnoticed.

If you are weighing up managing payroll in-house or handing it to a provider, seePayroll Outsourcing vs In-House: How to Choose. If you want to see how much ofthis automation can take off your plate day to day, read Payroll Automation: How ItSaves NZ Businesses Time in 2026.

What counts as payroll compliance in New Zealand?

Applying minimum wage, PAYE, KiwiSaver, the ACC earner's levy and leave rules correctly to every pay run, filing PAYE information with Inland Revenue on payday, and keeping accurate wage, time and holiday records.

Do all NZ employers need to do payday filing?

Yes. Every NZ employer must file PAYE information with Inland Revenue each payday, whatever the size of the business.

What happens to the Holidays Act now the Employment Leave Act has passed?

The Holidays Act 2003 stays in effect until 6 August 2028. The Employment Leave Act is law, but it only applies after that two-year transition, and employers cannot adopt the new rules early.

How long do I need to keep payroll records?

Seven years. Inland Revenue requires business records that support your tax position, payroll included, to be kept for seven years, and keeping your wage, time, holiday and leave records for the same period covers your employment-law obligations as well.

What is the minimum wage in New Zealand in 2026?

Since 1 April 2026 the adult minimum wage is $23.95 an hour, and the training and starting-out minimum wage is $19.16 an hour.

Can outsourcing or automation reduce payroll compliance risk?

Both can help, in different ways. Automated payroll software applies current rates and files with Inland Revenue for you, which removes the need to remember new rates or file manually.

Outsourcing hands the processing work to a provider which reduces the risk of having a single point of failure within your own business.

Where payroll compliance can slip

Many payroll problems in New Zealand come down to one of two things: a rate that changed without anyone updating the system, or records that were never properly kept in the first place. Neither is dramatic, and both are straightforward to check.

With this year's rate changes now six months old it is a good time to confirm your payroll is applying this year's rules rather than last year's.

Make payroll compliance easier

See how Smartly can automate the details, keep your payroll up to date and give you more confidence every pay run. Book a free demo to see it in action, or request a callback and our team will help you find the right option for your business.

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