Outsourcing payroll in New Zealand: Guide for employers

On first glance, payroll might seem like a straight-forward process that involves just pressing ‘pay’. But anyone who’s ever processed payroll knows that payday in New Zealand is anything but that. It’s a complex process with layers and layers of legislation and rules.

That’s why so many employers are leaning on outsourced payroll services. By handing over the complex parts of payroll to experts, businesses can simplify their processes, reduce their compliance risk and refocus their energy on their people and growth.

What’s in the guide?

To help you consider whether outsourced payroll is right for your business, our guide covers: 

• What is payroll outsourcing and how does it work? 
• The benefits of outsourcing payroll
• Why you might want to keep payroll in-house
• What to look for when choosing an outsourced payroll provider

Download the full guide now by filling out the form on the right. 

What is payroll outsourcing?

As your business grows, payroll becomes more complex and more important to get right. Outsourcing payroll means putting this critical function in the hands of experts who live and breathe compliance, freeing your team up to focus on other business critical tasks.

How payroll outsourcing works

Outsourcing payroll means handing the management of pay runs, entitlements and compliance over to a team of experts who handle it all for you. The process starts with setup. Your provider learns how your business operates, configures the system to match your pay structure and securely migrates employee data like pay rates, leave balances and Kiwisaver details.

Once everything is set up, your provider runs test pay cycles to check accuracy before going live. From there, they take care of each pay run. This includes calculating wages, tax and super, along with generating payslips and making sure everything is up to date with current legislation and modern awards.

You’ll still have full visibility and access to reports, but without the day-to-day admin. Your payroll partner manages the details, answers employee queries and provides ongoing support, giving you more time to focus on growing your business while knowing your team is paid correctly and on time.

Levels of outsourcing (partial vs full)

Payroll has a number of moving parts, so it makes sense that there are different levels of outsourcing available. It may be that you just need help with that monthly pay run, or maybe you’re looking for more comprehensive management that handles any day-to-day requests. 

Luckily with outsourcing, there are often different levels of support to choose from. 

Key steps in the outsourcing process

When you decide to outsource payroll, there often are a few steps required before you can get the ball rolling. First, you need to pick your provider. That involves understanding your own selection criteria and doing the research to ensure you choose the right provider. Make sure to consider their level of local knowledge – for example, Employment Hero’s outsourced payroll team are made up of experts who know the New Zealand system inside and out.

Once you’ve signed on the dotted line, you’ll likely need to go through a data transfer process and any necessary integration with relevant technology. Then, once everything is set up and everyone is aligned on the plans ahead, you can leave it to the experts. 

The pros of outsourcing payroll in New Zealand

Payroll mistakes can affect organisations of all sizes. Companies across New Zealand have recently discovered historical underpayments to their staff by misinterpreting the Holidays Act (2003). We’ve seen announcements from organisations like Bunnings, Fulton Hogan, McDonalds and even Government entities like MBIE and ACC, stating that they’ve discovered errors in their leave payments. 

Payroll is often more complicated than it needs tobe. What might start as a quick monthly task in HR or finance can turn into hours of data entry, leave calculations and compliance checks. Add in different work types and timesheet variations and even small errors can lead to costly underpayments and penalties.

Time savings 

Running payroll in-house can quickly become a time drain as your business grows. Managing pay runs, timesheets, employee queries and reports can pull your team away from higher-value work.

Running payroll in-house comes with hidden costs, from software and training to staff hours spent processing pay runs and managing employee queries. These expenses can add up quickly, especially as your team grows.

Expert compliance

By outsourcing payroll, you gain access to experts who stay up to date with evolving legislation and award changes. You’ll also benefit from having access to powerful payroll software (like Employment Hero) that calculates leave, automates deductions and offers time and attendance tracking, rostering tools and employee self-service features. 

Cost predictability and scalability

As your business grows, so do your payroll needs. Outsourced payroll gives you the flexibility to scale up (or down) without the stress of hiring, training or overhauling your existing systems. 

Whether you’re expanding across the country, adding new employment types or managing a team of seasonal staff, your payroll partner understands your unique business needs and adapts with you.

Access support

Outsourcing payroll gives you instant access to specialists who live and breathe New Zealand payroll. These are the experts who stay ahead of legislative updates and compliance changes, so you don’t have to. 

Alongside their in-depth knowledge, you gain the advantage of powerful payroll technology that automates calculations, updates in real time and integrates seamlessly with your other tools.  

The cons of outsourcing payroll

Before choosing a provider, it’s important to understand the potential drawbacks and how to manage them effectively.

Perceived loss of control over payroll

When you outsource payroll, you’re placing a part of your business in someone else’s hands. This can sometimes make employers feel a step removed from the process, especially when it comes to making last-minute adjustments or accessing detailed payroll information. 

This is why choosing the right provider is so important. Look for one that offers transparent communication, real-time reporting and system access can help maintain visibility and control. 

Data security and privacy concerns

Payroll data is among the most sensitive information a business holds. That’s why it’s crucial to work with a partner who uses encrypted systems, secure data storage, strong access controls and who complies with New Zealand data protection laws. The right provider will make data security a top priority.

Integration and communication challenges

Traditional outsourcing can create a divide between payroll and HR. This sometimes means that critical data gets missed, or that teams find themselves chasing up information more often than is helpful. That’s why it’s important to check that your provider has integration top of mind, whether that’s working ahead of potential communication challenges or utilising a platform like Employment Hero that effectively unites HR and payroll. 

Understanding service costs

When looking for an outsourced payroll provider, some businesses might worry about the potential for hidden fees. Beyond the upfront cost, there may be charges for system updates, additional reports or complex pay adjustments. 

To avoid surprises, it’s important to partner with a provider that offers transparent pricing and clear inclusions.

How to decide if payroll outsourcing is right for you

New Zealand payroll legislation is confusing, complicated and difficult to get right. But as many legal cases have shown, getting payroll wrong can spell disaster. Errors can lead to time-consuming audits, financial penalties, reputational damage and even staff underpayments.

The reality is that the dedication to running payroll in-house can affect your bottom line. Not to mention that keeping up with New Zealand’s complicated government regulations can become an unenviable task. 

You need to ask yourself, “Is now the time to outsource payroll?”. Once you hand over the complex tasks of payroll management to the experts, you’ll get the peace of mind that a critical function of your business is in safe hands. 

How Employment Hero can help streamline payroll

With Employment Hero Outsourced Payroll, you can hand it all over to our team of payroll experts. Our New Zealand-based specialists can manage your entire pay process with precision and care using our powerful Employment Operating System. 

Here’s just a few reasons why businesses rely on us to process their payroll every payday. 

• Expertise you can rely on: Our payroll specialists live and breathe New Zealand payroll. They stay on top of every legislative change, making sure your people are paid correctly and on time, every time.
• Seamless setup and ongoing support: We handle the heavy lifting. From onboarding and data migration to go-live, your dedicated implementation manager ensures a smooth transition. Once you’re up and running, our support team is here whenever you need them.
• Integrated with your HR systems: Employment Hero’s payroll service connects directly with our HR platform, time and attendance tools and rostering software, so everything from onboarding to payday runs in sync. It’s one intuitive platform that becomes your single source of truth.
• Secure by design: Your data is handled with strict security protocols and encrypted systems. In fact, we’re the only vendor in our space to hold all three information security certifications – ISO 27001 (information security management systems (ISMS)), ISO 27017 (Cloud Security) and ISO 27018 (Protection of Personally Identifiable Information in the Cloud). In October 2025, we also received SOC 2 Type II certification by the independent auditors at Global Compliance Certification (GCC). 
• Save time and reduce costs: Running payroll internally takes time and resources, from manual data entry to compliance checks and staff queries. With Employment Hero, we take care of it all, so your team can focus on what they do best.
• A partner that scales with you: Whether you’re a small business or a growing scale-up, our payroll services grow alongside you. From simple weekly pay runs to complex award calculations, we’ve got you covered.

If you’re ready to find out how managed payroll can benefit your business, get in touch with one of our payroll experts at Employment Hero today.

Download the full guide now by filling out the form on the right hand side. 

Disclaimer: The information in this guide is current as of 23 October 2025, and has been prepared by Employment Hero Pty Ltd (ABN 11 160 047 709) and its related bodies corporate (Employment Hero). The views expressed in this guide are general information only, are provided in good faith to assist employers and their employees, and should not be relied on as professional advice. The Information is based on data supplied by third parties. While such data is believed to be accurate, it has not been independently verified and no warranties are given that it is complete, accurate, up to date or fit for the purpose for which it is required. Employment Hero does not accept responsibility for any inaccuracy in such data and is not liable for any loss or damages arising either directly or indirectly as a result of reliance on, use of or inability to use any information provided in this article. You should undertake your own research and to seek professional advice before making any decisions or relying on the information in this guide.