Cost of an employee calculator: the year and each hour worked
An employee costs their pay plus employer KiwiSaver of at least 3.5%, ACC levies and anything else you pay for. They are also paid for 4 weeks of annual leave, public holidays and sick days they do not work, so each hour actually worked costs more than the hourly rate. The calculator works out both.
Worked out for the example. Change the boxes to make it yours.
| Pay: $28.00 an hour x 40 hours x 52 weeks | $58,240 |
|---|---|
| Employer KiwiSaver (3.5%) | $2,038 |
| ACC levies at $0.48 per $100 | $280 |
| Other costs | $1,200 |
| Cost a year | $61,758 |
| Cost a month | $5,146 |
| On top of pay | $3,518 (6.0%) |
| Hours paid a year | 2,080 hours |
| Less annual leave (4 weeks) | 160 hours |
| Less public holidays (12 days) | 96 hours |
| Less sick days (5) | 40 hours |
| Hours actually worked a year | 1,784 hours |
| Cost per hour paid | $29.69 |
| Cost per hour worked | $34.62 |
- ESCT is taken out of the KiwiSaver contribution before it reaches the employee's account, so it is not an extra cost on top of it.
- Pay is counted over 52 weeks, with leave, public holidays and sick days paid at the normal rate. Holiday pay can be higher where average weekly earnings are higher, for example with overtime or commission.
Team timesheets shows the hours staff choose to share, by person, project and task, with a CSV ready for payroll. It never shows pay rates to managers.
See Team timesheetsWhat the cost is made of
Pay is the hourly rate times the paid hours over 52 weeks, or the salary. On top of it, an employer must contribute at least 3.5% of gross pay (3% while matching an employee's temporary rate reduction) to the KiwiSaver of an employee aged 16 to 64 who contributes from their pay, rising to 4% from 1 April 2028. Employer superannuation contribution tax (ESCT) is withheld from that contribution and paid to Inland Revenue with it, so it comes out of the 3.5% rather than adding to it. ACC charges every employer a work levy and the Working Safer levy for each $100 of pay. The work levy depends on your industry's classification unit and can be adjusted for your claims history, so the calculator uses the rate you enter. The 2026/27 rates are set by the Accident Compensation (Work Account Levies) Regulations 2025, before GST, on pay up to $156,641 a person.
Paid time that is not worked
Under the Holidays Act 2003 a permanent employee gets at least 4 weeks of paid annual holidays after each 12 months, a paid day off for each of the 12 public holidays that falls on a day they would otherwise work, and 10 days of paid sick leave a year after six months. Each of those hours is paid but not worked, so the calculator takes them off the paid hours and divides the year's cost by what is left. That is the cost per hour worked, the figure to price work or a quote against. Our guide to leave in New Zealand covers each entitlement.
Edge cases
Annual holiday pay is the greater of ordinary weekly pay and average weekly earnings, so it can be more than the normal rate for someone with overtime or commission. An employee on a fixed term under 12 months, or who works too irregularly for 4 weeks off to be practical, can instead be paid at least 8% of gross earnings on top of their pay: set annual leave to 0 and add the 8% to other costs. Work on a public holiday adds time and a half and an alternative day off, which this calculator does not count.
From 6 August 2028
The Employment Leave Act 2026 replaces the Holidays Act on 6 August 2028. Annual leave then builds at 0.0769 of an hour for each standard hour, which is still about 4 weeks a year, and sick leave at 0.0385 of an hour, about 10 days on a 40-hour week. Casual hours and extra hours an employee is free to refuse earn a leave compensation payment of at least 12.5% of the ordinary hourly rate instead. Our article on the Employment Leave Act changes explains the rest. Keeping accurate wage and time records matters under both laws.
Questions
How much does it cost to employ someone in NZ?
Their pay, plus employer KiwiSaver of at least 3.5%, plus ACC levies at your industry's rate, plus anything else you pay for. On $28 an hour for 40 hours a week, with a cafe's ACC rate of $0.48 per $100, that is $60,558 a year before other costs.
Is ESCT an extra cost on top of KiwiSaver?
No. ESCT is deducted from the employer's contribution before it reaches the employee's KiwiSaver account. The employer pays the 3.5% in total, and part of it goes to Inland Revenue as ESCT.
What ACC levy do I pay as an employer?
A work levy set by your industry's classification unit, plus the Working Safer levy of $0.08, each per $100 of pay up to $156,641 a person in 2026/27. ACC sends an invoice; its levy guidance explains your classification.
How many paid days off does an employee get a year?
At least 4 weeks of annual holidays after 12 months, up to 12 public holidays that fall on their working days, and 10 days of sick leave after six months. For someone on 40 hours a week over 5 days who takes all of it, that is 336 of the 2,080 hours paid in a year.
Can I see what each person costs from their hours?
Team timesheets at jobtracker.co.nz shows the hours staff choose to share, by person, project and task, with a CSV ready for payroll. It never shows pay rates to managers, so the rates stay with you and this calculator.
Sources
- Inland Revenue: employer contributions to KiwiSaver schemes and complying funds.
- Inland Revenue: employer superannuation contribution tax (ESCT).
- Inland Revenue: KiwiSaver changes.
- ACC: understanding levies if you work or own a business (levy guidance).
- Accident Compensation (Work Account Levies) Regulations 2025, Schedule 2: rates for 2026/27.
- Health and Safety at Work (Rates of Funding Levy) Regulations 2016.
- business.govt.nz: ACC levies.
- Employment New Zealand: annual holiday pay.
- Employment New Zealand: managing public holidays as an employer.
- Employment New Zealand: taking sick leave.
- Employment Leave Act 2026.
More free tools: see all the calculators.