Alex is Sprintlaw's co-founder and principal lawyer. Alex previously worked at a top-tier firm as a lawyer specialising in technology and media contracts, and founded a digital agency which he sold in 2015.
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If you’re hiring staff (or even just making your first employment offer), it’s completely normal to pause at the same question many NZ business owners ask: is KiwiSaver included in salary?
This comes up all the time when you’re putting together job ads, negotiating packages, or trying to keep payroll predictable. And it’s also an area where getting the wording wrong can create avoidable disputes with employees (and compliance headaches for you).
In this guide, we’ll break down what “KiwiSaver included in salary” actually means in practice, when you can structure a pay package that way, and what you must do to stay compliant as an employer in New Zealand.
What Does “KiwiSaver Included In Salary” Actually Mean?
When someone asks whether KiwiSaver is included in salary, they’re usually talking about one of these scenarios:
- Total remuneration packages (where the employer KiwiSaver contribution is part of the total package figure).
- “Salary plus KiwiSaver” (where the stated salary is paid as normal, and KiwiSaver is paid on top).
- Confusion about deductions (employees’ KiwiSaver contributions come out of their pay, so they assume the employer contribution is also “coming out” of salary).
To keep things simple:
- Employee contributions (usually 3%, 4%, 6%, 8% or 10%) are deducted from the employee’s gross pay (unless they’re on a KiwiSaver savings suspension or not a member).
- Employer contributions are a separate payment obligation you make for eligible employees (generally 3%), but you may be able to structure the overall remuneration so that the employer contribution is accounted for within an agreed total remuneration package if it’s done correctly.
So when a business advertises “$70,000 including KiwiSaver”, they’re typically referring to a total remuneration figure, not a standard salary.
The key risk for employers is this: if the employment agreement and job offer aren’t crystal clear, “including KiwiSaver” can look like you’re trying to avoid paying the employer contribution (or that the employee’s take-home pay won’t match what they expected).
Are You Allowed To Include KiwiSaver In Salary In NZ?
Yes, in many cases you can structure an offer so the overall package figure is inclusive of employer KiwiSaver contributions (often described as a total remuneration package).
But there are two important cautions.
1) It Must Be Clearly Agreed In Writing
If you want KiwiSaver to be “included” in a package figure (instead of paid on top of an advertised salary), you should make sure the employment agreement is properly drafted and unambiguous.
This is one of those areas where a generic template can cause real problems, because the wording has to match what you’re actually doing in payroll and still comply with the KiwiSaver Act 2006 / Inland Revenue guidance. A tailored Employment Contract can help avoid misunderstandings about whether the package is salary-only, salary-plus, or total remuneration.
2) Minimum Entitlements Still Apply
Even if you use a total remuneration model, you still need to comply with New Zealand’s minimum employment entitlements (including minimum wage requirements, holiday pay calculations, and other statutory obligations).
In other words, packaging doesn’t remove your obligations - it just changes how the package is presented and calculated.
Practical example: If you advertise $60,000 “including KiwiSaver”, and the employee is a KiwiSaver member and entitled to compulsory employer contributions, you may be treating the $60,000 as a total remuneration figure where part of that $60,000 is your employer KiwiSaver contribution. That can be lawful, but only if properly agreed and administered (including making clear what happens if the employee isn’t eligible or isn’t a KiwiSaver member).
Employer KiwiSaver Contributions: What Are Your Legal Obligations?
From an employer compliance perspective, it helps to separate KiwiSaver into the “employee side” and the “employer side”.
Employee KiwiSaver Deductions
If your employee is a KiwiSaver member (and not on a savings suspension), you generally need to:
- deduct KiwiSaver contributions from their gross pay at their chosen rate (or default rate if applicable); and
- pay those deductions to Inland Revenue on their behalf through your usual payroll process.
Employees can opt in, opt out in certain situations, or apply for a savings suspension. Your payroll process needs to handle these changes correctly.
Employer KiwiSaver Contributions (Compulsory Employer Contributions)
For eligible employees who are KiwiSaver members, employers generally must contribute at least 3% of the employee’s gross salary or wages as an employer contribution (often called “employer superannuation contribution”).
Eligibility isn’t one-size-fits-all: for example, compulsory employer contributions generally apply for KiwiSaver members aged 18 to 64 (and different rules can apply where an employee is under 18, 65 and over, or not a KiwiSaver member). You’ll also need to apply the correct tax treatment, including ESCT (employer superannuation contribution tax) where applicable.
Because payroll settings and contract wording go hand-in-hand, it’s a good idea to confirm the intended remuneration structure in writing before the employee starts. If you’re unsure, get advice early - fixing it after the fact can be messy.
Total Remuneration Packages Vs “Salary + KiwiSaver”: Which Should You Use?
There’s no one-size-fits-all approach. The better option depends on how you recruit, what your cashflow looks like, and how transparent you want the package to feel for employees.
Option 1: Salary + KiwiSaver (KiwiSaver Paid On Top)
This is the approach many employees expect by default. You offer (for example) a salary of $70,000, and if the employee is eligible, you also pay employer KiwiSaver contributions on top.
Pros:
- Simple to explain and usually aligns with employee expectations.
- Less risk of a dispute about whether KiwiSaver was “hidden” in the number.
- Often easier to administer consistently across staff.
Cons:
- More costly than a total remuneration figure at the same headline salary.
- Can make budgeting slightly less predictable if you’re not accounting for KiwiSaver in advance.
Option 2: Total Remuneration (KiwiSaver Included In Salary Package)
This is where the employer says: “The total package is $X, inclusive of employer KiwiSaver contributions (if applicable).”
Pros:
- Predictable overall cost for the business.
- Can be useful for senior roles or where you’re comparing total reward packages across candidates.
Cons:
- Higher risk of confusion if the wording isn’t clear.
- Employees may feel the offer is less transparent (especially if they compare it with other jobs advertising “plus KiwiSaver”).
If you do use total remuneration, your agreement should clearly state:
- the total remuneration figure;
- whether the figure is inclusive of employer KiwiSaver contributions (and whether it is intended to be inclusive or exclusive of ESCT);
- how the employee’s base salary is calculated from the total remuneration;
- what happens if the employee is not eligible for compulsory employer contributions, is not a KiwiSaver member, opts out (where permitted), or is on a savings suspension; and
- that the employer will still make any compulsory employer contributions required by law (and that the “inclusion” is achieved by adjusting the base salary component, not by avoiding the contribution).
Because this can tie into other employment terms (like deductions, bonuses, commissions, and overtime), it’s often worth making sure your overall employment documentation is consistent - not just the KiwiSaver clause.
Common Mistakes Businesses Make When Saying “KiwiSaver Included In Salary”
Most KiwiSaver issues we see aren’t from employers trying to do the wrong thing - they’re from employers moving quickly (often during hiring) and using wording that creates confusion later.
1) Advertising One Thing, Contracting Another
If a job ad says “$80,000 + KiwiSaver” but the employment agreement says “total remuneration $80,000 inclusive of KiwiSaver”, you’ve created an immediate mismatch.
Even if the numbers are similar, the expectations aren’t. That’s where disputes start.
2) Not Defining What “Salary” Means In Your Offer
In everyday conversation, people use “salary” to mean “what I get paid”. Legally and administratively, you may need to distinguish between:
- base salary (the amount you pay as wages/salary), and
- total remuneration (base salary plus benefits, allowances, and potentially employer KiwiSaver contributions).
Clear definitions in the agreement go a long way.
3) Forgetting About Holidays Act Calculations
KiwiSaver and remuneration packaging can intersect with payroll calculations and minimum entitlements. If you’re unsure how a package interacts with holiday pay, allowances, or variable pay, it’s worth checking your payroll setup and getting advice.
This is particularly important if you have employees on commission, variable hours, or mixed remuneration structures.
4) Inconsistent Treatment Across Staff
If you have some staff on “salary + KiwiSaver” and others on “total remuneration”, you can do that - but you need to document it properly and apply each model consistently within the group it applies to.
If you’re changing someone’s structure (for example, moving a role from base salary to total remuneration), treat it as a contract change and document it properly. Where a change is significant, you may also want to get advice on the process for varying employment terms.
5) Not Having Proper Employment Documentation In Place
KiwiSaver clauses sit inside the wider employment relationship. If you don’t have strong employment foundations, disputes often aren’t limited to KiwiSaver - they spill into pay, duties, termination, and other obligations.
It’s usually worth ensuring you have a solid Workplace Policy framework (for consistency) and employment agreements that are tailored to your roles and pay structures.
How To Stay Compliant: A Practical KiwiSaver Checklist For Employers
If you want a practical way to reduce risk, here’s a compliance-focused checklist you can run through when hiring or reviewing your payroll setup.
Step 1: Decide Which Remuneration Model You’re Using
- Are you offering base salary + KiwiSaver?
- Or are you offering a total remuneration package where KiwiSaver is included?
Make sure your job ad, offer letter, and employment agreement all reflect the same model.
Step 2: Make The Employment Agreement Wording Unambiguous
Your agreement should clearly explain:
- whether employer KiwiSaver contributions are paid on top or included;
- how payroll will treat the contribution (including ESCT if relevant);
- what happens if the employee isn’t eligible or doesn’t contribute / isn’t a member; and
- any other relevant deductions or benefits that form part of the package.
Getting your Employment Contract right from day one can save you time and stress later, especially if your team grows quickly.
Step 3: Align Payroll Settings With The Contract
This is where issues often show up. You can have a well-written contract, but if payroll is set up differently, you’ll still have a compliance problem.
Make sure payroll correctly handles:
- KiwiSaver deductions for employees who are members;
- employer contributions for eligible employees;
- ESCT (employer superannuation contribution tax) where applicable; and
- reporting and payment to Inland Revenue on time.
Step 4: Be Careful When Changing Pay Structures
If you’re changing a role’s remuneration structure (for example, moving from “plus KiwiSaver” to “total remuneration”), document the change properly and make sure the employee genuinely agrees.
Contract variations should be clear and in writing, and it’s often sensible to get legal input to make sure you’re not accidentally creating inconsistent terms across your workforce.
Step 5: Keep Your Wider Compliance House In Order
KiwiSaver is only one part of running a compliant workplace. As your business grows, you’ll also want to ensure your broader legal foundations are solid - including privacy, workplace behaviour, and record-keeping.
For example, if you collect and store employee personal information (which most employers do), you’ll typically need processes aligned with the Privacy Act 2020 and a suitable Privacy Policy where relevant (particularly if you also collect information through an online hiring process).
And if you’re bringing on contractors instead of employees (common for small businesses), make sure you’re using the right documentation and not accidentally creating an employment relationship. A properly drafted Contractor Agreement can help set expectations clearly.
Key Takeaways
- “KiwiSaver included in salary” usually refers to a total remuneration package where employer KiwiSaver contributions are included in the headline figure, rather than paid on top.
- You can often structure a package this way in NZ, but the arrangement needs to be clearly agreed in writing and applied correctly in payroll.
- Employer KiwiSaver contributions are a separate legal obligation for eligible employees, and packaging doesn’t remove minimum employment entitlements.
- The biggest compliance risks come from unclear job ads and contracts, inconsistent payroll setup, and changing remuneration models without documenting the variation properly.
- Having the right employment documentation in place (including a tailored Employment Contract and consistent policies) helps you stay compliant and avoid misunderstandings as your team grows.
Important: This guide is general information, not legal or tax advice. KiwiSaver and ESCT settings can be fact-specific, so it’s worth getting tailored legal advice and checking the tax treatment with your accountant or Inland Revenue.
If you’d like help reviewing your pay structure or making sure your employment agreements clearly cover KiwiSaver (including total remuneration clauses), reach us at 0800 002 184 or team@sprintlaw.co.nz for a free, no-obligations chat.
