Unpaid Training In New Zealand: Employer Compliance Requirements

Training is one of the best investments you can make in your team - it improves performance, reduces mistakes, and helps you deliver a better customer experience.

But when you’re a small business owner trying to manage cashflow, it’s also normal to wonder: can this training be unpaid?

The short answer is that unpaid training can be a legal minefield in New Zealand. If the training time counts as “work”, you’ll usually need to pay at least the minimum wage, even if the person is brand new or still “learning”. Getting this wrong can lead to wage claims, penalties, and a lot of time spent dealing with disputes - none of which helps your business grow.

This guide walks you through how unpaid training works in NZ, when training must be paid, and how to set up your processes so you’re protected from day one.

What Does “Unpaid Training” Actually Mean In NZ?

When people talk about unpaid training, they usually mean one (or more) of the following:

• Induction and onboarding (e.g. health and safety briefing, policies, systems training)
• Mandatory modules (e.g. online compliance training, workplace conduct training)
• Trial shifts (sometimes called a “test shift” or “unpaid trial”)
• Role-specific instruction (e.g. learning how to use equipment, POS systems, internal processes)
• External courses (e.g. first aid, licences, certifications)
• Team training sessions outside normal hours

The key legal issue is not the label (“training”, “trial”, “shadowing”). It’s whether the time counts as work for minimum wage and wage-and-time record purposes.

In practice, if a person is required (or realistically expected) to attend training and it’s connected to their job, there’s a strong chance it needs to be paid.

Even if someone is “only watching”, they may still be working if:

• they’re under your direction or control during that time,
• they’re at your workplace (or logged into your required system) at your request, and/or
• the training is primarily for the benefit of your business (so they can do the role you need them to do).

When Does Training Have To Be Paid?

As a business owner, your safest approach is to assume training is paid unless you’ve clearly confirmed it falls outside paid work time.

In NZ, paying for training time usually ties back to core employment obligations, including:

• minimum wage compliance (under the Minimum Wage Act 1983),
• good faith and fair dealing in the employment relationship (under the Employment Relations Act 2000), and
• record-keeping around wages, time worked, and leave (often a practical pain-point when training is handled informally).

Training Is Usually Paid If It’s Mandatory

If you require the training - either explicitly (“you must complete this module”) or implicitly (it’s a practical condition of doing the job) - it will usually count as working time.

Common examples:

• health and safety inductions you require before someone starts work
• training on your systems, tools, or processes
• training required to meet your compliance obligations
• role-specific training needed for the employee to perform their duties

Remember: under the Health and Safety at Work Act 2015, you have duties to keep workers safe - that often means providing instruction, training, and supervision. If you’re directing someone to attend training to meet those obligations, that’s a strong indicator it should be treated as paid work time.

Training Outside Normal Hours Can Still Be Paid

A common trap for small businesses is running training “after close” or “before opening” and treating it as optional because it’s outside rostered hours.

If it’s required, or there’s real pressure to attend, it’s generally still working time. That means you’ll need to consider:

• paying for the hours spent training, and
• whether those hours push the employee into additional hours that require careful handling (for example, if it creates overtime or affects fatigue management).

If your training sessions extend hours, it’s worth aligning your approach with your broader approach to extra hours and payroll - and checking what the employment agreement says about additional hours, overtime rates (if any), and any agreed alternatives.

Depending on your arrangements, some businesses also use working overtime processes or agreed alternatives - but the key is that it should be agreed and documented, not assumed.

“Trial Shifts” Are High Risk If Unpaid

Unpaid trial shifts are one of the most common ways businesses accidentally end up with a wage claim.

If the person is:

• doing tasks that are part of the role (even with supervision),
• helping you serve customers, produce goods, or deliver services, or
• being assessed by having them do the work in a real working environment,

then it’s very likely to be considered work - and should be paid at least minimum wage.

If you want a genuine assessment process, you can still run a structured paid trial. The key is to document it properly and keep it short, specific, and fair.

What About “Voluntary” Training?

Sometimes training really is optional - for example, a staff member chooses to attend an industry event to build skills that aren’t required for their current role.

Even then, you should be careful. If:

• attendance is strongly encouraged (or it would disadvantage the employee not to attend),
• it’s connected to the employee’s role, KPIs, or performance expectations, or
• you benefit from the employee being trained (and you’re directing it),

it may still be considered working time.

Where you do offer genuinely optional development, consider confirming in writing what is (and isn’t) paid, and whether any alternative arrangements apply if attendance occurs outside normal hours. In practice, the safest approach is to document expectations upfront and apply them consistently.

Common Unpaid Training Scenarios (And How To Handle Them)

Let’s make this practical. Below are common situations where small businesses ask about unpaid training, and what you should think about before you proceed.

1) Induction And Onboarding

Induction is almost always paid. If you require someone to come in, sign forms, learn policies, and be briefed on safety - that’s part of employing them.

A good Employment Contract should clearly set expectations around hours of work, training requirements, and how you’ll handle additional hours when needed.

2) Online Training Modules At Home

If you require an employee to complete online modules, it’s safest to treat the time spent as paid time.

From a compliance perspective, you’ll want a way to:

• record how long the module takes (or allocate a reasonable time allowance),
• ensure employees know how to log that time, and
• pay it through payroll (rather than treating it as “off the clock”).

Also think about privacy: online training platforms often collect personal information and usage data. If you’re introducing systems that track staff activity, it can help to have clear internal privacy practices in place (many businesses address this through an Employee Privacy Handbook).

3) First Aid Training Or Role-Related Certifications

If the certification is required for the role (or you require a certain number of staff to hold it for safety/compliance reasons), it’s often treated as work time.

You’ll also want to think about:

• who pays course fees (the business, the employee, or shared?)
• what happens if the employee leaves soon after (you may want a carefully drafted training cost agreement - but these need to be handled properly to be enforceable and fair)
• travel time and expenses (particularly if the course is offsite)

4) Team Training After Hours

If you hold an after-hours training meeting and it’s required, treat it as paid time.

If it pushes someone over their agreed hours, you can sometimes manage this by agreement - for example, using time off in lieu where it’s lawful, properly agreed, and documented, rather than just hoping it “balances out” informally.

The important part is consistency and clear documentation. If one employee is paid and another isn’t for the same training, you may create both legal risk and culture issues.

5) Training For Contractors

If you engage contractors, you might assume training is automatically unpaid because they invoice you. But contractor relationships are also an area where businesses can get into trouble if the arrangement looks and feels like employment.

If you’re training a contractor in the same way you train employees (and controlling how, when, and where they work), you should review whether you’ve structured the relationship correctly. A properly drafted Contractors Agreement can help set expectations - but it also needs to reflect the real working arrangement in practice.

How To Run Training Compliantly (Without Blowing Your Budget)

You don’t need to avoid training - you just need a plan that’s legally sound and workable for a small business.

Here’s a practical compliance approach you can implement from day one.

Step 1: Decide What Training Is Mandatory Vs Optional

Start by categorising training into two buckets:

• Mandatory training (required to do the job, required for safety/compliance, required by you)
• Optional professional development (nice-to-have skills, employee-led learning, not required for the role)

Mandatory training should generally be paid. Optional development may be unpaid in some situations, but only where it’s genuinely optional, not directed by the business, and not tied to role requirements or performance expectations.

Step 2: Put The Rules In Writing

Informal arrangements are where disputes happen. It’s much easier to run training when the rules are clear upfront.

In practice, you’ll usually document training expectations in:

• the employment agreement (including training requirements, hours, and pay),
• workplace policies (including time recording and approval processes), and
• offer letters / onboarding checklists.

This is one reason it’s worth having a properly tailored Employment Contract rather than relying on a generic template that doesn’t match how your business actually operates.

Step 3: Record Training Time Properly

Even when training is paid, many businesses fall down at the record-keeping stage - especially for short modules, quick inductions, or shadowing shifts.

Set up a simple system for:

• approving training time (who approves it and when)
• recording training hours (timesheets, roster system, or payroll notes)
• capturing online module time (allocated time or tracked completion time)

This protects your business if you ever need to show what was worked and what was paid.

Step 4: Pay Correctly (And Avoid “Cash Fixes”)

It might be tempting to handle training informally - especially for a short shift - by paying cash or “sorting it out later”. That approach creates compliance risk quickly, particularly if tax and payroll records don’t match reality.

If you’re ever tempted to pay for training “off the books”, don’t - it can cross into illegal cash in hand territory and create much bigger issues than the cost of a few training hours.

Note: this article is general legal information only and isn’t tax advice. If you’re unsure about PAYE, record-keeping, or tax treatment for payments, it’s worth speaking with your accountant and/or checking guidance from Inland Revenue (IRD).

Step 5: Be Careful With Deductions And “Payback” Clauses

Some businesses try to recover training costs if an employee leaves soon after training. That can be possible in certain situations, but it needs to be handled carefully and fairly.

As a general rule, avoid:

• automatic deductions without clear written authority,
• overly harsh “bond” arrangements, and
• clauses that effectively stop someone from resigning (these can backfire).

If you want to invest in expensive training, it’s worth getting advice on the cleanest way to document it.

Step 6: Check For Discrimination Risks

Training is also an area where discrimination issues can quietly pop up - for example, if training opportunities are offered unevenly, or if certain workers are excluded without a lawful reason.

The Human Rights Act 1993 prohibits discrimination on various grounds. From a practical perspective, consistent training rules and fair access help reduce legal risk and also build trust with your team.

What Happens If You Get Unpaid Training Wrong?

If unpaid training should have been paid, your business could face:

• wage arrears claims (back pay for unpaid hours)
• penalties (depending on the nature of the breach)
• employment relationship disputes that consume time and energy
• reputational damage (particularly if the issue becomes public)
• compounding compliance issues if record-keeping and payroll aren’t aligned

Even when the dollar amount is small, these disputes can escalate because they often involve trust, fairness, and how you treat new staff.

And here’s the thing: most small businesses don’t set out to do the wrong thing. The problem is usually that the business has grown, the team has expanded, and the old informal way of training people no longer scales.

Getting your training approach documented properly now can save you a lot of headaches later - especially if you’re hiring frequently or running seasonal onboarding.

Key Takeaways

• Unpaid training is risky in NZ because if training counts as “work”, it generally needs to be paid at least minimum wage.
• Mandatory training is usually paid, including inductions, required online modules, and role-specific instruction.
• Unpaid trial shifts can easily become unlawful if the person performs real tasks or is being assessed by doing the job.
• Training outside normal hours can still be paid time if attendance is required or strongly expected.
• Put training expectations in writing through a tailored Employment Contract and clear internal processes for approvals and time recording.
• Keep payroll clean and consistent - avoid “cash fixes” and make sure training time is captured in your records.
• If you’re training contractors like employees, check your arrangements and documentation to reduce misclassification risk.

If you’d like help setting up your training arrangements, employment documents, or policies so your business is compliant from day one, you can reach us at 0800 002 184 or team@sprintlaw.co.nz for a free, no-obligations chat.