Can employee benefits reduce business risk?

New Zealand businesses are increasingly treating employee benefits as a core risk management strategy, rather than simply a staff wellbeing initiative, according to insurance brokerage Lockton New Zealand.

In a February article, the firm’s head of people solutions, Niall Martin, said the shift has become more pronounced over the past 12 months, with senior executives – including chief executive officers, chief operating officers, and chief financial officers – now playing a greater role in shaping employee benefit programmes alongside traditional HR and People teams.

From wellbeing to enterprise risk

Martin said two converging forces are driving the change. Hiring has become more costly and time-consuming, meaning that replacing or backfilling skilled roles takes longer and amplifies the business impact of employee absence. At the same time, rising absence rates are placing pressure on organisations already running at capacity.

The challenge is particularly acute in regional New Zealand, according to Lockton, where talent attraction is more difficult, teams are smaller, and individual roles carry broader responsibilities. In that context, workforce management has become what the firm describes as “an enterprise risk issue with direct implications for revenue, reputation, and service performance.”

Communication key to programme impact

Lockton warned that even a well-designed benefits programme can fall short if employees do not understand or know how to access it. The firm identified communication as the single most significant factor in determining the effectiveness of a programme. When employees clearly understand what is available, they are more likely to seek help early – potentially leading to shorter absences and improved workforce reliability.

Lockton also cautioned against a “set and forget” approach, noting that ongoing activation is essential once a programme is launched. The firm pointed out that New Zealand health and life insurers have steadily expanded their products in recent years to include early-intervention pathways, GP access, mental health support, and everyday wellbeing resources – services whose value is only realised when employees are aware of and confident in using them.

The brokerage further noted that measuring how employees use their benefits – and adjusting programmes accordingly – is key to keeping them effective over time.

Lockton described a well-integrated employee benefits programme as “one of the most under-utilised yet powerful risk management tools available to organisations.”

Shift in employment sector

The Lockton findings arrive against a broader backdrop of sweeping changes to New Zealand’s employment landscape. Stats NZ data shows the country’s unemployment rate climbed steadily through 2025, rising from 5.1% in the March quarter to 5.3% by September – its highest level since December 2016. The actual number of people out of work reached 160,000 in the September quarter, according to RNZ. By December 2025, the rate edged further to 5.4%, according to Trading Economics.

Meanwhile, the government has moved to increase baseline costs for employers. Effective April 1, 2026, New Zealand’s adult minimum wage will rise from $23.50 to $23.95 per hour, with the starting-out and training wage moving from $18.80 to $19.16 per hour, according to the Ministry of Business, Innovation and Employment.

Retirement savings obligations are also shifting. Minimum employer and employee KiwiSaver contributions are set to rise from 3% to 3.5% from April 1, 2026, with a further increase to 4% scheduled for April 1, 2028, according to Inland Revenue.