ACC levies are a compulsory cost for every New Zealand employer and self-employed person, and they are among the least scrutinised lines in most businesses. The amount is not arbitrary, it varies enormously by activity, and businesses are frequently on the wrong classification without knowing it.
How the levy is calculated
Your Work levy is based on two things: your liable earnings, and the levy rate attaching to your classification unit — a code describing what your business actually does.
Classification units carry very different rates because injury risk and claim cost differ dramatically between activities. Office-based professional services sit at the low end. Roofing, forestry, meat processing and heavy construction sit at the high end, sometimes by a factor of ten or more.
The unit is assigned based on your business activity, and it is derived initially from what you told ACC or Inland Revenue when you registered. That initial description is often a rough approximation that nobody revisited.
Why the classification is worth checking
Two common situations produce a wrong classification.
The business changed and the code did not. A company that started as a general construction operation and now does design and project management only may still be classified against a construction unit at a construction rate.
The original description was imprecise. Businesses registering in a hurry select the nearest-sounding option, and the nearest-sounding option can carry a materially different rate from the correct one.
Where a business has multiple genuinely distinct activities, more than one classification unit may apply, with earnings apportioned. This is legitimate and under-used.
ACC can review a classification, and where it has been wrong, adjustments can apply. Approaching them proactively is straightforward, and it is not treated as an admission of anything.
The levies you pay
- Work levy — funds cover for work-related injuries, paid by employers on employee earnings and by self-employed people on their own.
- Earners’ levy — funds cover for non-work injuries to earners, collected through PAYE for employees and invoiced to the self-employed.
- Working Safer levy — a small levy funding WorkSafe’s regulatory activity.
Levy rates are set periodically following public consultation and are published by ACC. Because rates change, budgeting from last year’s invoice without checking is unreliable.
Experience rating and discounts
ACC operates experience rating for many employers, adjusting levies up or down based on the business’s own claims history relative to others in the same classification unit. Businesses with fewer and less costly claims pay less.
This is the mechanism by which genuine health and safety investment produces a measurable financial return, and it operates on a lag — improvements show up in later levy years.
Programmes are also available for employers who meet audited health and safety standards, and for accredited employers who take on greater responsibility for managing claims in exchange for reduced levies. The accredited employer route suits larger organisations with the internal capability; it is not a fit for most small businesses.
CoverPlus Extra for the self-employed
Self-employed people are covered by default on a basis that pays weekly compensation calculated from their actual earnings, which for someone with variable or low declared income can produce disappointing cover at the moment they need it.
CoverPlus Extra allows a self-employed person to agree a fixed level of cover in advance, with levies based on that agreed amount. It removes the argument about what you were earning and is worth considering for anyone whose income fluctuates or who takes drawings rather than salary.
Practical steps
- Look up your current classification unit and read the description. If it does not accurately describe what you do, contact ACC.
- Check whether multiple units should apply where you have genuinely distinct activities.
- Review your levy invoice against your actual liable earnings rather than paying it unexamined.
- If you are self-employed with variable income, look at whether CoverPlus Extra gives you cover that would actually work.
- Treat claims management as a financial matter as well as a welfare one — supporting a safe, early return to work reduces claim cost and future levies.
ACC publishes classification units, current levy rates, and guidance on experience rating and CoverPlus Extra free at acc.co.nz. Levy consultation documents are also published, so rate changes are visible ahead of taking effect.
General information only. Confirm your position with ACC.
