The minimum wage has gone up – don’t get caught short

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MINIMUM WAGES IN NEW ZEALAND INCREASED ON 1 APRIL 2021

On 1 April 2021 the standard adult minimum wage increased again from $18.90 to $20.00 per hour. The other minimum wage rates also increased as follows:

  • The starting-out minimum wage rate has increased from $15.12 to $16 per hour; and

  • The training minimum wage rate has increased from $15.12 to $16 per hour.

This places New Zealand in the top three OECD countries in terms of minimum wage vs median wages.  This has implications for existing staff on minimum wages, staff who might be more experienced but are now paid only fractionally more, and (of course) the cost of a new-hire.

Things to watch

As an employer you need to comply with the Minimum Wage Act. If you get caught short, you could be in breach of the Act.

These changes are a good opportunity to:

  • review staff pay to ensure all staff are receiving the minimum wage and, possibly, more experienced staff are earning and appropriate rate
  • update your employment agreements to reflect the new rates
  • make those changes in your payroll systems so the pay actually goes through, and
  • consider whether your employees are properly recording their time.

The time recording requirement is particularly important where your staff are paid a salary / in seasonal industries. Minimum wage applies to salaried staff too. If your employees are on a salary you will need to record and check all their hours to ensure that their equivalent hourly rate for any given pay period works out to be above the minimum wage.

Industries that have seasonal workflow, such as dairy farming, fruit harvesting and tourism have a trickier task. The ebb and flow of the work in these industries mean employers can miscalculate their employee’s wages. An employer can’t dip below the minimum wage in one pay period anticipating a quieter period the next week.

What if I missed the boat?

Employers who didn’t get the update may already be in breach of the Act by not updating their agreements and systems and keeping up with their payment increases. If your changes came a bit late (or are just now getting in place) there are ways to remedy those mistakes.  Let us know about the situation and we can put a plan in place which will hopefully keep staff happy and your business risk-free.

How can we help?

WRMK Lawyers has Northland’s largest team of employment law specialists. If you need some help or guidance, please give one of us a call or contact your usual WRMK lawyer for advice. You can view our Employment Law team here.

WRMK Lawyers takes all reasonable care to make sure that the information in this article is up-to-date and accurate at today’s date. It is necessarily general information and not intended as legal advice to be relied upon.

Our thanks to Simon Davies-Colley and Laura Lee for writing this article.