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Landmark Wage Decision – Are You up to Speed?

Published May 09, 2017 (last updated December 7, 2020) -

The minimum wage reflected below is from 2017, for 2018’s minimum wage please refer to our latest post here. 

In April this year, the New Zealand Government announced a funding boost that will see wages amongst some of the health sector’s lowest paid workers, increase to between $19 and $27 over the next five years.

The wage boost follows the TerraNova pay equity claim and will impact over 55,000 workers in the health sector and their legislated minimum wage. It is expected that new wage rates will apply in the first pay run after 1 July 2017.

Existing workers will be transitioned to positions on the new pay scale which reflects their skills and experience. Wages of new workers employed after July 1 2017 will be based on an individual’s level of qualifications.

A care and support worker on the minimum wage with three years’ experience and no qualifications will receive a 27% increase in their hourly wage rate moving from $15.75 to $20 per hour from July 1 2017. That rate would progressively increase to $23 by July 2021 and would rise further if they attain a higher qualification.

Who does the pay equity settlement apply to?

This decision impacts three types of care and support workers in New Zealand and their legislated minimum wage:

  1. Home and community care workers
  2. Aged residential care workers
  3. Community residential support workers

The new prescribed wage rates will apply to all employees in the sectors outlined above, even if they are not a union member.

What happens now?

Legislation will be introduced shortly to prescribe minimum rates of pay with implementation of new wages rates to occur over a five-year period, recognising years of experience and qualifications.

Employers do not need to act now however, be prepared that there are forthcoming changes to the pay structure in the care and support industry.

Settlement parties agreed to create incentives for care and support workers to gain formal qualifications with contracts between funders and providers to require employers to provide systems and support to enable covered workers to gain the appropriate qualifications. The NZ Qualifications Authority Health & Wellbeing Certificate qualifications will need to be gained within the following time periods:

  • Level 2 NZ Certificate – within 12 months of employment
  • Level 3 NZ Certificate – within three years of employment
  • Level 4 NZ certificate – within six years of employment

Should female-dominated industries get a pay rise?

This decision is based on the TerraNova pay equity claim that addressed systematic gender inequality, and reflects the fact that care and support workers are predominately female. The case argued that a care worker’s pay is less than what a male’s pay would be if skillsets were equal in another occupation.

Will the implications of this decision affect other female-dominated industries and potentially lead to a reform across the entire minimum wage structure where we see industry-specific minimum wages, or ‘Awards’, more like the Australian model? We’d love to hear your view – email us at [email protected].

For more information see the following fact sheet from the New Zealand Government Ministry of Health or contact Employsure on 0800 568 012.

About Employsure

Employsure is one of New Zealand’s largest workplace relations advisers to small and medium businesses, with over 5,500 clients. We take the complexity out of workplace legislation to help small business employers protect their business and their people.

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