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Minimum Wage Goes up but What About the Living Wage?

Published April 06, 2017 (last updated December 2, 2020) -

The new minimum wage of $15.75 is now in place, after coming into effect on 1 April 2017. This minimum wage rate is still above the starting-out wage and training wage which have both also had an increase and now sit at $12.60 per hour.

The rules are simple, employees must be paid at least the minimum wage. But before you simply make the rate change, be sure to carefully consider which minimum wage rate applies to your employees.

There are three types of minimum wage rates and, as mentioned above, they have all had an increase. The most common rate is the adult minimum wage which applies to all employees 16 years of age and older, as well as all employees involved in supervising and training of other employees. This minimum wage has now gone up 50 cents to $15.75, and as of 1 April 2017 you need to be paying adults in your workplace at least this amount per hour.

As the minimum wage rates have changed across the board, it is important for you to consider whether you pay employees the starting-out minimum wage. This type of minimum wage applies to a number of different groups of employees, such as employees aged 16 and 17 years who have not done six months of service with you. Some employees aged 18 and 19 years can also be paid this wage provided they have not done six months service with you, and they have been paid some form of social security benefit for six months or more. Employees aged 16 to 19 years may also be paid this minimum wage if they have an employment agreement which states 40 credits a year of industry training is required.

To round out the three categories of minimum wage, you may also have employees eligible for the training minimum wage. The training minimum wage, as its title makes clear, covers those employees who are learning while they earn a wage. It covers only those employees doing an approved industry training programme.

While these changes are in place, the debate around minimum age versus the living wage continues. We asked small business owners across various industries to share their views on what they thought of the living and minimum wage, with some varied and interesting responses.

Some business owners indicated they are happy to pay well above the minimum wage and did not see a need for the living wage to be legislated, while others were stronger in their criticism of the living wage saying it made it hard to compete against foreign companies which pay less. Other responses focused on how the minimum wage has removed flexibility in the employment relationship.

Regardless of whether any change to the living wage comes into effect, one thing for sure is the implementation date of the minimum wage has now come. Whether you pay the adult, starting-out, or training minimum wage rate you now have a new minimum which you must meet. There are harsh penalties issued by the Employment Relations Authority for failing to pay employees basic entitlements. Make sure your policies are in place to avoid an investigation and severe penalties.

If you would like to have your say about the minimum wage versus living wage, email us at [email protected].

Implementing the correct minimum wage rate can be complex, Employsure can help. As the leading workplace relations specialist, we will work directly beside you to help you achieve a fair a safe workplace for all. Contact an Employsure specialist 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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