The government has announced that minimum wage is increasing for New Zealand workers.
Like last year, the minimum wage will increase on 1 April 2022, compounding the challenges experienced by small businesses during COVID.
As announced on 11th February by the NZ Government, the minimum wage will increase by 6%, which means the minimum hourly rate will go from $20.00 to $21.20.
Concurrently, the starting-out wage and training minimum wages will increase from $16.00 per hour to $16.96 per hour.
Does the Minimum Wage Apply to My Business?
Yes, the minimum wage increase will apply to all employers within New Zealand.
Are There Any Exemptions to Paying the Minimum Wage?
There is no minimum wage rate for workers under 16 years of age, but all the other minimum standards and employment rights and obligations apply. Employers must remember to switch employees to the minimum wage rate once they turn 16. Should an employer fail to adjust the rate, they may risk non-compliance with the Minimum Wage Act 1983, and also be liable for the recovery of underpaid wages.
Other exemptions outlined in the Act include:
Apprentices under the Māori Housing Amendment Act 1938, Defence Act 1990, and other relevant legislation
Inmates of any charitable institution
Prisoners working in custody under the Corrections Act 2004
Employees who travel between clients, which are instead covered by the Home and Community Support Settlement Act 2016
Exemptions for Employees with a Disability
In some cases, an employee may have a disability that limits them carrying out the requirements of their job. Under a mutual agreement with the employee, employer and a Labour Inspector, the employee can be issued a minimum wage exemption permit, which allows the employer to pay a proposed minimum wage lower than the national standard for a specific job and time period.
To issue a minimum wage exemption permit under the Minimum Wage Act 1983, the employer and employee have to discuss the requirements of the job and negotiate a new minimum wage. During these negotiations, the employee can be accompanied by a union representative, advocate or independent representative for guidance and support.
A Labour Inspector will not issue a minimum wage exemption permit if they, a representative, or the employee do not agree to the proposed pay rate. A minimum wage exemption permit will not be granted if the Labour Inspector feels the employee deserves the base minimum wage rate or the negotiated rate is not fair.
If I Pay My Employees a Salary, Do I Have to Comply with the Minimum Wage?
The difference between a wage and a salary only refers to the structure of payment.
A wage is a pay rate per hour that is then multiplied by the number of hours worked. On the other hand, a salary is a fixed, regular payment agreed upon in an employment agreement, generally for a certain number of hours worked per week expressed over the course of year (e.g. $60,000 per annum).
Salaried employees must receive at least equal or higher than the current minimum wage rate for every hour worked.
Where Can I Learn More About My Wage Obligations?
Employsure can assist you to better understand and implement the minimum wage in your business, including providing tips on how you can reduce staffing costs. Get in touch with us now for free, initial advice, or download our guide to find out more information about wages in New Zealand.
Got Questions on the Minimum Wage Increase?
Call Employsure now to get free, initial advice on what this change means your business.