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Minimum Wage in New Zealand.

Minimum Wage in New Zealand

Minimum wage rates apply to all employees aged 16 year and older who are full-time, part-time, fixed-term, casual, and work from home. The minimum wage standard applies to employees who are paid an hourly wage and salary, and most employees who earn a commission or piece rates.

Why Have A Minimum Wage?

New Zealand was the first country in the world to establish a Minimum Wage Policy in 1894, although the idea of a minimum wage has been around a lot longer. Minimum wage laws have been modified over time to provide equal pay and fairness in the workplace, while aiming to increase the standard of living and reduce poverty.

The argument for and against the minimum wage, and what rate it should be set at is still heavily debated to this day.

What is the Current Minimum Wage?

As of 1 April 2019, the minimum wage rates apply to the following workers aged 16 years or over:

1) Adult Minimum Wage – $17.70 Per Hour
This is the wage most commonly used by businesses in New Zealand and applies to all employees over 16 years of age.

2) Starting-Out Minimum Wage – $14.16 Per Hour
This applies to employees aged 16-19 entering the workforce for the first time. However, there are certain requirements to use this wage rate.

3) Training Minimum Wage – $14.16 Per Hour
This applies to employees 20 years or over who involved in relevant industry training to become qualified. However, there are certain requirements to use this wage rate.

How Often Does The Minimum Wage Change?

Each year the Minister for Workplace Relations and Safety fulfils their obligation under the Minimum Wage Act 1983 to submit an annual review of the minimum wage by 31 December. Since 2000, the New Zealand minimum wage has increased on a yearly basis for each type of minimum pay including adults, new entrants and trainees.

Employers need to be prepared each year for increases to the minimum wage. These changes impact businesses across all industries and employers who pay staff the minimum wage in NZ. Employers who fail to pay the correct minimum wage may be forced to pay back the full amount of lost wages and a severe penalty.

What Happens In Cases Of Non-Compliance?

If an employee believes they have been underpaid, they should first approach their employer to try and resolve the situation. They may also apply to the Employment Relations Authority to seek to recover the underpayment, or, request the assistance of a Labour Inspector.

The role of a Labour Inspector is to investigate and enforce compliance with minimum requirements. This includes leave entitlements, as well as the minimum wage. If a Labour Inspector finds an employer has failed to comply with minimum requirements, they have the option of requiring an employer to rectify the breach, and/or apply to the Employment Relations Authority to impose penalties on the employer.

Read our guide on the ERA for information on how this process works. If unresolved at the ERA, a case may escalate to the Employment Court.

How To Find Out If Your Business Is Compliant With The Minimum Wage Act?

Be sure to stay informed on the current minimum wage rates for all employees aged 16 years and older. Employsure will regularly update clients on any changes or updates throughout the year. If an employee has recently turned 16, their rate of pay must be increased to reflect the current New Zealand minimum wage rates.

The following employees are exempt from the standards of the Minimum Wage Act 1983:

  • employees under 16 years (but they are still entitled to other minimum employment rights)
  • some disabled employees who hold an exemption permit from the minimum wage
  • inmates of a charitable institution
  • prisoners working in custody under the Corrections
  • apprentices who are under: the Maori Housing Amendment Act 1938, the New Zealand Railways Corporation Act 1981, the Defence Act 1971, the Post Office Act 1959, the State Services Act 1962, or under any other Act.

For advice on how to be compliant with the New Zealand minimum wage, contact Employsure on 0800 675 697.

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