What is the Minimum Wage in NZ?



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The minimum wage is the lowest remuneration for employees, regardless of employment type or a part-time or casual basis.
New Zealand Employment and HR
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When you employ staff who are 16 years or older in New Zealand, the law requires you to pay them at least the minimum wage. Employees are entitled to minimum wage even if they only work part-time or on a casual basis. Nevertheless, there are some exceptions and instances in which you can pay them a lower minimum wage rate. Similarly, you can also pay your workers a higher rate, though this must be agreed to the employment contract between you and your worker. Hence, as an employer, it is crucial that you understand your obligations under the minimum wage legislation to help you avoid potential legal disputes. This article will help you understand your legal obligations as an employer around minimum wage payments.

What Are the Minimum Wage Rates in New Zealand?

The minimum wage is the lowest remuneration you must pay your employees for their work. This is regardless of your employees' employment type. Further, the minimum wage applies regardless of the number of hours your employee works for you. To qualify for the minimum wage, your employees must be at least 16 years old.

The three different types of minimum wage rates in New Zealand are the:

  1. adult minimum wage;
  2. starting-out minimum wage; and
  3. training minimum wage.

As an employer, you need to understand the differences between these rates to avoid potential legal disputes with your employees.

Migrant workers also have the same employment rights as New Zealand workers. This means that if you employ a migrant worker, they are still entitled to be paid the minimum wage.

1. Adult Minimum Wage

If your employees are 16 years or older and do not meet either of the two categories below, you have to pay them the adult minimum wage. The adult minimum wage is $23.15 per hour as of 1 April 2024. The New Zealand government publishes minimum wage increases annually on the Employment New Zealand website.

2. Starting-Out Minimum Wage

You can use the starting-out minimum wage rate for your workers if they fall under any of the following categories.

  • 16 or 17 years of age but have not worked for you for six uninterrupted months.
  • 18 or 19 years of age but have been receiving a social security benefit for longer than six months. Additionally, these employees, since they started receiving the benefit, have not worked for you for a continuous six-month period.
  • 19 years old or younger, but their employment agreement with you states they have to undertake recognised industry training. Your employee may have to undertake industry training to become qualified in the area they are working in. This industry training must equate to at least 40 credits a year.

To assess whether your workers meet the six months of continuous employment requirement, you need to determine:

  • your employee's first day of work; and
  • the next six calendar months from this date.

In this assessment, you must include any time your employee worked before they turned 16. You also need to factor in any leave they took, whether paid or unpaid.

3. Training Minimum Wage

You can use the training minimum wage if your employee:

  • is 20 years or older; and
  • their employment agreement states that they have to complete an industry-related programme. This is most common where your employee wishes to become qualified in the area they are working in.

The training minimum wage as of 1 April 2024 is $18.52 per hour.

Can You Apply for a Minimum Wage Exception?

As an employer, you can apply for an exemption if you want to take on an employee with a disability. In this instance, you may think it is appropriate to pay them less than the minimum wage. To apply, you can contact the Employment Service Centre and lodge a referral to the Labour Inspectorate.

If you employ workers in the agricultural sector, you may provide them with other benefits as part of their employment, such as:

  • accommodation; and
  • other goods and services.

That said, you need to agree with your employees beforehand regarding:

  • what you will provide; and
  • how much you will deduct from your employee's wages.

How to Calculate Minimum Wage

The wage you owe your employees depends on their employment type. For your salaried employees, you should divide their pay by the number of hours they work. You should check the Employment New Zealand website for wage earners to ensure their hourly rate is at least the minimum wage. This includes any extra hours they work.

There are several other considerations. For example, if:

  • You have agreed to a higher rate with your employees: In this instance, you must pay them the rate stated in their employment agreement.
  • Your employees meet the starting-out criteria: In which case, you have to pay them at least the minimum starting-out wage rate.
  • You employ trainees over 20 years of age: In this scenario, you must pay them at least the training minimum wage rate.

Commission or Piece Rates

It is important that if you have any employees who are being paid on piece rates or commission, you still pay them the minimum wage. As such, your employee's rates of commission or piece rates cannot be lower than the minimum wage. This is in reference to the minimum wage your employee is entitled to for each hour of work. If these rates are lower than the minimum wage, this will be considered unlawful.

Key Takeaways

If you employ workers over 16 in New Zealand, you are legally obligated to pay them at least the minimum wage for any work. This is regardless of their employment type and the total number of hours they work. You can pay a lower rate in several instances. However, your employees must meet the starting-out or training eligibility criteria. As such, you should always check the Employment New Zealand website to ensure you use the most current rates. It is important to check the current rates, as they typically increase yearly.

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