The minimum wage has just increased. How much is the increase and what do employers and employees need to know about the change?
The adult minimum wage in New Zealand is increasing from $20 per hour to $21.20 on April 1 2022, following promises from the government last year. The minimum wage for starting out and training will also go up from $16 to $16.96 per hour.
If you are earning the minimum wage your employer should automatically increase your pay by April 1 2022 to be in line with the new minimum.
If this does not happen you should ask your employer why the change has not occurred - it may be easier to do this in writing.
If your employer can not give you a satisfactory explanation you can call Ministry of Business, Innovation and Employment on 0800 20 90 20 for further advice.
Starting out workers and trainees
Starting out workers and trainees should also have their pay automatically increased from April 1.
Starting out workers are defined as employees who:
Are 16 or 17 years of age and have not completed six months of continuous employment with their current employer.
18 and 19 year old employees who have been paid one or more social security benefits and have not completed six months of continuous employment with their current employer.
16- to 19-year-olds whose employment agreement states they have to complete training for at least 40 credits a year in order to become qualified.
The training minimum wage applies to employees aged 20 years or over who must complete at least 60 credits a year of a training programme to be qualified. This mainly applies to apprentices and does not apply to employees who are being training at work.
What employers must do
Employers should be ready for the minimum wage increase and adjust their systems and budgets accordingly. Employment New Zealand suggests taking the following steps:
Advise your team.
Check your payroll systems and processes.
Update your business budget.
Changes to minimum wage should happen on the day the law change occurs. If they do not you must backdate all payments as soon as possible so that your employees are paid correctly.
You may also wish to review how employers are paid relative to each other, and consider increasing pay for more experienced workers on high rates as well.
Why the government increased the minimum wage
The cost of living in New Zealand increased quickly during 2021 - inflation was at 5.9% and the median rent went up by $40 during the year. This increase aims to help the workers and families earning the minimum wage to meet these rising costs and fairly compensate them for the work they do.
Workplace relations and safety minister Michael Wood says this change will benefit a total of 300,000 Kiwis as well as the economy:
“For someone working a 40-hour week on the minimum wage, this increase will see them earning an extra $48 a week, and almost $2,500 more each year.”
“The wage increase will also have a stimulatory effect on the economy as many workers will spend the extra money on goods and services, which in turn, will help support businesses.”
This Money and You Industry News, NZ minimum wage rises to $21.20 on April 1 (Industry News), is accurate at the date of publishing, 31 March 2022 and contains general information only. This Industry News is not intended to constitute financial advice and does not take your individual circumstances and financial situation into account. We encourage you to seek assistance from a trusted financial adviser, legal or other professional advice. The links that are provided or names of third parties are additional resources that you access at your own risk and the FSC takes no responsibility for any third party content. The FSC and its employees make no express or implied representations or give any warranties regarding this information and we accept no responsibility for any loss, damage, cost, or expense (whether direct or indirect) incurred by you as a result of any error, omission, or misrepresentation in this information.