Minimum Wage Increasing to $17.70 from 1 April, further increases signalled

Gerrad Brimble

In a further step toward its goal of a $20 per hour minimum wage by 2021, the government will increase the minimum wage to $17.70 per hour from 1 April this year. That is a fairly hefty $1.20 increase over the current $16.50 minimum wage. The government has also signalled it intends to increase the minimum wage to $18.90 from 1 April 2020 before hitting its $20 target the following year.

Starting out and Training rates will also increase to $14.16 per hour from 1 April 2019.

Employers should be reviewing pay rates now to ensure no employees will fall below the new minimum wage from 1 April. That is a straight-forward exercise for employees paid an hourly rate, but do not forget about salaried employees, who are also entitled to be paid at least the minimum wage for all hours worked. Particular care should be paid to salaried employees whose hours of work fluctuate. Large variations in hours may mean those employees pay dips close to (and potentially below) minimum wage thresholds in some pay periods.

Breaches of minimum wage obligations carry a penalty of up to $50,000 per breach for an individual, or the greater of $100,000 or three times the amount of the financial gain made for a company. Non-compliant employers will also automatically be stood down by Immigration New Zealand from hiring migrant workers (or supporting current migrant workers’ visa renewals) for up to two years. For some employers (and their employees) that is a potentially very serious sanction.

The Labour Inspectorate is still hot on minimum wage compliance and there have been a number of prosecutions for minimum wage breaches in the past year, so it pays for employers to make sure they have their ducks in a row. Accurate wage, time and holidays records are also an area the Labour Inspectorate is continuing to monitor closely, with penalties of $1,000 per breach of those obligations, up to a maximum of $20,000 for multiple breaches in a three month period.

Talk to our employment law team for more information or to discuss your requirements.