Minimum wage increases from 1 April 2020
26 March 2020
The adult minimum wage will increase $1.20 from $17.70 to $18.90 per hour on 1 April 2020.
The new rate equates to an extra $48 per week before tax for employees on a 40-hour working week.
The starting-out and training minimum wage rates will increase 96 cents from $14.16 to $15.12, and will remain at 80% of the adult rate.
All employees and employers should take note of the minimum wage changes, as it sets a new relative benchmark for pay negotiations.
Overall, the increase is estimated to boost wages paid in the New Zealand economy by $306 million a year. More than 240,000 workers will have a lift in their income. Key industries with significant numbers of affected employees include accommodation, food services and retail. Affected occupations include service, clerical and sales workers, plus machinery operators, drivers and labourers.
Employers should ensure payroll systems and processes are up-to-date to handle the new rates.
By law, employers are required to pay all employees at least the minimum wage. There are penalties for not complying with the minimum wage. Where an employer is found to have breached the Minimum Wage Act, penalties of up to $20,000 (for a company) or $10,000 (for an individual), can be ordered, per breach. In the case of serious breaches stronger sanctions can be ordered such as financial penalties and banning orders.
Employers still have time to make the required updates and avoid the risk of penalties.
Note: The Government has announced its COVID-19 package for employers and employees affected by the coronavirus.
Workplace response to coronavirus (COVID-19)