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Wellington, March 28, 2021
The government has confirmed that the adult minimum wage will increase from $18.90 to $20.00 per hour on April 1, 2021.
The starting-out and training minimum wage rates will also increase on April 1, 2021, from $15.12 to $16.00 per hour.
Employers must ensure that their payroll systems and processes are updated.
All employers and employees should also take note of the minimum wage changes, as it sets a new relative benchmark for pay negotiations.
Employees have to be paid at least the minimum hourly wage rate for every hour worked. Anyone who thinks they are being paid less than the minimum wage should Employment New Zealand.
Different types of minimum wage rates has more information on the different types of minimum wage rates: adult, starting-out and training.
Adult minimum wage
The adult minimum wage applies to all employees aged 16 years and over who are not starting-out workers or trainees or involved in supervising or training other workers.
What this means will depend on each individual situation.
For example, it would usually include an employee overseeing the performance of another employee or instructing another employee in the performance of their job; the employee need not have direct line management responsibility for other employees. The supervising or training needs to be a part of that person’s job, not just a one-off event.
Starting-out minimum wage
The starting-out minimum wage applies to workers who are (a) 16-and-17-year-old employees who have not done six months of continuous employment service with their current employer (b) after six months with one employer, they are not starting-out workers and must be paid the adult minimum wage (b) 18-and-19-year old employees who have been paid one or more social security benefits for six months or more, and who have not completed six months’ continuous employment with an employer since they started being paid a benefit.
Specified security benefits include (1) domestic purposes benefit (2) emergency benefit (3) independent youth benefit (4) invalid’s benefit (5) jobseeker support (6) sickness benefit (7) sole parent support (8) supported living payment (9) unemployment benefit (10) widow’s benefit and (11) young parent payment and youth payment.
16- to 19-year-old employees whose employment agreement states they have to undertake industry training for at least 40 credits a year in order to become qualified in the area in which they are working.
If an employee is supervising or training other workers, then the starting-out minimum wage doesn’t apply and they must be paid at least the adult minimum wage.
Calculating six months of continuous service
Six months of continuous employment with an employer is calculated for the next six calendar months from the employee’s first day of work; the number of hours per week the employee works is not relevant.
Calculating whether or not an employee has completed six months of continuous service must include any time the employee was employed by their employer before they turned 16 on leave (paid or not).
If the employee moves to a new employer, they will be a starting-out worker again for the first six months; this applies with each new employer until they reach the maximum age.
Training minimum wage
The training minimum wage applies to employees aged 20 years or over whose employment agreement states that they have to do at least 60 credits a year of an industry training programme to become qualified in the area in which they are working.
Many of these employees will be apprentices.
An apprentice has the same minimum rights and protections under employment law as any other employee but may be paid the training wage.
Training minimum wage does not apply to employees who are being trained at work, for example, by their employer at the start of their employment; it only applies to employees doing an approved industry training programme.
It does not apply to an employee who is supervising or training other workers. These employees must be paid at least the adult minimum wage.
Paying employees under 16
There is no minimum wage for employees under 16 but all the other minimum standards and employment rights and obligations apply.
When an employee turns 16, they must be paid the relevant minimum wage (even if they were paid less than the minimum wage when they were 15).
Exceptions to the Minimum Wage Act 1983
Exemptions from the Act
The Minimum Wage Act 1983 does not apply to (a) Apprentices 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 (b) Inmates of any charitable institution (who are not living there just because they are employees) who do any work as inmates (c) Prisoners working while in custody under the Corrections Act 2004. They may be paid at a rate approved by the Minister of Corrections (d) employees who travel between clients are covered by the Home and Community Support (Payment for Travel Between Clients) Settlement Act 2016 in relation to travel only.
