1 April 2019 sees an increase in the minimum wage for all NZ employees.
From today, every single employee must be earning:
- $17.70 or more, if they are an adult employee
- $14.16 or more, if they are a starting employee or employee in training.
What this means for you as an employer is that any employee who is currently earning less than these amounts, must, from today, receive an adjustment to their hourly rate which brings their hourly rate to this amount or more.
Example 1: If an employee was previously earning $16.50 per hour as a minimum paid employee, their new rate from today must be no less than $17.70 (a $1.20 per hour increase)
Example 2: if an employee was earning $17.00 per hour (3.03% more than the minimum wage), there is no legal requirement to move the employee to anything other than $17.70. With an eye on employee morale and workplace dynamics, an employer could in the interests of consistency move that employee to $18.236 per hour (3.03% more than the new minimum wage). This is not a legal requirement, however.
Example 3: if an employee is already earning $17.70 or more, there is no legal requirement to make any changes to the employees pay on 1 April. The employer could limit the changes only to those employees earning less than the minimum.
Managing the change
In determining a strategy for these changes, it is important to manage affordability but also to properly understand workforce expectations and manage them proactively. For example, an employee already earning $17.70 who is more experienced than another who suddenly earns the same pay rate, may be resentful or frustrated that their seniority or skill is no longer recognised in comparison to their less experienced/skilled colleague who has benefited from the minimum wage change.
All changes should be applicable from today and appear in the next pay slip received by each employee. It is possible in rare situations to delay the increase (if for example the administrative load makes it impossible to meet the deadline) but affected employees would then entitled to backpay to 1 April. Again, proactive communication is recommended.