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Are you up to date with the minimum wage?

10 July 2020 / By Rachel Harris

By now, you’re likely to be aware that the adult minimum wage in New Zealand has risen to $18.90 per hour. But this took effect from 1 April 2020, and with New Zealand entering Alert Level 4 almost a week prior on 25 March 2020, there was already a lot going on for business owners to think about and factor in!

If you made the necessary changes to your payroll, great! If not, or if you’re thinking about taking on new employees in the near future, this is to catch you up on the latest changes.

The increase to the minimum wage is a continuation of the Government’s plan to achieve a $20.00 per hour adult minimum wage by 2021, and has put an extra $48 in the pocket of minimum wage workers that work a 40 hour week.

The rates are now the following:

Adult minimum wage – $18.90 per hour
This applies to all employees aged 16 and over who aren’t starting-out workers or trainees, and all employees who are involved in supervising or training other employees.

Starting-out wage – $15.12 per hour
This applies solely to workers aged between 16 and 19 and who are entering the workforce for the first time.

Training minimum wage – $15.12 per hour
This applies to employees aged 20 years or over who are completing recognised industry training involving at least 60 credits in order to become qualified.

 

So what’s the Living Wage we hear about?

The Living Wage emerged as a response to growing poverty and inequality that can hold many employees and their families back. In essence, the Living Wage is the hourly wage a worker needs in order to pay for the necessities of life, and to participate as an active citizen in the community. It reflects the basic expenses of workers and their families such as food, transportation, housing, and childcare, and it's calculated independently each year by the New Zealand Family Centre Social Policy Unit.

The Living Wage Movement is not aligned to any political party but seeks to influence those who have the power to change the lives of workers and their families. This is why a number of large publicly-funded employers in New Zealand are encouraged, or choose, to pay a Living Wage. Many small and ethical/socially-responsible employers also choose to pay a Living Wage and have become accredited.

On 1 September 2020, the Living Wage rate will rise from $21.15 to $22.10 per hour.

 

What do you need to think about if you’ve got staff that are on minimum wage?

If you have staff that are on minimum wage, you’ll need to ensure you have increased their pay from 1 April 2020. If you haven’t done this, you will need to backdate the increase to 1 April 2020 – but remember to factor in any variations you might have also made to your employees’ remuneration over the various COVID-19 alert levels. Don’t panic if you have overlooked the increase; work through each employee systematically to calculate the arrears, communicate with your staff, and then make any necessary corrections in your payroll system. If you are needing to change your staffing as a result, think about how you might handle those conversations with employees and if you need any help to do so.

I spoke to Jon Colgan, RightWay Business Partner, who had this advice, "businesses who have employees on minimum wage should also be thinking about how the changes are affecting their cash flow. You might decide that you’re going to need to reflect the increase in your pricing or just absorb the cost. This can also be a good time for businesses to think about their systems and processes. Automating some of your processes or finding a more efficient way to do things might mean that you can continue to keep costs down”.

Don't hesitate to reach out if you have any questions or concerns about wages in your business, or anything business related! Call 0800 555 024, email rachel.harris@rightway.co.nz or see more on our information page.

 

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