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Minimum Wage

Information on the national minimum wage rates and how they apply to workers in New Zealand.

Sections

1. National Regulations on Minimum Wage in New Zealand

The minimum wage in New Zealand is governed by the Minimum Wage Act 1983. The government reviews the minimum wage annually, typically adjusting it on April 1 each year. The minimum wage applies to all employees aged 16 and over, regardless of whether they are full-time, part-time, fixed-term, casual, or working from home.

Key points:

  • Employers are legally required to pay at least the minimum wage to eligible employees.
  • The minimum wage applies to hours worked, including training and trial periods.
  • Deductions (e.g., for accommodation) must not reduce an employee's pay below the minimum wage unless agreed upon in writing and compliant with the law.

2. Current Minimum Wage Rates (as of October 2023)

The minimum wage rates in New Zealand are divided into three categories:

a. Adult Minimum Wage

  • Rate: NZD $22.70 per hour (before tax).
  • Eligibility: Applies to employees aged 16 years and older who are not starting-out workers or trainees.

b. Starting-Out Minimum Wage

  • Rate: NZD $18.16 per hour (before tax), which is 80% of the adult minimum wage.
  • Eligibility: Applies to:
    • 16- and 17-year-olds in their first six months of employment with a new employer.
    • 18- and 19-year-olds who have been on a benefit for six months or more and are starting work for a new employer.
    • 16- to 19-year-olds in a recognised industry training programme involving at least 40 credits per year.

c. Training Minimum Wage

  • Rate: NZD $18.16 per hour (before tax), which is 80% of the adult minimum wage.
  • Eligibility: Applies to employees aged 20 years or older who are completing industry training as part of their employment.

d. Exceptions

  • Employees under 16 years old are not entitled to the minimum wage.
  • Volunteers and contractors are not covered by minimum wage laws, as they are not considered employees.

3. Application Across Different Types of Work

  • Casual and Part-Time Workers: The minimum wage applies regardless of the number of hours worked. Casual workers must be paid at least the minimum wage for every hour worked.
  • Piece Rates and Commission-Based Work: Workers paid by output (e.g., per item produced or per sale) must still earn at least the minimum wage for every hour worked.
  • Overtime and Public Holidays: Employees must be paid at least the minimum wage for all hours worked, including overtime. On public holidays, employees are entitled to time-and-a-half pay and potentially a day off in lieu if they work.

4. General Costs of Living in Relation to Wages

New Zealand has a relatively high cost of living, particularly in major cities like Auckland, Wellington, and Christchurch. Below is an overview of typical expenses:

a. Housing

  • Rent for a one-bedroom apartment:
    • Auckland: NZD $450โ€“$600 per week.
    • Wellington: NZD $400โ€“$550 per week.
    • Smaller towns: NZD $300โ€“$450 per week.
  • Utilities (electricity, water, internet): NZD $150โ€“$250 per month.

b. Food

  • Weekly grocery costs for one person: NZD $80โ€“$150.
  • Dining out: NZD $15โ€“$25 for a casual meal.

c. Transportation

  • Public transport (monthly pass): NZD $120โ€“$220, depending on the city.
  • Petrol: Around NZD $2.50โ€“$3.00 per litre.

d. Other Costs

  • Healthcare: Subsidised for residents, but GP visits cost NZD $50โ€“$70 without insurance.
  • Education: Free for children in state schools, but private schools and tertiary education can be expensive.

e. Minimum Wage vs. Living Wage

The Living Wage in New Zealand is a voluntary benchmark that reflects the income needed to meet basic living costs. As of 2023, the Living Wage is NZD $26.00 per hour, higher than the minimum wage. Many employers voluntarily pay the Living Wage to support workers' well-being.

5. Standard Procedures for Employers and Employees

a. Employersโ€™ Responsibilities

  • Ensure employees are paid at least the minimum wage for all hours worked.
  • Keep accurate records of hours worked and wages paid.
  • Provide written employment agreements to all employees.
  • Comply with tax obligations, including PAYE (Pay As You Earn) deductions.
  • Offer a safe and healthy workplace under the Health and Safety at Work Act 2015.

b. Employeesโ€™ Rights

  • Receive at least the minimum wage for all hours worked.
  • Be provided with a written employment agreement.
  • Have access to paid leave entitlements (e.g., annual leave, sick leave, public holidays).
  • Raise concerns about pay or working conditions without fear of retaliation.

c. Resolving Disputes

If an employee believes they are not being paid the minimum wage, they can:

  1. Discuss the issue with their employer.
  2. Seek advice from the Employment New Zealand website or helpline.
  3. File a complaint with the Employment Relations Authority (ERA) if necessary.

6. Country-Specific Considerations and Cultural Aspects

a. Work Rights and Fairness

New Zealand has a strong culture of fairness and equality in the workplace. The government actively enforces employment laws to protect workers from exploitation, particularly migrant workers who may be more vulnerable.

b. Migrant Workers

  • Migrants on work visas are entitled to the same minimum wage protections as New Zealand citizens and residents.
  • Employers hiring migrant workers must comply with visa conditions and ensure fair treatment.

c. Union Representation

  • Many workers in New Zealand are members of unions, which advocate for better wages and conditions. Joining a union is voluntary but can provide additional support.

d. Cultural Attitudes

  • New Zealand workplaces tend to have a relatively flat hierarchy, with an emphasis on collaboration and respect.
  • Employers and employees are encouraged to maintain open communication and resolve issues amicably.

7. Key Resources

Summary

The minimum wage in New Zealand is designed to ensure fair pay for all workers, with specific rates for adults, starting-out workers, and trainees. While the minimum wage provides a baseline, the high cost of living in New Zealand means many workers advocate for the Living Wage. Employers and employees must adhere to legal requirements, and there are robust systems in place to address disputes and protect workers' rights. Understanding these regulations and cultural norms is essential for both workers and employers to navigate the New Zealand job market effectively.