Minimum wage rise: what you need to know

by | Mar 18, 2022 | News

Supermarket and warehouse workers have been at the frontline of our country’s food supply over the past couple of years, and are now getting a pay rise. The minimum wage is to rise by $1.20, going up from $20.00 to $21.20 an hour, on 1 April 2022.

“Many Kiwis who earn the minimum wage have gone above and beyond in our fight against COVID-19. We remain committed to supporting New Zealanders by raising their wages, as we continue to recover and rebuild from the pandemic,” Michael Wood said in February when the change was announced.

“With the arrival of Omicron, we are once again calling on many of our frontline workers – such as cleaners, supermarket workers, and security guards – to keep the country running as the virus spreads and cases begin to increase. I think everyone agrees those contributing so much to our COVID response deserve a pay rise.

The minimum wage applies to employees who are:

  • full-time, part-time, fixed-term, casual, working from home
  • paid by wages, salary, commission or piece rates (with some exceptions).

Employees must be paid at least the minimum hourly wage rate for every hour worked, unless they agreed to a higher rate in their employment agreement. Payments for call-outs should also be negotiated in the employment agreement.

The government predicts the wage increase will have a stimulatory effect on the economy as many workers will spend the extra money on goods and services, which in turn, will help support businesses.

“Raising the minimum wage will directly benefit approximately 300,000 workers, and will help many households that have been most impacted by the effects of COVID. For someone working a 40-hour week on the minimum wage, this increase will see them earning an extra $48 a week, and almost $2,500 more each year”, Wood said.

Here’s what you need to do.

When: 1 April 2022

What: The new minimum wage rates, before tax, are:

  • Adult – $21.20 an hour (up from $20.00)
  • Starting-out – $16.96 per hour (up from $16.00)
  • Training – $16.96 per hour (up from $16.00)

Minimum pay rules

Why: By law, the Government must review the minimum wage rates every year.

What you’ll need to do:

  • If you do have staff on minimum wage, send them a letter or email to let them know about the increase.
  • If any workers are on starting-out or training wages, now is a good time to check when they’ll be eligible to move to the adult rate.
  • If you pay staff minimum wages, recalculate your budget for the rest of the year, as you’ll be paying out more in wages. To work out the updated cost of your employees, use the Employee cost calculator.
  • Check that any affected employment contracts are updated.
  • Talk to whoever runs your payroll system to make sure they’re ready for the changes.

Employee cost calculator

  • If your payroll and employment agreements are a few years old, you can use this as a chance to update them using our free and easy tool, the Employment Agreement Builder. Note that it is a legal requirement to have a written employment agreement with all your staff.

Source: Business.govt.nz

For more click here: Employment New Zealand

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