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Pay and the Minimum Wage

On the 1st of April New Zealand's minimum wage will increase from $18.90 to $20.00 an hour. The starting-out and training minimum wage will also see an increase from $15.12 to $16.00. With this in mind this week we will look at pay and the minimum wage.

So what is a minimum wage. It is exactly what it sounds like. Regardless of how you are paid, salary, wages, commission or piece rate you are entitled to be paid a minimum amount of remuneration for each hour worked on average. Employers are responsible for ensuring that their employees are paid correctly. All employees over the age of 16 years are entitled to a basic minimum wage, unless they fall into a category where there is a minimum wage exemption (more on this later). An employer cannot pay an employee less than the minimum wage even if the employee agrees to it.

Paying an employee correctly means that an employer must not discriminate based on an employees race, ethnic origins, sex, religious or ethical beliefs, sexual orientation or if they are part of a union. Employers must also ensure that women and men receive the same pay rates for doing the same or substantially similar work.

So who gets the minimum wage? All full-time, part-time, permanent, fixed term, on casual employment agreements, people working from home, people paid wholly or partly by commission or by a piece rate. The only exceptions are workers under the age of 16 and a small number of people who are limited by a disability to carry out the full range of duties for the role they are in. In these cases an exemption, issued by a Labour Inspectorate, is given to the employer.

If an employee works overtime then they are also entitled to be paid the minimum wage for each of those hours worked over their usual hours. For employees who earn a piece rate, that is someone working in an orchard and getting paid by the number of bins they pick, the amount they earn per hour on average must not be less than the minimum wage.

Payment of wages should always be on the same day and interval agreed to between the employer and the employee. Neither may change without the employee first being consulted. The payment of these wages should also be in cash (New Zealand coins or banknotes) unless:

  • the employee is employed by the Crown in which case they can be paid by cheque.

  • The employee has requested in writing to be paid by postal or money order

  • The employee is away from the proper or usual place for the palace of the wages then they can also be paid buy postal or money order or by cheque

Payments for an employees annual holidays must be paid at the rate of the greater of the employees ordinary weekly pay or the average weekly pay over the 12 month period at the time that the leave is taken. This applies to employees who have had a change in their pay or work pattern over a 12 month period.

Leave - If an employee works a public holiday then they are entitled to receive at least time and a half for the hours that they worked plus an alternative paid day off in lieu.

Deductions - In general employers may not deduct money from an employee's wages unless the employee has agreed to or requested the deduction in writing. In some cases it may be necessary if an employer needs to recover an overpayment. The employer must tell the employee that they intend to recover the overpayment before deducting any money and must make the deductions within the following two months. A court may also direct an employer to make deductions or a deduction is required by law to pay for income tax, child support or other legislated purpose.

In situations where the employer provides board and lodging to an employee, the employer may make deductions with written agreement from the employee.

Premiums - It is illegal for an employer to charge an employee a fee for getting or keeping a job. This is called a premium and is sometimes known as “buying a job”.

Employers must keep accurate records of wages and time as well as holiday and leave records for all employees. These records must be made available to the employee, their union and Labour Inspectorates if they are requested. They must be in written form or be made easy to access and be printable. An employer must keep these records for six years.

If there is a topic that you are interested on learning about and would like us to cover please get in touch with us by email or contact us through our website

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