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Minimum Wage Increase effective 1 April 2022
It’d be fair to say that costs for business owners seem to be rising just as quickly as Omicron cases at the moment! This includes wage costs, following the Government’s announcement in February of an increase to the minimum wage from $20 per hour to $21.20 per hour, which will come into effect on 1 April 2022.
Concurrently, the starting-out wage and training minimum wages will increase from $16.00 per hour to $16.96 per hour.
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Every year the Minister for Workplace Relations and Safety fufills their obligation under the Minimum Wage Act 1983 to submit an annual review of the minimum wage by 31 December.
When it comes into effect, Minimum Wage will have increased by about 5.9 percent, matching the 5.9 percent increase in the price of goods and services in New Zealand in the last three months of 2021 compared to 2020 – the biggest jump since a 7.6 percent annual increase in 1990. The minimum rates apply to all employees. It doesn’t matter if they work full-time, part-time or casually. It also applies if they are paid an hourly rate, a salary, a commission basis, or some sort of piece rate. There is no legal minimum rate for employees aged 15 years or younger, but you need to pay the adult minimum wage to all employees aged 16 and over unless they are eligible for the ‘starting-out’ wage or the ‘training’ wage.
What do I need to do?
When there is a wage rate change, you should advise your employee of this, and record the change in writing through a ‘Variation’ Letter, which both you and your employee should sign. A copy should be kept for your records and a copy given to your employee. It’s important to keep a record because you’ll need to show it to Labour Inspectors if you’re ever audited.
If you have salaried employees, you need to make sure that their total remuneration meets minimum wage requirements for each individual pay period.
