Minimum wage is the minimum amount of money that an employee must be paid per hour for completing work. There are also separate wage rates for people starting out in work, or in training. These are called the starting-out and training wages. These wages are lower than the minimum wage and only apply in limited circumstances. The minimum wage is increasing in New Zealand on April 1st 2021, to $20.00 per hour. The starting-out and training wages will be raised to $16.00 per hour. This article will:
- set out how the minimum age works in New Zealand; and
- look at the training and starting-out wages, in terms of what they are and when they apply.
How Does The Minimum Wage Work In New Zealand?
Everyone must be paid at least the minimum wage (currently $18.90) in New Zealand for every hour that they work. This is a basic right in New Zealand. Employers can be prosecuted for paying their employees less than the minimum wage. There are a few exceptions to this. Two of the major exceptions are the:
- training wage; and
- starting-out wage.
These apply to certain employees as described below.
While there is no minimum wage for employees under 16, all the other minimum standards and employment rights and obligations apply. If you have an employee aged under 16, they must be paid the relevant minimum wage when they turn 16. This is whether that is the adult minimum wage or the starting-out wage.
The minimum wage is raised regularly by the government so that the rate keeps up with inflation and increases to the cost of living.
What Is The Training Wage?
The training wage, which is currently $15.12 per hour, can be paid in lieu of the adult minimum wage ($18.90) in some cases. The training wage is relevant when you have employees aged 20 years or over, whose employment agreement states that they have to do at least 60 credits a year of an industry training programme to become qualified in the area they are working in. Usually, these employees will be apprentices. Other than being able to be paid the training wage, an apprentice has the same minimum rights as other employees.
Just because an employee is being trained at work, for instance at the start of their employment, does not mean that the training wage necessarily applies. It is only relevant for employees doing an approved industry training programme, like an apprenticeship.
Continue reading this article below the formWhat Is The Starting-Out Wage?
The starting-out wage, which is currently $15.12 per hour, can be paid in lieu of the adult minimum wage ($18.90) to certain younger workers. There are three situations where this might be relevant to your business.
Firstly, the starting-out wage is relevant when you have 16- and 17-year-old employees who have not done six months of continuous employment service with one business. After six months with one employer, they are no longer starting-out workers and must be paid the adult minimum wage.
Secondly, the starting-out wage also applies to 18 and 19-year-old employees who have been paid one or more social security benefits for six months or more, and who have not completed six months’ continuous employment with an employer since they started being paid a benefit.
Finally, the starting-out wage is relevant if you have 16 to 19-year-old employees whose employment agreements require them to do at least 40 credits a year of industry training. These employees are also likely to be apprentices, like with the training wage.
When Does The New Zealand Minimum Wage Increase?
The minimum wage will increase from $18.90 to $20.00 per hour on April 1st 2021. The starting-out and training minimum wage rates will also increase on April 1st 2021, from $15.12 to $16.00 per hour.
The responsibility sits with employers to ensure that their payroll systems and processes are updated to reflect the new minimum wage.
Key Takeaways
The minimum wage in New Zealand will be increasing on April 1st 2021, from $18.90 per hour to $20.00 per hour. The starting-out and training wages will be raised to $16.00 per hour. As a basic employment obligation, all New Zealand employees are entitled to the minimum wage for every hour that they work. However, some employees who are either starting out in work or who are completing an apprenticeship or other industry training program may be paid a lower wage (either the starting-out wage or the training wage) for a period of time. If you want to know more about the minimum wage, contact LegalVision’s New Zealand employment lawyers on 0800 005 570 or complete the form on this page.
Frequently Asked Questions
The minimum wage is the hourly rate that all adults in New Zealand must be paid for every hour that they work. As the name suggests, it is the minimum amount that can be paid. Currently, the minimum wage is $18.90 per hour.
On April 1st 2020 the minimum wage is going up to $20.00 per hour. The starting-out and training wages will be raised to $16.00 per hour.
No, they do not. However, other minimum standards and rights of employees still apply to young people. When young employees turn 16, they must be paid at least the minimum wage (or the starting-out wage).
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