Reading time: 6 minutes

When you employ staff in New Zealand, you are required by law to pay them at least the minimum wage. To qualify for this, the employee must be 16 years or older. They are entitled to minimum wage even if they only work part-time or on a casual basis. There are some exceptions and instances in which you can pay them a lower minimum wage rate, such as if you employ apprentices aged under 20. You can also choose to pay your workers a higher rate, but you should agree to this in your employment contract. As an employer, it is crucial to understand your obligations under the minimum wage legislation to avoid potential legal disputes with your employees. This article will help you understand your legal obligations, as an employer, around minimum wage payments.

What Are the Minimum Wage Rates in New Zealand?

The minimum wage is the lowest remuneration that you must pay employees for the work they perform, regardless of their employment type and the number of hours they work. To qualify, your employees must be at least 16 years old.

The three different types of minimum wage rates in New Zealand are the:

  • adult minimum wage;
  • starting-out minimum wage; and 
  • training minimum wage. 

Starting-out Minimum Wage 

As an employer, you need to understand the differences between each of these rates to avoid potential legal disputes with your employees. 

For example, you can use the starting-out minimum wage rate for workers if they are:  

  • 16 or 17 years of age but have not worked for six uninterrupted months; 
  • 18 or 19 years of age but have been receiving a social security benefit for longer than six months, and since they started receiving the benefit, have not worked for a continuous six-month period; and 
  • 19 years old or younger but their employment agreement states they have to undertake recognised industry training (for at least forty credits a year) to become qualified in the area they are working in.

How to Determine the Six Month Continuous Employment Eligibility

To assess whether your workers meet the six months of continuous employment requirement, you need to determine: 

  • your employee’s first day of work; and 
  • the next six calendar months from this date. 

In this assessment, you need to include any time that your employee worked before they turned 16, and any leave that they took, whether paid or not.

Training Minimum Wage 

You can use the training minimum wage if your employee: 

  • is 20 years or older; and 
  • their employment agreement states that they have to complete an industry-related programme to become qualified in the area they are working in. 

Adult Minimum Wage 

If your employees are 16 years or older, and they do not meet either of the two categories above, you have to pay them the adult minimum wage. The adult minimum wage is $18.90 per hour as of 1 April 2020. The New Zealand government publishes minimum wage increases every year on the Employment New Zealand website

Can You Apply for a Minimum Wage Exception?

As an employer, you can apply for an exemption if you want to take on an employee with a disability, but you think it is appropriate to pay them less than the minimum wage. To apply, you can contact the Employment Service Centre and lodge a referral to the Labour Inspectorate.

If you employ workers in the agricultural sector, you may provide them with accommodation and other goods and services as part of their employment. Still, you need to agree with your employees beforehand: 

  • what you will provide; and 
  • deduct the cost from your employee’s wages.

How to Calculate Minimum Wage 

How you should check whether you have paid the correct minimum wage amount to your employees depends on what type of employee they are. For salaried employees, you should divide their pay by the number of hours they work in a period. For wage earners, you should check the Employment New Zealand website to make sure that their hourly rate is at least the minimum wage, including any extra hours they work. There are several other considerations. For example, if:

  • you have agreed to a higher rate with your employees, you must pay them the rate stated in their employment agreement;
  • your employees meet the starting-out criteria, you have to pay them at least the minimum starting-out wage rate; and
  • you employ trainees over 20, you must pay them at least the training minimum wage rate.

Key Takeaways 

If you employ workers over 16 years of age in New Zealand, you have a legal obligation to pay them at least the minimum wage for any work they perform, regardless of their employment type and the total number of hours they work. There are a couple of instances in which you can pay a lower rate, but your employees must meet the starting-out or training eligibility criteria. Always check the Employment New Zealand website to make sure you use the most current rates as they typically increase every year. If you need help deciding what minimum wage rate you should use for your employees or reviewing your employment agreements, contact LegalVision’s employment lawyers on 0800 005 570 or fill out the form on this page.

FAQs

What is the minimum wage?

The minimum wage is the base remuneration rate that employers must pay to workers over the age of 16, regardless of their employment type and the number of hours they work. The national minimum wage rate for adults in New Zealand is $18.90 per hour (from April 1st 2020), but there are two other rates for starting-out workers and apprentices. These rates go up every year, so check the Employment New Zealand website for the most up to date information.

Is paying someone below minimum wage illegal?

You cannot pay less than the minimum wage, even if you agree to it with your employees, unless you have received an exemption from the Labour Inspectorate. If you employ workers in the agricultural sector, you must deduct from their wages the cost of the accommodation and any other goods and services that you provide as part of their employment.

Can apprentices be paid less than minimum wage?

You can pay your apprentices the training minimum wage if they are older than 20 and their employment agreement states that they have to complete an industry training programme to become qualified in the area they are working in.

How much is the minimum wage for a 15-year-old in NZ?

Employees under the age of 16 are not entitled to the minimum wage in New Zealand. You can pay young employees, between 16 and 19 years of age, a different minimum wage than adult workers if they meet the starting-out eligibility requirements.

About LegalVision: LegalVision is a tech-driven, full-service commercial law firm that uses technology to deliver a faster, better quality and more cost-effective client experience.

The majority of our clients are LVConnect members. By becoming a member, you can stay ahead of legal issues while staying on top of costs. From just $119 per week, get all your contracts sorted, trade marks registered and questions answered by experienced business lawyers.

Learn more about LVConnect

Need Legal Help? Get a Free Fixed-Fee Quote

If you would like to receive a free fixed-fee quote or get in touch with our team, fill out the form below.

  • 2019 Top 25 Startups - LinkedIn 2019 Top 25 Startups - LinkedIn
  • 2020 Excellence in Technology & Innovation – Finalist – Australasian Law Awards 2020 Excellence in Technology & Innovation Finalist – Australasian Law Awards
  • 2020 Employer of Choice – Winner – Australasian Lawyer 2020 Employer of Choice Winner – Australasian Lawyer
  • 2021 Fastest Growing Law Firm - Financial Times APAC 500 2021 Fastest Growing Law Firm - Financial Times APAC 500
  • 2021 Law Firm of the Year - Australasian Law Awards 2021 Law Firm of the Year - Australasian Law Awards
  • 2020 Law Firm of the Year Finalist - Australasian Law Awards 2020 Law Firm of the Year Finalist - Australasian Law Awards