New Zealand’s employment law is in a state of constant change, and complying with the current law is a key requirement for employers.
A recent example of employment law change was the 5% increase in the minimum wage to $16.50 per hour passed into law in late 2017, which took effect from the 1st of April this year. The increase was one of the promises contained in the Labour led government’s initial One Hundred Day plan.
Further, the government has indicated that as part of its commitment to delivering “a high-performing economy with good jobs, decent work conditions and fair wages”, additional increases are likely through to 2021.
In total the government is targeting an increase to $20 per hour which represents a 20% increase from the 2017 base rate. The government has indicated that whilst it intends to legislate for the increases, they will take into account the annual economic conditions before making any changes.
Currently the minimum rate of $16.50 per hour applies only to non-trainee “Adult” employees. Those employees, including apprentices, who meet the requirements of the “Starting Out” or “Training” regimes, can continue to be paid at a lower rate. The minimum rate for these employees is at least 80% of the current minimum wage, which equates to $13.20 per hour.
To be eligible for the concessionary rates, the employee must be actively involved in a minimum level of approved industry training as per the table below:
|Starting out||16 – 19||40|
|Training||20 and older||60|
The training and starting out concessions reflect the effort that employers are required to put into training apprentices and serve as an offset to the costs incurred. We would recommend that employers assess whether employees met the training requirements on an annual basis, and if not, ensure that at least the adult minimum rate is paid to the employee.
Further changes expected
Please be mindful that the government has indicated that it intends to abolish the training wage regime, and that this is likely to occur in the current calendar year. If this occurs it is likely that the minimum wage will apply to all employees regardless of whether they are in training. Further, given that employment law is constantly evolving, we would also expect further changes will be enacted at some stage.
We would recommend that employers not only keep abreast of any changes that have or will occur in the future, but also that they put in place effective systems to enable the correct payments to be made.
At Crowe Horwath we have a specialist team which can assist with any queries you may have around your obligations as an employer, payroll advise or changes to employment law.
Please phone 0800 494 569 or visit www.crowehorwath.co.nz