As an employer, you’ll need to keep up to date with the latest minimum pay rates and pay your employees at least the current minimum rate. This rate stands even if your employee only works a few hours for you each week or has little responsibility at work.

There are three rates:

• Adult minimum wage
• Starting-out wage
• Training minimum wage

Payment of wages(external link)  — Employment Agreement Builder

Adult minimum wage 

The adult minimum wage applies to all employees aged 16 years and over who aren’t starting-out workers or trainees, and all employees who are involved in supervising or training other employees. 

This is the minimum wage most widely used by Kiwi businesses of all shapes and sizes. 

Starting-out wage 

The starting-out wage applies solely to workers aged between 16 and 19 and who are entering the workforce for the first time. 

Starting-out workers are:

• Aged 16 to 17 years and have worked for you for less than six months.
• Aged 18 to 19 years and have been paid a specified social security benefit for six months or more, and who haven’t yet completed six months continuous employment with any employer since they started being paid a benefit. After six months continuous employment with a single employer, they must be paid at least the adult minimum wage rate.
• Aged 16 to 19 years and required by their employment agreement to undertake industry training for at least 40 credits a year to become qualified.

Training minimum wage

The training minimum wage applies to employees aged 20 years or over who are completing recognised industry training involving at least 60 credits in order to become qualified.

Employing school-age workers

There is no minimum wage for employees who under 16 years of age. If you employ under-16s, you must not let their work get in the way of attending school.

Exemptions

A small number of people hold an exemption from the minimum wage, eg prison inmates and some apprentices. These links give full details:

Minimum wage rates(external link) — Employment New Zealand

Minimum wage exemptions for people with disabilities(external link) — Employment New Zealand

Agricultural industry(external link) — Employment New Zealand

If you’re unsure how much you should be paying your employees, or think you might be paying too little,  contact Employment New Zealand for advice.

Email us a query(external link) — Employment New Zealand

The Fair Pay Agreements Act 2022 has now passed, and from 1 December 2022 eligible unions can apply to begin bargaining.

The Fair Pay Agreement (FPA) system brings together and employer associations to bargain for minimum employment terms for all covered employees in an industry or occupation.

When an FPA comes into effect it must be better, or the same as relevant minimum entitlements. But if the law changes a minimum entitlement so it’s better than an FPA term, then the new minimum entitlement applies. For more information about Fair Pay Agreements visit the Employment New Zealand website.

Understanding Fair Pay Agreements: (external link)A quick guide for employers — Employment NZ

Fair Pay Agreements(external link) — Employment NZ

At each step of the Fair Pay Agreement process, there are actions that you as an employer need to take.

Union applies or is approved

Once a union has applied to the Ministry of Business, Innovation and Employment to start negotiations for a Fair Pay Agreement, or has been approved to start, you as an employer have to communicate with your employees and unions.

• If notified that an application to initiate bargaining for a FPA has been approved, you need to inform all other unions your covered employees are members of.
• You need to directly pass on a statement to covered employees which will be provided by the initiating union, which includes the name of the initiating union and how to contact them.
• Provide an opt out form to employees, collect the form, and keep a record.
• Provide contact details of employees who have not opted out to the initiating union.

Bargaining begins

When bargaining begins, employees are represented at the bargaining table. 

As an employer, you have to:

• pass on information to employees from the employee bargaining side throughout the bargaining process
• allow your employees to attend 2 x 2 hour paid meetings arranged by the employee bargaining side
• allow a representative from an employee bargaining side access to the workplace
• notify the initiating union if any employee wants to opt out or opt in at any time, and provide updated contact details for the employee bargaining side.

Voting

Once the bargaining sides agree on the terms of a Fair Pay Agreement, your eligible employees may vote on the terms of the Fair Pay Agreement. 

This includes employees that may have opted out of receiving information about the proposed FPA earlier.

Fair Pay Agreement in place

Once a Fair Pay Agreement is finalised and made into law it applies to all covered employees and covered employers.

All employers covered under the FPA must make sure the employment agreements of all their covered employees have terms that are the same as or better than those in the FPA.

In addition to paying the legal minimum wage or higher, you’ll need to ensure your pay policies and practices are as fair as possible.

It’s important to remember that waged employees need to be paid for actual hours worked. This means paying employees at least the minimum hourly wage for any extra time worked.

Paying employees fairly also means:

• Women and men must receive the same pay rates for doing the same or substantially similar work
• You cannot discriminate on the basis of an employee’s colour, race, ethnic or national origins, gender (including pregnancy or childbirth status), marital or family status, age, disability, religious or ethical belief, political opinion, sexual orientation or union activity.