Minimum wage and paid Parental Leave increases to take effect

Businesses across New Zealand need to be prepared to act as increases to the minimum wage and parental leave take effect over the next few months. 

Here's what employers need to know: 

Minimum wage goes up in April 

From 1 April 2018 the new minimum wage rates are as follows: 

  • Adult — $16.50 an hour 

  • Starting-out — $13.20 an hour (up from $12.60) 

  • Training — $13.20 an hour (up from $12.60) 

Starting-out and training minimum wages are 80% of the adult minimum wage. Currently, the hourly adult rate is $15.75, starting and training rates are $12.60. 

The starting-out minimum wage applies to workers who are:

  • 16- and 17-year-old employees who haven’t done six months of continuous employment service with their current employer. After six months with one employer they are not starting-out workers and must be paid the adult minimum wage

  • 18 and 19 year old employees who have been paid one or more social security benefits for six months or more, and who haven’t completed six months’ continuous employment with an employer since they started being paid a benefit.

  • 16- to 19-year-old employees whose employment agreement states they have to undertake industry training for at least 40 credits a year in order to become qualified in the area they are working in.

You can find more information about types of minimum wage rates here: www.employment.govt.nz/hours-and-wages/pay/minimum-wage/different-types-of-minimum-wage-rates/ 

What do you need to do as an employer? 

You'll be paying out more in wages so ensure you are prepared to meet higher outgoings; you'll find yourself in hot water if you fail to pay minimum wage. 

Should you be paying your employees piece rates or commission only, you must ensure that they still receive at least the relevant minimum wage. 

Are your employment agreements up to date? If not, now is a good time to review and renew them to ensure every employee contract is up to date.  

You and your staff can agree to any wage as long as it is higher than the minimum rates as laid out above.  

Note that it is a legal requirement to have a written employment agreement with all your staff. 

Paid parental leave increases in July 

The Government is increasing the duration of paid parental leave. The Parental Leave and Employment Amendment Bill, which was passed in December, increases parental leave payments over three years in two stages: 

  • From July 1 2018, employees will be entitled to take 22 weeks paid parental leave (an increase from 18 weeks) 

  • From 1 July 2020, employees will be entitled to 26 weeks paid parental leave. 

Employees will also be entitled to more 'Keeping in Touch' days from 40 to 52 hours from 1 July, and 64 hours from 1 July 2020. These allow parents to do limited work while on parental leave, if they choose to, for example to attend a team day or change announcement. 

What does this mean for employers? 

Employers must ensure they know how to deal with employees who request parental leave and the rights they have. 

Anita Dazzi, Senior Consultant at EQ Consultants, advises: "If you're a new manager or business owner then you may be unaware of parental leave legislation and its implications on your firm. Therefore, we recommend you take a proactive approach to avoid being on the back foot of future changes." 

For more information about managing parental leave requests and steps you need to take, view our 'Managing parental leave – 10 key steps for employers', alternatively call Anita Dazzi on 021 289 1966