From 1st April 2023 the adult minimum wage rate will increase to $22.70 an hour from the previous rate of $21.20 an hour. The starting-out and training minimum wage rate increases to $18.16 an hour from the previous rate of $16.96 an hour.
We strongly encourage you to review your pay rates particularly for salaried employees and ensure that you are not in breach of the new rates. Also read further for some pointers on how you can ensure you are ready for the increases and reminders about applying the new rates.
How to prepare for the increases:
Advise the team
- if you have employees on the minimum wage, let them know about the increase they will be getting
- send a letter or email (variation of employment contract) advising the employee of the new wage
Check your payroll systems and processes
- talk to whoever runs your payroll, make sure they are ready to implement the change
- if your system is manual or computer-based, review and confirm settings will be adjusted for the new rates
- check when employees on starting-out or training wages will be eligible to move onto the adult rate
- if any employment agreements (contracts) are not current or you do not have one in place, discuss this in good faith with your employees
Employee pay relativity
- consider potential impacts on your business due to internal wage relativity (for example, how employees are paid compared to each other) and external benchmarking (such us how your pay rates compare to others in your industry or sector). Employees on higher wages may possibly want to negotiate a pay increase to keep the relative difference
Update your business budget
- add any expected increased costs to your short and medium-term budget forecasts, to help you plan for and manage the effect of higher wage and holiday pay liabilities – see employee cost calculator.
Upskill on minimum wage obligations
- ensure you know the details around the minimum wage:
- applies to all hours worked, unless both parties agree to a higher rate in the employment agreement
- applies to employees paid with a salary or piece rates or commission
Below are some important reminders about applying the minimum wage rates:
- the adult minimum wage applies to all employees aged 16 and over who are not starting-out workers or trainees
- the starting-out wage applies to workers aged 16 or 17 who have not yet completed six months continuous employment with their current employer, workers aged 18 or 19 who have received a specified social security benefit for six months or longer and have not yet completed six months continuous employment with their current employer, or workers aged 16 to 19 who are required to undertake industry training to become qualified
- the training minimum wage applies to employees aged 20 and over who are doing recognised industry training to become qualified
- there is no minimum wage for employees aged under 16 but all other employment rights and entitlements still apply
If you have any queries, please do not hesitate to contact your client manager or our office on 07 885 1022 to discuss.