All Employers are urged to review their pay rates promptly to avoid breaching the new regulations. Here are some essential steps to ensure you have everything covered:
- Inform Your Team: Communicate with employees affected by the minimum wage adjustments. Sending a formal notice, like a letter or email (variation of employment contract), detailing the new rates is crucial.
- Audit Payroll Systems: Ensure your payroll systems are primed to accommodate the updated rates. Verify settings for accuracy, particularly for employees transitioning from starting-out or training wages to the adult rate. Tidy up any employment agreements (contracts) that are not current or you do not have one in place.
- Consider Pay Relativity: Evaluate potential impacts on 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). Adjustments may be necessary to maintain equity among employees.
- Update Budget Forecasts: Incorporate projected cost increases into short and medium-term budget plans. This proactive approach aids in managing higher wage and holiday pay liabilities effectively. See employee cost calculator.
- Understand Minimum Wage Obligations: Familiarise yourself with the details around the minimum wage. Remember, these regulations apply to all hours worked unless both parties agree to a higher rate in the employment agreement. The increase also relates to employees paid with a salary or piece rates or commission.
Furthermore, it’s essential to grasp the specifics surrounding different wage categories:
- Adult minimum wage: Applies to employees aged 16 and over, excluding starting-out workers or trainees.
- Starting-out wage: Relevant for workers aged 16 or 17 with less than six months’ continuous employment, or aged 18 or 19 with prior social security benefits.
- Training minimum wage: Pertains to employees aged 20 and over undergoing 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.
OTHER 1ST APRIL CHANGES
Default Kiwisaver Contribution Rate increase – from 3% to 3.5% for you and your employee.
Contributions for 16 & 17 year olds – from 1st April you will need to start making contributions for employees aged 16 & 17 years old (if they meet other eligibility requirements), previously employees had to be aged 18 and over to qualify for employer contributions. More information can be found here.
Other changes – any other annual rate increases which take effect on 1st April 2026 (for example the ACC levy rate) will also be reflected in the most up to date version of both your payroll software, as well as the PAYE deduction tables – IR340 and IR341, available online at the IRD, please note from 1st April the ACC Earner levy are deducted at the rate of $1.75 per $100.00.
For further guidance or clarification, please reach out to us directly on 07 885 1022.