As of April 1, 2024, the adult minimum wage in New Zealand is $23.15 per hour. This rate applies to all employees aged 16 and over who are not on starting-out or training wages. For those on starting-out or training wages, the rate is $18.52 per hour, which is 80% of the adult minimum wage.
Understanding your entitlements regarding minimum wage nz regulations is crucial for both financial stability and legal compliance. Whether you are an employer ensuring your payroll is accurate or an employee verifying your payslip, staying updated with the latest Employment New Zealand mandates is essential. This guide covers everything from current hourly rates to the complexities of holiday pay and sick leave entitlements.
What are the Current Minimum Wage Rates in NZ?
New Zealand’s minimum wage is reviewed annually by the government, with changes typically taking effect on April 1st of each year. It is vital to ensure that no employment agreement offers less than these statutory minimums, as any contract attempting to do so is legally unenforceable.
The Adult Minimum Wage
The standard adult minimum wage applies to the majority of the workforce. If you are aged 16 or over and do not fall into the specific categories of ‘starting-out’ or ‘training’, you are entitled to at least $23.15 per hour before tax. This rate applies regardless of whether you are full-time, part-time, or casual.
Starting-Out Wage
The starting-out wage is set at 80% of the adult minimum wage, currently $18.52 per hour. This rate is designed to help younger workers gain experience and applies to:
- 16 and 17-year-olds who have not yet completed six months of continuous service with their current employer.
- 18 and 19-year-olds who have been paid a specified social security benefit for six months or more, and who have not yet completed six months of continuous employment with any employer.
- 16 to 19-year-olds who are required by their employment agreement to undertake industry training for at least 40 credits a year.
Once a worker completes six months of continuous service, they must be moved to the adult minimum wage.
Training Minimum Wage
Similar to the starting-out wage, the training minimum wage is also $18.52 per hour. This applies to employees aged 20 or over who are required by their employment agreement to undertake at least 60 credits a year of an industry training programme to become qualified in the area they are working in.
How is Holiday Pay Calculated on Minimum Wage?
Holiday pay in New Zealand is a critical component of the total remuneration package. Under the Holidays Act 2003, all employees are entitled to annual holidays (annual leave). The calculation of payment for these holidays ensures that staff are not financially disadvantaged by taking a break.
The 8% Gross Earnings Rule
When an employee resigns or is terminated, or if they are on a casual contract receiving “Pay-As-You-Go” (PAYG) holiday pay, the calculation is generally based on 8% of their gross earnings.
Gross earnings include:
- Salary or wages.
- Overtime pay.
- Productivity or incentive-based payments (bonuses).
- Allowances (excluding reimbursing allowances).
- Holiday pay and payment for public holidays.
For example, if a minimum wage earner works 10 hours a week at $23.15/hr, their weekly gross pay is $231.50. Their holiday pay accrual for that week would be roughly $18.52 (8% of $231.50). Over a year, this 8% accumulates to provide the equivalent of four weeks of paid leave.
Ordinary Weekly Pay vs. Average Weekly Earnings
When an employee takes annual leave, they must be paid the greater of:
- Ordinary Weekly Pay (OWP): What the employee would normally receive for an ordinary working week.
- Average Weekly Earnings (AWE): The employee’s gross earnings over the last 12 months divided by 52.
For minimum wage workers whose hours fluctuate, the AWE calculation ensures that overtime or busier periods are reflected in their holiday pay rate.
What are the Rules for Public Holidays?
New Zealand has specific legislation governing pay on public holidays (often referred to as statutory holidays). Minimum wage earners are entitled to specific penal rates if they work on these days.
Time and a Half
If you work on a public holiday, you must be paid at least time and a half (1.5x) for every hour worked. On the current minimum wage of $23.15, this means the hourly rate jumps to $34.72 per hour for any time worked on a public holiday.
Alternative Holidays (Days in Lieu)
In addition to time and a half, if the public holiday falls on a day that is considered an “otherwise working day” for the employee, they are also entitled to an Alternative Holiday (commonly known as a day in lieu). This is a full paid day off to be taken at a later date.
Mondayisation
When a public holiday like Waitangi Day or ANZAC Day falls on a weekend, it may be “Mondayised” (moved to the following Monday) for employees who do not normally work on weekends. If an employee normally works on the weekend day the holiday falls on, they observe it on the calendar date. They do not get it twice. This ensures that minimum wage workers retain their entitlement to paid public holidays regardless of their roster pattern.
How Does Sick Leave Work for Minimum Wage Earners?
Sick leave entitlements are not dependent on your hourly rate but on your tenure and hours worked. However, for those on minimum wage, understanding these rights is vital for financial planning during illness.
Minimum Sick Leave Entitlement
Currently, employees are entitled to 10 days of sick leave per year. This entitlement becomes available once an employee has worked for the same employer for six months continuously. This applies if you have worked:
- An average of at least 10 hours a week, and
- At least one hour in every week or 40 hours in every month.
Accumulation of Sick Leave
Unused sick leave can be carried over to the next year, up to a maximum cap of 20 days under current legislation. This accumulation is a safety net for workers, ensuring that a prolonged illness does not immediately result in loss of income.
Casual vs. Permanent: Handling the 8% Pay-As-You-Go
A common point of confusion in the “minimum wage nz” landscape is the difference between accruing leave and getting paid out as you go. This is particularly relevant for students or temporary workers.
When is PAYG Holiday Pay Allowed?
Employers can pay annual holiday pay regularly with the employee’s pay (Pay-As-You-Go) only if:
- The employee is on a fixed-term agreement of less than 12 months, OR
- The employee works so intermittently or irregularly that it is impracticable for the employer to provide 4 weeks’ annual holidays.
In these cases, the 8% is added on top of the hourly wage in every pay cycle.
Calculation Example:
Base Minimum Wage: $23.15
Plus 8% Holiday Pay: $1.85
Total Hourly Gross: $25.00
It is mandatory that this holiday pay component is identified separately on the payslip. It cannot simply be “rolled in” to the wage without transparency.
Employer Obligations and Record Keeping
For employers, strict adherence to the Minimum Wage Act 1983 and the Holidays Act 2003 is not optional. Failure to comply can result in significant penalties, back-pay orders, and reputational damage.
Wage and Time Records
Employers must keep accurate records of:
- The hours worked by employees each day.
- The pay rates for those hours.
- The dates public holidays were taken and how they were paid.
- Leave accruals and balances.
Even for salaried staff, records must prove that their total earnings divided by hours worked do not fall below the minimum wage nz threshold ($23.15/hr). If a salaried employee works excessive hours, their effective hourly rate might drop below the legal minimum, requiring a “top-up” payment.
What to do if you are underpaid?
If you suspect you are being paid less than the minimum wage or have not received your correct holiday pay:
- Check your employment agreement: Verify your agreed hours and rates.
- Keep a diary: Log your own hours to compare against payslips.
- Talk to your employer: Often, payroll errors are genuine mistakes that can be rectified quickly.
- Contact MBIE: If the issue is not resolved, you can seek assistance from the Ministry of Business, Innovation and Employment (MBIE).
People Also Ask
Will the NZ minimum wage go up in 2025?
The New Zealand minimum wage is reviewed annually by the government. While no official rate for 2025 has been confirmed yet, historical trends suggest an increase typically occurs on April 1st each year to account for inflation and the cost of living.
Is the minimum wage the same as the living wage in NZ?
No. The minimum wage is the legal minimum set by the government ($23.15 as of April 2024). The Living Wage is a voluntary rate calculated independently based on the cost of living, which is generally higher than the statutory minimum.
Can an employer include holiday pay in the hourly rate?
Only for casual workers or fixed-term contracts under 12 months. This is known as Pay-As-You-Go (PAYG) at 8%. It must be agreed upon in the contract and shown as a separate, identifiable amount on the payslip.
Do I get paid for public holidays if I don’t work?
Yes, but only if the public holiday falls on a day that would otherwise be a normal working day for you. In this case, you are paid your relevant daily pay for that day, even though you did not work.
What is the minimum wage for a 16-year-old in NZ?
If the 16-year-old is starting out and has not worked for six months continuously with the employer, they may be paid the Starting-Out wage of $18.52 per hour. Otherwise, they are entitled to the adult minimum wage of $23.15 per hour.
Does minimum wage apply to salary earners?
Yes. A salary is simply an annual calculation of wages. When you divide the salary by the actual hours worked in any given pay period, the result must be at or above the minimum wage hourly rate ($23.15).
