On 1 April 2024 minimum wage increases to $23.15 per hour. Think this doesn’t apply to your business? Let’s double check…
Adult minimum wage will be increased to $23.15 per hour (currently it’s $22.70).
‘Starting-out’ & ‘Training’ minimum wage will be increased to $18.52 per hour (currently it’s $18.16).
From 1 April 2024, minimum salary per annum for a 40 hour week is $48,152 (this is using the calculation of hourly rate x 40 hours x 52 weeks). If you currently have people being paid a salary around this amount, it will need to be reviewed before the changes take effect.
It’s important that you also check employment agreements to confirm the contracted hours - some full time hours can vary between 35-40+ hours per week. You’ll need to calculate this accordingly.
Under legislation employees must be paid at least the minimum hourly wage rate for every hour worked, including salaried workers. What does this mean?
If you have a salaried person, who, when you work out their hourly rate, is paid close to the minimum wage, you must ensure that if they work any extra hours (such as starting early, finishing a bit later etc), that they do not end up being paid less than minimum wage.
Example: “Greg works a couple of extra hours a week as he likes to start earlier than everyone else - surely that’s not an issue? “ Well, actually it is…
Greg is paid a $48,500 salary per year for his 40 hour per week job. He starts earlier than his contracted hours and often stays until everyone else leaves. Most weeks Charlie is working 41-42 hours per week. When you work out the hourly rate for these hours (using the calculation mentioned above), it’s between $22.20 - $22.74 (approx) . This is well below the minimum wage. Even if Greg is happy working these extra hours, it is illegal, and if businesses are found to be in breach of minimum wage laws, tough penalties (including hefty financial costs) can apply.
As a solution you might consider increasing the salary, or working with your staff member to ensure they only complete the hours they are contracted to work.
A note about KiwiSaver
If your business pays staff KiwiSaver ‘inclusive’ of salary or wages (rather than additional), you must ensure that when you take away the employer’s KiwiSaver contribution, that they are still paid at least minimum wage - for “every hour worked”.
If you have any questions about implementing minimum wage correctly, or you want to discuss approaches for ensuring staff work within their contracted hours, please get in touch with one of the team.
This information is general guidance only, and you should not solely rely on this information; specific advice should be sought for your situation.