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“Employers Must Double Check Their Payroll Systems” - Minimum Wage Increases

While the government has stated the increase to the national minimum wage will lift the incomes of almost 200,000 workers, for small businesses still recovering from the pandemic, it is another financial blow, according to Employsure, New Zealand’s largest workplace relations advisor.

From today, the adult minimum wage has risen from $18.90 per hour to $20, for all employees over the age of 16 - equating to a weekly pay rise of about $44.

The starting-out minimum wage for first time workers aged 16 to 19 who satisfy certain conditions has risen from $15.12 per hour to $16. The same $16 per hour rise also applies to the training minimum wage, which affects employees aged 20 or over who are completing recognised industry training involving at least 60 credits per year in order to become qualified.

“While we support fair wages, an increase to the minimum wage is always an added risk to business owners, regardless of whether or not there is a pandemic,” Employsure Advice Services Team Leader Gabby Adds.

“Employers have experienced a year of added financial pressure due to lockdowns, restrictions, and weaker demand for business. This increase to the minimum wage comes at a time where many business owners simply can’t afford it.”

Understanding minimum wages in New Zealand is one of many crucial elements an employer should be aware of when running a business. Employees cannot legally be paid less than their applicable minimum wage, even if they agree to it.

Employers are urged to educate themselves on the changes to the minimum wage, and update their payroll systems and processes to avoid the risk of underpaying employees.

The increase to the minimum wage is just one of several changes that could soon lead to further disruptions for businesses. A bill introduced last year to double paid sick leave to 10 days could pass in the coming months, while the new Matariki public holiday will be held for the first time in June next year.

“Introducing too many new initiatives, especially at this frequency, will place further and unnecessary strain on the already stretched budgets of employers,” continued Ms Adds.

“More targeted support for low-income households, or further increasing wage subsidies for employers, could be a better alternative to increasing the minimum wage. We’re already seeing employers benefit from subsidies like the $350 Short-Term Absence Payment, the Resurgence Support Payment and the Leave Support Scheme.

“Employers have already been dealt enough stress with snap lockdowns and increased restrictions over the past several months. As the COVID-19 vaccine starts to rollout across the country, it now presents an opportunity for them to improve both their financial and emotional health.

“Being able to identify new ways to be creative with cost savings, is one of many way businesses can survive. Small short-term payments are a step in the right direction that will assist with this, that will help put the country’s economy back on track,” she concluded.
 

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