by Some employers adopt a “total remuneration” approach to compulsory KiwiSaver contributions, meaning the employee is paid a set rate of pay that includes the employer’s compulsory contributions to their KiwiSaver account. As such, if the employee joins KiwiSaver then their pay is adjusted down to offset the compulsory employer contribution (this is in addition to the deduction for their own personal KiwiSaver contribution). If they don’t join KiwiSaver, then they get their rate full pay without any deductions for KiwiSaver.
This sort of arrangement does comply with the KiwiSaver Act 2006, but it must be agreed to and adequately specified in the employment agreement.
It is important to be aware that employer contributions to KiwiSaver cannot take an employee below the minimum hourly wage rate. This means if an employer pays a “total remuneration” approach they need to ensure that the hourly rate is high enough to enable the employee to be paid at least the minimum wage rate after the adjustment for the employer contribution has been made.
We can answer your questions relating to minimum entitlements, KiwiSaver and the Holidays Act so if you need some help please do get in touch.
Please do not substitute this article for professional advice.