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Minimum wage goes one step closer to $20 target

On 1 April 2020 the adult minimum wage rate is going up to $18.90 per hour.  This is the last step in a series of significant incremental increases that have been rolled out since the new Government announced (back in 2017) that the minimum wage would reach $20 per hour by 2021.

The minimum wage will go up to $20 per hour on 1 April 2021, which is in line with the Government’s original intention.

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KiwiSaver contributions and the minimum wage

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.

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