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Consequences of COVID-19 starting to show

During the COVID-19 lockdown and beyond, many employers have resorted to reducing employees’ pay – some with, and some without, consultation and/or agreement.  It all happened so quick, it was all so new and unfamiliar, and many employers understandably made some rather swift changes to better position their businesses to survive.  We are now seeing some of the consequences coming through the employment institutions, with a few cases coming out of the Employment Relations Authority that are giving some serious cause for concern!

Ready, willing and able to work

These cases centre around the principle that in order to be paid, employees need to be ‘ready, willing and able’ to work.  Many employers have taken the position that during the COVID-19 lockdown, employees were not ‘able’ to work, and as a result they were discharged from their normal obligations to pay wages and salary in accordance with the relevant employment agreements. However, while that may apply in some circumstances, we are now seeing is that is not necessarily the case!

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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.

Continue reading → Minimum wage goes one step closer to $20 target

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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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The latest minimum wage

The adult minimum wage is now $16.50 per hour, which is up 75 cents from last year’s minimum rate. The starting out and training rates have also increased 40 cents to $13.20 per hour.

This is the new Government’s first step in progressively increasing the minimum wage to $20.00 per hour by 2020 (with the final increase to take effect in April 2021).  We expect the minimum wage to increase by at least $1.00 per year in order to hit this target so be prepared for your wage costs (or your pay packet) to go up.

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Please do not substitute this article for professional advice.