Minimum Wage is Going Up

The minimum wage is set to increase from 1 April 2021as follows:

• $20 per hour for adult workers (increased from $18.90 per hour); and
• $16 per hour for starting-out workers and trainees (increased from $15.12 per hour).

This increase applies to both workers paid by the hour and to salaried workers.

It is a common view that the idea behind paying a salary is to even out peaks and troughs and paying employees more than minimum wage some of the time makes up for the extra hours they work at other times.

However, the law is clear that employees must be paid the minimum wage for all the hours they work and the ability to “average” is actually quite restricted.

For example, a salaried worker sometimes works 40 hours a week, but other times they work 70 hours or more. They are paid fortnightly and annually they work an average of 100 hours per fortnight.

Many employers would assume that paying this person a salary of $52,000 (the equivalent of 100 hrs/fortnight at minimum wage) meets minimum wage obligations in the above case.

However, the maximum period employers can average an employee’s hours is fortnightly (unless employees are paid weekly, in which case the employer must average weekly).

This means that, in the above example, if the employee worked 49 hours one week and 52 hours the next, their salary would not equate to minimum wage and they would be entitled to a “top-up” payment.

The key take-away for business owners: If you have anyone on your team earning less than the new hourly rates set out above or anyone employed to work 40hrs/week and earning a salary of less than $41,600, you probably need to give them a pay-rise. Even at $47,000, you need to be keeping a careful eye on hours; if they work more than 5 additional hours in a week you may need to pay a “top-up” for those hours.

If you require any guidance or assistance, our experienced Employment team at Wakefields Lawyers are happy to help. Please get in contact at info@wakefieldslaw.com or 04-970-3600.