There are different types of pay an employee can get, including wages, salary, commission, and piece

rates.

Wages and penal rates

 Wages is payment based on the time worked, and is usually payment per hour.
 People paid wages may have penal rates in their employment agreement. Penal rates are
special rates for:
o doing certain tasks
o working particular days or shifts
o extra hours.
 Penal rates are negotiated between an employee and an employer. They may be included as
part of the employment agreement or negotiated as a one-off. Employees should check their
employment agreement to see if they're entitled to any penal rates.

Salary

Salary is normally a fixed amount per year. The salaried hours to be worked should be in the
employment agreement; if an employment agreement doesn’t have the salaried hours then the
salary earned by the employee must still be equal to or higher than the minimum wage for each
hour worked.

Commission

A commission is when an employee is paid based on sales they have made or other targets they
have met, for example, a percentage of the total value of a sale made. Some people are employed
on commission only, others may have an hourly wage rate and be paid a sales commission on top of
this, some may have a capped commission, while others have an unlimited ability to earn
commission. Employees paid on commission must still get at least the relevant minimum wage.

Piece rates

A piece rate is a commission where the employee is paid for the number of pieces they worked on,
for example, being paid for the number of bins of fruit picked, or the number of garments
sewn. Employees paid per piece must still receive at least the relevant minimum wage for each hour
worked.

Payment for training

Whether or not training is paid for (both the cost of the training and the time taken to attend
training) depends on the type of training. Training that is required by the employer and undertaken
as part of the employee's normal working hours (on the job training) must be paid. This includes new
employees starting a job who need some form of training that is commonly undertaken on the job.

Training can also be given through conferences, after-hours seminars and workshops, or there may
be opportunities to take more formal courses that lead to qualifications. An employer may choose to
give study leave to attend these types of courses and/or pay for the cost of the course.

Training outside of work hours or more formal courses of study are a matter for negotiation
between an employer and employee. It’s best practice to discuss upcoming training or study in
advance and agree whether or not such training will be paid. Whatever is agreed should be put in
writing to ensure everyone understands the terms and conditions of the training.

Payment for clothing

Protective clothing
Employers have to pay for and provide employees with protective clothing if it's needed to reduce
potential exposure to an identified hazard.

Uniforms
Dress requirements, such as the type or standard of clothing when at work, may be in the
employment agreement or workplace policies; employees should clarify requirements with thir
employer if they're in doubt. If there is an agreement about uniforms or dress requirements, both
parties must keep to that agreement. An employer may have dress requirements to identify staff, for
staff protection, or to reflect the nature of the business.

The cost of buying and cleaning the uniform should be agreed by the employee and employer, but if
the employee is paying, the employer can’t make the employee buy the uniform from their shop or a
certain place.

Payment of wages/salary
Employees must be paid in cash (NZ banknotes and coins) unless:

 their employer is the Crown or a local authority, then the employer can choose to pay the
employee by cheque
 the employee agrees or asks in writing to be paid by postal order, money order, cheque or
bank deposit. If the employee wants to change to be paid in cash, they need to tell their
employer in writing. Their employer then has to make the change as soon as possible and within
2 weeks
 the employee is away from the proper or usual place for the payment of their wages, then
they can be paid by postal order, money order or cheque
 the employment agreement provides some other form of payment.

Employers can’t tell employees how they must spend their money.
 Minimum wage

Minimum wage rates apply to all employees aged 16 and over, who are full-time, part-time, fixed-

term, casual, working from home, and paid by wages, salary, commission or piece rates (some

exceptions).

The minimum wage applies to all hours worked. There is no minimum hours requirement. For
example, an employee who works only 2 hours at a time must still get the minimum wage for each
of these hours, unless the employee and employer have agreed to a higher rate in the employment
agreement. Payments for call-outs should also be negotiated in the employment agreement.

Employees have to be paid at least the minimum hourly wage rate for every hour worked:

 Salaried employees can divide their pay by the number of hours they work in a pay period to
make sure they earn the minimum wage.
 Wage earners can check that their hourly rate is at least the minimum wage and that any
extra hours they’re asked to work are also paid at least the minimum wage. Employers and
employees may agree to any wage rate as long as it’s not less than the relevant minimum wage
rate. For example, starting-out workers must be paid at least the minimum starting-out wage
rate, and trainees over 20 must be paid at least the training minimum wage rate.
 Employees paid piece rates must still be paid the minimum wage for each hour worked.
 The minimum wage does not apply to people who have a minimum wage exemption permit.

Different types of minimum wage rates

There are three different types of minimum wage rates: adult, starting-out and training.

Adult minimum wage

The adult minimum wage applies to all employees aged 16 years and over who are:

 not starting-out workers or trainees, or

 involved in supervising or training other workers. What this means will depend on each
individual situation. For example, it would usually include an employee overseeing the
performance of another employee, or instructing another employee in the performance of their
job; the employee doesn’t have to have direct line management responsibility for other
employees. The supervising or training needs to be a part of that person’s job, not just a one-off
event.

Starting-out minimum wage

The starting-out minimum wage applies to workers who are:
 16- and 17-year-old employees who haven’t done six months of continuous employment
service with their current employer. After six months with one employer they are not starting-out
workers and must be paid the adult minimum wage
 18 and 19 year old employees who have been paid one or more social security benefits for
six months or more, and who haven’t completed six months’ continuous employment with an
employer since they started being paid a benefit.
Specified security benefits include:
o domestic purposes benefit
o emergency benefit
o independent youth benefit
o invalid’s benefit
o jobseeker support
o sickness benefit
o sole parent support
o supported living payment
o unemployment benefit
o widow’s benefit
o young parent payment and youth payment.
 16- to 19-year-old employees whose employment agreement states they have to undertake
industry training for at least 40 credits a year in order to become qualified in the area they are
working in.

If an employee is supervising or training other workers, then the starting-out minimum wage doesn’t
apply and they must be paid at least the adult minimum wage.

Calculating six months of continuous service

Six months of continuous employment with an employer is calculated for the next six calendar
months from the employee’s first day of work; the number of hours per week the employee works is
not relevant.

Calculating whether or not an employee has completed six months of continuous service must
include any time:

 the employee was employed by their employer before they turned 16

 on leave (paid or not).

If the employee moves to a new employer, they’ll be a starting-out worker again for the first six
months; this applies with each new employer until they reach the maximum age.

Training minimum wage

The training minimum wage:

 applies to employees aged 20 years or over whose employment agreement states that they
have to do at least 60 credits a year of an industry training programme to become qualified in the
area they are working in. Many of these employees will be apprentices(external link). An
 apprentice has the same minimum rights and protections under employment law as any other
employee but may be paid the training wage
 doesn’t apply to employees who are being trained at work, for example, by their employer
at the start of their employment; it only applies to employees doing an approved industry
training programme
 doesn’t apply to an employee who is supervising or training other workers. These employees
must be paid at least the adult minimum wage.

Current minimum wage rates

Minimum wage rates are set by the government and are reviewed each year.

The current minimum wage rates (before tax) are as at 1 April 2017 and apply to employees aged 16
years or over:

Type of minimum wage Per hour 8 hour day 40 hour week 80 hour fortnight

Adult $15.75 $126.00 $630.00 $1,260.00

Starting-out $12.60 $100.80 $504.00 $1008.00

Training $12.60 $100.80 $504.00 $1008.00

Employees have to be paid at least the minimum hourly wage rate for every hour worked. Anyone
who thinks they are being paid less than the minimum wage should contact us.

Different types of minimum wage rates has more information on the different types of minimum
wage rates: adult, starting-out and training.

Exceptions and exemptions

There are some exceptions to the application of the Minimum Wage Act 1983 and a small number of
people with a disability hold an exemption permit from the minimum wage.

Minimum wage exemption for people with disability has information about exemption permits to
employees who have a disability that limits them carrying out the requirements of their work.

Paying employees under 16

There is no minimum wage for employees under 16 but all the other minimum standards and
employment rights and obligations apply. When an employee turns 16, they must be paid the
relevant minimum wage (even if they were paid less than the minimum wage when they were 15).

Exceptions to the Minimum Wage Act 1983

The Minimum Wage Act 1983 doesn’t apply to:

 apprentices under: the Maori Housing Amendment Act 1938, the New Zealand Railways
Corporation Act 1981(external link), the Defence Act 1971, the Post Office Act 1959, the State
Services Act 1962, or under any other Act
 inmates of any charitable institution (who aren’t living there just because they’re
employees) who do any work as inmates
 prisoners working while in custody under the Corrections Act 2004. They may be paid at a
rate approved by the Minister of Corrections
 employees who travel between clients and are covered by the Home and Community
Support (Payment for Travel Between Clients) Settlement Act 2016 (external link), in relation to
their travel only.

Previous minimum wage rates

Minimum wage rates from 2007-2017.

Minimum wage rates from May 2013 to April 2017

In force from: Adult Starting out Training

1 April 2017 $15.75 $12.60 $12.60

1 April 2016 $15.25 $12.20 $12.20

1 April 2015 $14.75 $11.80 $11.80

1 April 2014 $14.25 $11.40 $11.40

1 May 2013[4] n/c $11.00 n/c

Minimum wage rates from April 2008 to April 2013

In force from: Adult New entrant Training

1 April 2013 $13.75 $11.00 $11.00

1 April 2012 $13.50 $10.80 $10.80

1 April 2011 $13.00 $10.40 $10.40

1 April 2010 $12.75 $10.20 $10.20

1 April 2009 $12.50 $10.00 $10.00

1 April 2008 $12.00 $9.60 $9.60

Minimum wage rates from March 1997 to April 2007

In force from: Adult Youth Training

1 April 2007 $11.25 $9.00 $9.00

27 March 2006 $10.25 $8.20 $8.20

21 March 2005 $9.50 $7.60 $7.60

1 April 2004 $9.00 $7.20 $7.20

24 March 2003 $8.50 $6.80 $6.80

 In force from: Adult Youth Training

18 March 2002 $8.00 $6.40  

5 March 2001 $7.70 $5.40  

6 March 2000 $7.55 $4.55  

1 March 1997 $7.00 $4.20  

Notes:

1. From 1 May 2013 the minimum starting-out wage replaced the minimum wage for new
entrants and the training minimum wage for trainees under 20 years of age.
2. The training minimum wage was introduced in June 2003.
3. The youth minimum wage applied to employees aged 16 and 17 years. From 1 April 2008,
the youth minimum wage was replaced with a minimum wage for new entrants, which
applies to some employees aged 16 or 17 years.
4. From 2001 to 2008 the adult minimum wage applied to employees aged 18 years and over.
Prior to that, the adult minimum wage only applied to those aged 20 years and over. From 1
April 2008, the adult minimum wage applies to employees aged 16 years and over who are
not new entrants or trainees.

Minimum wage exemption for people with disability

Labour Inspectors may issue minimum wage exemption permits to employees who have a disability

that limits them carrying out the requirements of their work.

Every employee over 16 must be paid at least the relevant minimum wage unless they have a
minimum wage exemption permit.

Labour Inspectors may issue minimum wage exemption permits to employees who have a disability
that limits them carrying out the requirements of their work. A minimum wage exemption permit
means that the person named in the permit has a lower minimum wage rate for the specific job and
only for the period stated in the permit.
The Minimum Wage Act 1983 allows Labour Inspectors to issue minimum wage exemptions in
certain circumstances to people with disabilities. Labour Inspectors will issue a minimum wage
exemption if they think it is reasonable and appropriate. They will not issue one if they think the
employee should be paid the relevant minimum wage if the wage offered is unfair, or if the
employee disagrees with the rate of pay offered.

How to apply for a minimum wage exemption

First, the employer and the employee should discuss the job and possible wage rates. The employee
needs to be told that they can have an independent representative, union representative or
advocate present during these talks. The employer and employee have to negotiate the wage rate in
good faith, that is, openly, honestly and without misleading each other. When doing this, the parties
need to consider how the employee could earn a higher rate of pay by doing things such as the
employer:

 providing more training, supervision and/or support

 matching the content of the job to the employee’s abilities
 making physical changes to the workplace, or changing the way the work is done
 offering the employee a different job
 having flexible working hours.

If the employee is a union member, the union will need to agree to the employee being paid at a
different rate than the pay rate in the collective agreement. If after this discussion, the parties have
negotiated and agreed to a proposed wage that is less than the minimum wage, the employer
should contact a Labour Inspector as soon as the employment relationship begins, and before the
employee physically starts working. The Inspector will visit the workplace to confirm that the process
and the wage rate are fair and reasonable. The Labour Inspector won’t backdate the exemption
earlier than the date they were notified so in some instances the employer may need to pay the
employee minimum wage for a period of time if the employee has already started work before the
exemption has been issued.

Showing that the wage is fair

The parties will have to give reasons for the wage rate that has been negotiated. To do this, it may
be helpful to use a wage assessment tool (you can ask the Labour Inspector for a wage assessment
tool) to estimate the employee’s job performance and to provide concrete evidence for why the
proposed wage rate is reasonable. The Labour Inspector will need to be satisfied that the employee
agrees with the rate.

Before approving the negotiated wage rate, the Labour Inspector will want to confirm that:

 the employee’s disability really stops them from earning the minimum wage for the work
they do
 the wage rate relates to the employee’s ability to do the work
 the employee has been given the opportunity to have an independent representative,
support person or advocate with them when discussing the wage rate
 the work is suitable for the employee and they will get appropriate supervision, training and
support from the employer
 the employer is offering the employee an employment agreement that meets all other
minimum employment standards, eg sick leave, annual holidays, etc
 the wage rate is consistent with the wages of other people in similar circumstances who
have minimum wage exemptions to do similar work
 the employer has done everything that can reasonably be expected to be done to help the
employee do the job to the best of their ability.

A Labour Inspector may cancel a minimum wage exemption permit if they think it is no longer
reasonable and appropriate.

If an employee has any concerns about how the wage rate may affect their benefit or tax exemption
they can contact Work and Income(external link)

Agricultural industry

Many employees in the agricultural industry are offered accommodation and other goods and

services as part of their employment.

This statement sets out the Labour Inspectorate’s position on how providing accommodation and
other goods and services should be dealt with to make sure the requirements of the Minimum Wage
Act 1983 are met.

 Position Statement – the Minimum Wage and Employment Agreements in the Agricultural
Industry [PDF 175KB]

What employees need to be paid

 An employer must pay its employees at least the relevant minimum wage set annually under
the Minimum Wage Act 1983. The minimum wage must be paid for each hour worked on the
farm. Wages cannot be averaged over a season.
 Employees must be paid their wages in money, and cannot be paid through other non- cash
benefits except deductions from their wages agreed by the employees for accommodation or
other goods or services.
 The employer must keep accurate records of hours worked, wages payable (and paid), and
leave taken.

Employer-provided accommodation for employees

 For Minimum Wage Act 1983 purposes, board is considered to mean providing both
accommodation and meals while lodging means providing accommodation only.
 Employers and employees may agree that the employer will provide accommodation to an
employee, and also that the cost of that accommodation will be deducted from the employee’s
wages before they are paid.
 The agreed value of accommodation deducted before payment of wages will be included as
“wages” for Minimum Wage Act 1983 calculation purposes.
 Any agreement relating to accommodation should clearly detail the accommodation
arrangement and its cost to the employee, which should be reasonable. The wage records should
include the wages payable before any deduction is made for the agreed value of accommodation.
 If there is no specific agreement about the cost of accommodation, an employer can deduct
15% of the employee’s wages calculated at the relevant minimum wage rate for board or 5% for
lodging.
 The rental or accommodation agreement should be either separate from the employment
agreement or able to be separated.

Providing other goods or services related to an employee’s employment

 Employers and employees can also agree that other goods or services related to the
employment may be provided. For example, these might include the use of farming property, the
provision of firewood or an animal.
 If provided as non-cash benefits, they cannot be considered as part of the employee’s wages
when determining whether the minimum wage is being paid.
 However, when expressly authorised by the employee, the employer may deduct the agreed
cost of those goods and services, (eg firewood, beast, etc) from wages payable before they are
paid in which case the deducted amount will be included as “wages” for Minimum Wage Act
1983 calculation purposes.
 The wages records should include the wages payable before any deduction is made for the
agreed value of the goods or services.
 Any such agreements and deduction authorisations should be recorded outside of the
employment agreement.

Employers and employees should get their own advice as to the tax implications of arrangements for
deducting accommodation costs or other agreed costs from wages.

They should also consider the need to comply with the Residential Tenancies Act 1986 for any
accommodation provided.

Foreign fishing crews working in New Zealand

As part of a foreign fishing crew working in New Zealand, your work visa allows you to work in New

Zealand waters until its expiry date.

New Zealand has rules regarding your rights and responsibilities as an employee and foreign worker.
It is very important you are aware of these. Visit Immigration New Zealand for the rights and
responsibilities for you and your employer, and to obtain a factsheet(external link) (available in
multiple languages).
If you want to know more about these issues, have any other questions or want to make a complaint
you can:
 Contact us for general queries on employment relations, pay and holidays or if you think you
are not being paid correctly.
 Talk to the New Zealand company that charters the ship you work on.
 Contact the New Zealand Fishing Industry Guild (NZFIG) or other employee representative
organisation. NZFIG is the union that acts for fishing crews. Call NZFIG on (09) 358 3013,
email: NZFIGuild@xtra.co.nz or write to PO Box 90 212, Auckland. You can also contact the
International Transport Workers Federation on (04) 801 7613 or (021) 292 1782.

If you have any questions about your immigration status, contact the New Zealand company whose
ship you are working on, or contact Immigration New Zealand

Pay day

When and how often an employee is paid (eg weekly, fortnightly, monthly) varies between

workplaces and will often be in employment agreements or workplace policies.

To make sure your first pay is paid on time, you need to give your employer all the right details, such
as your IRD number, KiwiSaver information (and your bank account number if that’s how you will be
paid) so that they can pay you.

If you don’t think you’re getting paid the right amount or on time, you should talk to your employer
and ask them why. If you’re not happy after that, contact us for advice.

Pay day
Employees are usually paid on a regular day each week, fortnight or month. For example your pay
day might be every Thursday, or every second Wednesday. The law doesn’t say how often an
employee should be paid or what day they should be paid on but this is included in most
employment agreements. If your pay day isn’t included in the employment agreement that your
employer offers you, you should ask your employer how often and when you will be paid before you
sign it and ask for it to be included so that there is no confusion. Employers need to consider their
good faith obligations and be reasonable when deciding how often their employees will be paid.

Pay period

 The pay period is the time period that you have been paid for in your pay. If you’re paid on a
fortnightly basis your pay period would be 2 weeks.
 For employees who receive wages, you will usually be paid after the pay period. For
example, Mike is paid on a Monday, for the pay period from Monday last week, until the Friday
last week.
 For employees who receive a salary, they may be paid before the end of the pay period. For
example, Shanti is paid fortnightly, in the middle of her pay period. This means Shanti is paid one
week in advance (ie before she does the work related to one week of her pay), and one week in
arrears (ie after she has done the work related to one week of her pay).
Timing of the payment

Pay for annual holidays

 If you take annual holidays, you must be paid for all of the holiday before the holiday starts
unless you agree to be paid in your normal pay payment pattern. You and your employer should
agree to this in writing to make sure you both understand.
 If your employment is ending, your employer must pay your holiday pay in your final pay.
 If you work so irregularly or intermittently that it isn’t practical for you to get 4 weeks off on
annual holidays, or if you are on a fixed term agreement of less than 12 months, you may agree
with your employer to get 8% of your gross earnings as holiday pay with your regular pay instead
of taking holidays. If you agree to this, it must be recorded in your employment agreement and
recorded as a separate identifiable item in pay records (and should show in your payslip).

Pay for public holidays

You must be paid for public holidays in your pay for the pay period in which the public holiday falls if
it is an otherwise working day for you. (If you work on a public holiday you must be paid at a rate of
at least time and a half).

Pay for sick or bereavement leave

You must be paid for sick or bereavement leave in your pay for the pay period during which you took
leave, and at the rate you would usually be paid for that day. If your employer requires you to prove
you were sick then they don’t have to pay you sick leave until you have given them the proof.

Pay for alternative holidays

You must be paid for any alternative holiday you take in the pay for the period that the alternative
holiday was taken. If you haven’t taken an alternative holiday that you are entitled to, when your
employment ends you must be paid it out in your final pay.

Deductions

Deductions may only be made from an employee’s pay if they are required by law, agreed to by the

employee or are overpayments in some circumstances.

The Wages Protection Act 1983 sets out the way wages must be paid, and prevents unlawful
deductions from wages. Employers can make a deduction from pay if:

 the deduction is specifically required by law, for example, PAYE tax, student loan repayment,
child support
 the deduction is for a lawful purpose, is reasonable and the employee has agreed to or
asked for the deduction in writing. ‘Agreed in writing’ includes a general deductions clause in the
employment agreement, but an employer must consult with the employee before they make a
specific deduction under a general deductions clause. The employee can vary or withdraw their
 written consent to a deduction by giving notice in writing at any time. The employer must then
vary or stop the deductions within two weeks of receiving the notice or as soon as practicable
 the deduction is to recover an overpayment in limited circumstances
 a court directs that a deduction be made.

If an employer takes money from an employee's pay without written consent (freely given, ie the
employer can’t threaten or pressure the employee to agree), the employee could contact us or take
an action in the Employment Relations Authority to get the money back (as long as it’s not more
than 6 years since it happened).

Premium (fee) for employment

It is illegal for employers to charge an employee a premium (fee) for employment. This includes
charging an employee money in exchange for giving them a job or keeping them in a job so they can
work under a work visa. It is always illegal, whether the employee pays the fee in a lump sum or
regular amount to the employer or the employer deducts the money from the employee’s pay or the
employer makes the employee pay their own PAYE tax etc. If you or someone you know is being
charged a premium you should contact us for help. A Labour Inspector can seek a penalty against the
employer in addition to the employer having to pay the money back to the employee

Overpayments

If an employer overpays an employee (in some circumstances only), the employer can get back the
amount of overpayment from the employee’s pay as long as it wasn’t reasonably practical for the
employer to avoid the overpayment (due to the methods and equipment used to make payments).

The employer must let the employee know that they’re going to recover the overpayment before
deducting any money, and must make the deduction within two months of telling them.

The employer can recover an overpayment for any period that an employer doesn’t have to pay
wages because the employee has:

 been absent from work without that employer's authority

 been on strike
 been locked out (within the meaning of that subsection)
 been suspended.

Time lost because of poor performance is not an overpayment and an employer can’t deduct wages
for this.

Recovering an overpayment

In relation to a specific pay deduction, the employer must let the employee know the amount of the
overpayment and that they’re going to recover the overpayment no later than five working days
after the overpayment was made.
For other overpayments, the employer must let the employee know:

 no later than 10 days after the employee’s next normal pay day if they don’t have a fixed
workplace (fixed workplace means they work in one set workplace), or
 if they have a fixed workplace, but don’t go there during normal working hours, then no
later than the first day after the employee’s next normal pay day that they go to their workplace
during normal working hours, or
 if the worker has two or more fixed workplaces and didn’t go to either of them during
normal working hours on the employee’s next normal pay day, then no later than the first day
the worker goes to one of the workplaces, or
 no later than the employee’s next normal pay day in any other case,

and the overpayment must be recovered within two months after the employer lets the employee
know.

Recovering money owed if employee leaves without working out notice

If an employee leaves their job and doesn’t give their employee the notice required in their
employment agreement, an employer can’t make deductions or withhold their wages or holiday pay
unless the employee has given their written consent. A written employment agreement may include
a specific deductions clause giving the employer specific permission to deduct wages or holiday pay
if an employee resigns without giving the required notice. This clause may be enforceable if:

 the employee has been given adequate opportunity to consider and ask for independent
advice on the terms and conditions of the employment agreement, and
 the employee has signed the employment agreement, and
 any deductions from wages or holiday pay relying on that clause takes into account the
actual loss suffered by the employer as a result of the employee failing to work their notice
period; and the proportion of the notice period that the employee fails to work.

Union-related deductions

Employers can make deductions from an employee’s pay on behalf of the employee’s union:

 for an employee on a collective agreement, their agreement is treated as if it stated that an

employer who is a party to the collective agreement must deduct a member’s union fee from
their salary or wages regularly (unless the collective states otherwise)
 for an employee on an individual employment agreement who is a member of a union, their
agreement is treated as if it stated that with the consent of the employee, an employer must
deduct a union member’s union fee from their salary or wages)
 if a bargaining fee arrangement applies to the employee.

Deductions for board and lodging

 Board is both accommodation and meals; lodging is accommodation only.
 Employers and employees can agree that the employer will provide accommodation to an
employee, and also that the cost of that accommodation will be deducted from the employee’s pay.
Any agreement relating to accommodation should clearly detail the arrangement and its cost to the
employee, which should be reasonable. The wage records should include the wages payable before
the agreed value of accommodation is deducted (and this total amount is what is used to ensure
that at least the minimum wage is being paid to the employee).
 If there is no specific agreement about the cost of accommodation, an employer may deduct
from an employee’s wages, calculated at the relevant minimum wage rate, no more than 15% for
board or 5% for lodging.
 The tenancy or accommodation agreement should be either separate from the employment
agreement or able to be separated.

KiwiSaver

KiwiSaver is a voluntary work-based savings initiative to help all New Zealanders aged under 65 years
with their long-term saving for retirement. More information about KiwiSaver, including what
employers and individuals need to do to start a savings scheme, is available from the following
websites:

 Employees: http://www.kiwisaver.govt.nz/(external link)
 Employers: http://www.ird.govt.nz/kiwisaver/employers/

Taxes

When you start work you’ll need to get an IRD number, if you don’t already have one.

How much to pay and pay rises

As long as an employee’s pay is above the relevant minimum wage and complies with the

employment agreement and legislation, an employer can choose how much to pay their employee.

How much to pay employees

An employer cannot pay an employee a different amount based on their: sex (including pregnancy or
childbirth status), gender, employee’s colour, race, ethnic or national origins, marital or family
status, age, disability, religious or ethical belief, political opinion, sexual orientation, union
membership or activity.

Other things to note:

 An employee must be paid whatever rate agreed to in the employment agreement, as long
as it is above the minimum wage rate (if 16 years old or over).
 There are no set standard or minimum industry wage rates. CareersNZ(external link) has
some information about the pay range for many jobs. Unions, industry and professional
organisations have useful information, and recruitment sites have market pay rates.
 Keeping up-to-date and accurate records is a necessary part of paying employees correctly
and avoiding disagreements and penalties.
 The frequency and amount of pay reviews and increases will depend on the employment
agreement, workplace policies and in some cases the minimum wage.

Pay rises
An employer doesn’t have a legal obligation to provide a pay rise or conduct a performance review
unless this is in an employment agreement or workplace policy. However, it is best practice to
regularly review employees' performance and pay.

Rates of pay, salaries, bonuses, review periods and pay rises are all up to employers and employees
to negotiate (over and above the level of the minimum wage).

Pay reviews
Pay reviews may be linked to you working to a certain standard or meeting specific performance
criteria, or may be linked to service or other criteria. They are often discretionary and the employer
may choose not to review an employee’s pay or may review it but decide not to increase it. If you’re
on the minimum wage rate, and this rate is increased, then your pay must be increased to at least to
the new minimum wage rate from the time the new rate takes effect. If you’re earning above the
minimum wage, and the minimum wage rate increases to a level above your wage rate, your pay
should be increased to at least the new minimum wage rate.

If an employee is unhappy about their current wage rate, then they can approach the employer and
try to negotiate a pay rise. If an employee requests a pay rise, their employer must consider and
respond to the request in good faith.

Performance reviews
It is good practice for employers and employees to have some form of performance criteria and
feedback system to be in place that both the employer and employee understand. This helps
employees and employers to have a shared view of how the employee is tracking against their
employer’s expectations and what they need to do to improve.

Impact of working a shift over the start or end of daylight saving, on wages
Daylight saving runs from 2am on the last Sunday in September until 2am on the first Sunday in April
each year (except for the Chatham Islands who don’t observe daylight time).

If an employee is working a shift when daylight saving time:

 starts, which means they work an hour less than they otherwise would have, they must not
be disadvantaged (ie they should be paid their pay and allowances for the lost hour)
 ends, which means they work an extra hour than they otherwise would have, they should be
paid for any extra hour worked.

Benefits and allowances

An employee is not entitled to be paid allowances over and above salary and wages unless these

have been agreed with their employer.

Employee’s entitlements to allowances over and above salary or wages

There is no specific legal entitlement to allowances. The payment of and level of allowances, over
and above salary or wages, can be agreed to by the employer and employee. Generally, allowance
payments are used to recognise:

 extra qualities or skills an employee brings to a job

 special responsibilities an employee may have taken on (eg leading hand or supervisor)
 any unpleasant or inconvenient features of their work.

Allowances may also be paid to an employee to reimburse them for costs or expenditure incurred on
behalf of the employer.

If an employee incurs a cost on their employer's behalf it is good practice for the employer to
reimburse or compensate them. If allowances are a regular feature of a job, it’s a good idea to have
them clearly specified, either in an agreement or in a workplace policy, so that it’s clear for everyone
about when and how they apply. 

An employer should also check with Inland Revenue(external link) on the payment of allowances,
and which ones are taxable and non-taxable. 

Employee’s entitlement to be paid for travelling time

Whether or not an employee is entitled to be paid for travelling time will depend on the
circumstances, and the employment agreement or workplace policies, (with the exception of home
and community support workers if the Home and Community Support (Payment for Travel Between
Clients) Act 2016(external link) applies).
If the employer and employee have agreed that travel during working hours is part of an employee's
normal work, then the employee should be paid for the time they take, for example, to travel from
one worksite to another.

Payment for travel time in other situations is to be agreed between the employer and employee, for
example, payment for travel time to and from home.

In addition to travel time, the employer and employee may agree to reimburse travel expenses, for
example, when an employee has to work away from their normal work site, it may be agreed that
the employer will reimburse use of their personal vehicle or other means of transport to travel to
that site.

It’s best practice to discuss these issues and make sure that anything agreed is put in writing, so that
everyone is clear about when and how travel time and/or expenses are paid.

The Inland Revenue website(external link) has schedules of kilometre allowances.

Pay and employment equity

An employee’s pay, conditions, experiences in the workplace and access to jobs at all levels of their

workplace should not be affected by their gender.

Pay equity means gender doesn’t affect what people are paid. Women receive the same pay as men
for doing the same work and also for doing work that is different but of equal value. The value of
work is assessed in terms of skills, knowledge, responsibility, effort and working conditions. Other
considerations in setting remuneration can include market factors, productivity and performance.

Employment equity is about fairness at work. It means people have the same opportunities to
participate fully in employment regardless of their gender.

Gender pay gap

Employment equity is about fairness at work. It means people have the same opportunities to

participate fully in employment regardless of their gender.

Rest and meal breaks

Employees must have rest and meal breaks or reasonable compensation if they don’t. Rest breaks

benefit workplaces by helping employees work safely and productively.

Employees are entitled to rest and meal breaks that:

 give them a reasonable chance during work periods to rest, refresh and take care of
personal matters
 are appropriate for the length of their working day with the employer.

Rest breaks benefit workplaces by helping employees work safely and productively. Employers must
pay for minimum rest breaks but don’t have to pay for minimum meal breaks.
Length and timing of breaks

There are no specific rules for when or how long rest and meal breaks should be and employers
must give their employees a reasonable opportunity to negotiate in good faith and reach agreement
over the timing and length of breaks.

An employee can take a representative (such as a family member or a union representative) along
during a discussion with their employer if they’re not comfortable addressing the issue on their own.
The employer or employee can seek mediation assistance if they’re having trouble reaching
agreement. When agreement is reached between an employer and employee, this should be
recorded in writing and followed.

If the employer and employee haven’t agreed the time and/or length of breaks, the employer can
choose reasonable times and lengths that help maintain workplace service or production, taking into
consideration the employer’s operational environment or resources, and the employee’s interests.

Good practice for determining what breaks are provided (when and for how long) takes into
account:

 how long the employee’s work period is

 the nature of the employee’s work
 any health and safety issues related to the work, eg fatigue
 the time of day or night that the employee’s work period starts, eg matching meal breaks to
normal meal times where possible
 the interests of the employee, eg to allow enough time for rest, refreshment and to take
care of personal matters
 the employer’s operational environment or resources, eg does the employer need
employees to take their breaks in stages or according to a roster, in order to continue production
or services, or do all employees need to take their breaks at the same time.

Common practice is that rest breaks are 10 to 15 minutes long and meal breaks are at least 30
minutes long, but these times vary across industries and occupations. If you are unsure what the
general practice in your industry is, you can check with your industry association or union.

Restrictions

Employers can only restrict rest and meal breaks when the restrictions are reasonable and:

 necessary, considering the nature of the employee’s work – in this case the employer can
specify what restrictions apply, or
 agreed to by the employer and employee, whether in an employment agreement or not.
An employer can only restrict rest and meal breaks if the restrictions relate to one or more of the
following:

 the employee continuing to be aware of their work duties or (if needed) continuing to do
some of their work duties, during the break
 the circumstances when the employee’s break may be interrupted
 the employee taking his or her break in the workplace or at a specified place within the
workplace.

Employers and employees should discuss in good faith whether restrictions are reasonable and
necessary.

Restrictions that are reasonable might include:

 allowing healthcare workers to deal with an emergency

 allowing a sole charge worker to respond to customers
 a situation where another team member needs urgent help.

Being reasonable depends on the circumstances of the workplace. For example, it may not be
reasonable to require an employee’s break to be interrupted because the employer didn’t roster on
enough staff on to cover a normal busy period of work.

Agreements and policies

An employment agreement or workplace policy can give an employee extra rest and meal breaks,
either paid or unpaid.

If meal breaks are unpaid, an employer can agree that meal breaks will be for a minimum length (eg
30 minutes) but employees can take a longer break if they want to. An employee still needs to work
their agreed total hours of work if they take a break longer than the agreed minimum (eg the
employee could take up to an one hour and add the extra work time on to the end of their working
day).

An employment agreement provision that removes or reduces an employee’s entitlement to take

breaks (without providing reasonable compensation) or to compensatory measures has no effect
and can’t be enforced by an employer.

Employers and employees can agree to not having rest or meal breaks
An employee and employer can agree to reasonable compensation instead of breaks.
An employer doesn’t have to provide rest or meal breaks
An employer does not have to give rest and meal breaks only if breaks cannot reasonably be given,
considering the nature of an employee’s work. However employers must provide reasonable
compensation to the employee if no break is given where a break would be appropriate.

Reasonable compensation
There are no set rules as to what reasonable compensation measures are but if the employee gets
time off work, instead of a break, this is reasonable if:

 the employee gets the same amount of time off as they would otherwise have taken as a
break, or
 the time off is given on the same basis as the break that the employee would have otherwise
taken, for example, if the break that was not taken wouldn’t have had restrictions, then the
compensatory break shouldn’t have restrictions, eg the employee is allowed a later start time,
earlier finish time, or they can add several compensatory breaks together and take a longer
break.

Health and safety

There are two reasons for employers to provide adequate breaks:

 to promote good morale and productivity

 to prevent fatigue causing harm.

People can't keep performing at a high level without having breaks of some sort. These should be
matched to the nature and intensity of the work, eg a person in a call centre may need short
frequent breaks to relieve the pressure of constant calls.

Ensuring adequate breaks can make a noticeable difference to an employee's physical and mental
well-being at work. In situations where fatigue can lead to harm (such as in driving or the operation
of dangerous machinery) employers have obligations to take all practicable steps to ensure that
fatigue is not likely to cause harm. Employers aren’t responsible for factors outside of work that lead
to fatigue or impact on an employee's ability to cope, but they do have to have systems that identify
and deal with these factors when they may affect workplace safety.

Download WorkSafe New Zealand's Temporary impairment: Dealing with an employee’s temporary

impairment(external link).
Stress and fatigue: Their impact on health and safety in the workplace (external link) is a publication
outlining best practice and tips to help people make reasonable and practical decisions about
workplace health and safety from WorkSafe New Zealand(external link).
Legislative exceptions
If an employee has to take a specific break under legislation, that legislation applies instead of any
break entitlement under the Employment Relations Act 2000.

For example, the Land Transport Rule: Work Time and Logbooks 2007 (external link) made under the
Land Transport Act 1998.

Compliance
If an employee thinks they are not being allowed to have the breaks they are entitled to, they should
first raise the matter with their employer. If this doesn’t fix the problem, they can contact us or can
seek mediation assistance. If employees are union members, they can seek assistance from their
union. The Employment Relations Authority can order employers to comply and impose a penalty if
they don’t provide appropriate breaks or reasonable compensation.

Hours of work

An employee’s hours of work must be agreed to by the employer and employee in a written

employment agreement.

Any agreed hours of work or an indication of the arrangements relating to the times the employee is
to work must be in the employment agreement.

Employment agreements must fix the maximum number of hours to be worked by the employee at
not more than 40 hours per week (not including overtime) unless the employer and employee agree
otherwise. If the maximum number of hours (not including overtime) are less than 40, the employer
and employee must try to fix the hours so they are worked on no more than five days of the week.

If an employee or employer wants to change the hours of work, both should agree to this in writing

in the employment agreement.

Hours of work in an employment agreement might include that an employee also do additional
work, as reasonably required by an employer, and should agree on any compensation for this
overtime. Employers must make sure that employees are paid at least the minimum wage for all the
time that they work; this rule applies equally to overtime as well as normal hours.

Overtime

The hours that are agreed to in an employment agreement are generally the only hours that an
employee needs to be present at work. Many employees receive payment if their employer asks
them to work more than their normal hours.
Whether this overtime is factored into the employee’s salary, or will be paid at the employee’s
normal rate of pay (at least the minimum wage rate) or a higher rate of pay, the arrangement needs
to be agreed to by the employer and the employee. This should be put into the employment
agreement so that both parties are clear.

You can find a sample clause on overtime in the Employment Agreement Builder(external link). If the
specific hours aren’t put into a written agreement (eg because they change so often that this isn’t
practical), then an accurate and timely written record will need to be kept of exactly what hours the
employee has worked.
If an employee has worked more than their normal hours and believes they haven’t been properly
compensated for this, they should try to resolve this with their employer.

Safety concerns

Employers and employees need to take all practicable steps to ensure the health and safety of
themselves and others in the workplace, and this includes working safe hours of work and avoiding
fatigue. For more information, view WorkSafe New Zealand's Managing shift work to minimise
workplace fatigue (A guide for employers)(external link).
If employees have safety concerns about the hours they are required to work, they should discuss
this with their employer, union or Worksafe New Zealand(external link).

Cutting back or increasing hours

If an employment agreement has the employee's hours of work, then an employer can’t change

them without the employee's agreement. If the employment agreement says that an employer can
change the hours of work, the employer still has to act fairly and reasonably before they do. If an
employee thinks that the change to their hours is disadvantaging them and that the process the
employer followed was unfair or there were no genuine reasons for changing the hours of work, an
employee should first try to resolve the issue with their employer.

In some situations (such as genuine financial, commercial or economic problems, or genuine

restructuring of the business), cutting back on an employee’s hours may be put forward as an
alternative to redundancy. In these situations the employer must follow the usual process for
organisational change, which includes giving the employee a fair opportunity to consider and
respond to the proposed change.

Having to be available for work or shifts

An employment agreement can’t have an availability clause put in (ie working is conditional on the
employer making work available to an employee and they’re required to be available to accept any
work that the employer offers) unless:

 the employment agreement specifies agreed hours of work and includes guaranteed hours
of work among those agreed hours, and the availability clause is in addition to those guaranteed
hours of work, and
 the employer has genuine reasons based on reasonable grounds for including the availability
clause and the number of hours of work specified, and
 the availability clause gives the employee reasonable compensation for making themselves
available to work.

To decide whether there are genuine reasons based on reasonable grounds, an employer needs to
think about such things as:

 whether they’re able to meet their business demands for the employee’s work successfully
without an availability clause, and
 the number of hours that the employee needs to be available, and
 the proportion of these hours compared with their agreed hours of work.

To decide whether the compensation is reasonable, the employer must think about all relevant
matters, including:

 the number of hours that the employee has to be available, and the proportion of these
hours compared with their agreed hours of work, and
 the nature of any restrictions on the employee if there is an availability clause, and
 how much the employee gets paid for the work they are available for, and
 the employee’s salary (if that’s how they are paid). If they are paid by salary, then the
employee and employer can agree that the employee’s salary includes compensation for being
available for work under an availability clause in their employment agreement. 

Saying “no” to work

If an employment agreement doesn’t have a valid availability clause that provides reasonable
compensation, then an employee can say “no” to work that isn’t part of any guaranteed hours
in their employment agreement. An employer can’t disadvantage an employee if they turn down the
work. This means that an employer can’t:

 refuse or not offer the same employment terms, work conditions, fringe benefits, and
training, promotion and transfer opportunities, as other employees with more or less the same
qualifications, experience and skills employed in the same or very similar circumstances, or
 dismiss or do anything to an employee that has a negative effect on the employment, job
performance or job satisfaction, when other employees employed to do the same type of work
aren’t treated the same.

Saying "no" to work scenario

Jenna has no guaranteed hours of work and said “no” to a shift because she couldn’t arrange
childcare. Her employer then reduced the number of shifts she was offered, and gave her all the
unpopular shifts because she said “no”. In this situation Jenna might want to make sure she has a
copy of her previous shift history (her employer has to keep accurate records of employees’ time
worked) before she said “no” as she could use this to show she was now being disadvantaged. 

Cancellation of shifts
If an employee is a shift worker, their employer can’t cancel one or more of their shifts unless:

 the employment agreement has:

o a reasonable period of notice for cancellation, and
o reasonable compensation payable to the employee if the employer cancels a shift
without giving reasonable notice, and
 the employer either gives the employee the above notice or pays the reasonable
compensation above, and
 cancelling the shift doesn’t breach the employment agreement.

To determine whether or not the period of notice is reasonable, you must consider all the relevant
factors, including-

 the nature of the employer’s business, including whether or not they could control or see
the situation that led to the proposed cancellation, and
 the nature of the employee’s work, including the likely effect of the cancellation on the
employee, and 
 the nature of the employee’s employment arrangements, including whether there are
agreed hours of work in the employee’s employment agreement and if so the number of
guaranteed hours of work (if any) included among those agreed hours.

To determine how much is a reasonable amount to pay for shift cancellation, you must consider all
the relevant factors, including:

 the shift cancellation notice period in the employment agreement and what the employee
would have been paid if they had worked the shift, and
 if the type of work means the employee would have incurred costs preparing for the shift.

If the employment agreement doesn’t have a valid shift cancellation provision (with reasonable
notice period and reasonable compensation for shift cancellation) and the employer cancels a shift
anyway, then, because they can’t do this, the employer must pay the employee what they would
have been paid if they had worked the shift. 

Employers must also pay employees what they would have been paid if they had worked the shift if:

 the shift is cancelled but the employer doesn’t tell the employee until the start of the
cancelled shift, or
 the rest of the shift is cancelled when the employee has already started the shift.

In this situation, the remuneration the employee gets when the shift is cancelled is included in their
ordinary weekly pay and relevant daily pay.

If the employer doesn’t protect the employee's rights in relation to having to be available for work,
or providing reasonable notice or reasonable compensation for shift cancellation, then the
employee may be able to raise a personal grievance.

People under 16 years

People under 16 years:

 must attend school, and their employment can’t stop or interfere with this
 can’t work between 10pm and 6am on any day
 can work during week days, before or after school, and/or between 6am and 10pm on the
weekends and during school holidays

Rostering

A good staff roster doesn’t just record employee hours and job duties; it is a business tool to help

you meet customer demand and your business targets.

Smart rostering can increase efficiency, and reduce your turnover rates and direct and indirect
payroll costs (uncertainty and variation in work-patterns can drive payroll calculation costs). The
better your rostering is, the more management time you free up for other business tasks. Rostering
is a balancing exercise that needs to be done with a view to doing the best by both your business
and your employees. Effective rostering (and communicating with your employees), will help you to
recruit and retain good staff.

Plan the roster before allocating specific employees to roster slots 

Decide what skills and responsibilities you need for each shift and how many people with each skill
set you will need
Every industry and business has its own sales patterns, busy periods, quiet times and rush hours. You
need to identify these patterns in your business. Analyse historical hourly, daily and weekly activity
and work demands in the context of what was going on outside and well as inside your business.

In some industries the weather influences peaks and troughs, in which case you may want to
consider long range forecasts when finalising rosters. Look at local and national information and
event calendars, social media and business association updates to find out about any events going
on that might affect your business. Consider the impact of the seasons on sick leave when you are
rostering.

Look at employee guaranteed hours, availability, experience, skill set and preferences to allocate
individuals to each shift
Have leave and holidays request (and approved leave) details on hand so you know not to include
these employees in the roster. An employee taking one day’s annual holidays can throw out your
whole roster, so encourage employees to request annual holidays as far in advance as they can to
reduce having to make changes later to accommodate time off.
Make sure you are clear about which employee is in charge during the shift. Make sure that when
you are rostering you are also considering opportunities for individuals to grow their skills and learn
from more experienced staff to future proof your business and develop your employees.

Share roster options and seek preferences

People may have preferences based on availability or because they are more productive at certain
times and certain days. Wherever possible, match shifts to employee preference; this will benefit
productivity and workplace culture. Employees will always have their favourite and least favourite
shifts. This might be because of the time of day, the particular day of the week, how busy the shift is,
any penal rates, the shift manager, who else might usually be rostered on at the time or the
potential for (or lack of) tips.

Ask each employee what their favourite and least favourite shifts are and if there are trends, make
sure you rotate popular and unpopular shifts around all employees. Act in good faith and avoid
favouritism in your rostering.

Roster busy shifts with experienced and skilled employees

If you have peak periods or shifts, make sure you have some experienced employees on shift.
Balance this with some employees who are developing so that they can observe how to deal with
the extra pressure. If employees are not keen to work these busy shifts, rotate them fairly so that
the workload is kept fair and individual employees don’t have the responsibility of all the critical
tasks.

Clearly communicate with employees

Make sure the whole team understands the basis for the roster and the mix of skills and experience
required
If an employee doesn’t have or understand their roster, they may not show up to work on time or at
all. Make sure everyone knows where and when the roster is available, the process for advising any
updates and the process for swaps, change requests etc.

It makes sense to let employees check their rosters remotely (without coming in to work), this saves
them hassle, time and transport costs. You could use specialist rostering packages, email rosters,
load into applications such as GoogleDrive or use online kiosk functions. If you have more than 1
staff member with the same name, make sure that each person is clear on how they are identified in
the roster.

Look at employment agreements

When you are allocating employees to the roster, make sure that you are meeting all of the
requirements of their employment agreement. The employment agreement:

a. may contain specific hours or days that the employee can or can’t be rostered or has to be
or doesn’t have to be available. An availability clause must meet the legal requirements for it to
 be valid (including there being genuine reasons based on reasonable grounds, and reasonable
compensation for availability).
b. may have a number of guaranteed hours (if the employee must be available for any work
that is offered by the employee, they must also have guaranteed hours).
c. should have valid shift cancellation provisions (with a reasonable notice period for shift
cancellation and a reasonable amount of compensation payable for cancelling with, and without,
giving the notice). You must use these provisions if you roster too many employees on a shift and
want to cancel an employee’s shift. Otherwise you must pay the employee what they would have
been paid if they had worked the cancelled shift.
d. should specify what the employee gets paid (and it must be at least the relevant minimum
wage) including any penal rates or overtime payments.

Make rosters as predictable as possible and do as far in advance as you can

Employees will have multiple commitments and interests outside of work such as care of
dependents, sports, clubs, etc. They need to budget and make sure they can pay their bills and meet
liabilities. Making rosters as even and predictable as you can and advising employees of the roster as
far in advance as possible is best practice. This will help your employees successfully organise their
lives and attend shifts, reducing unplanned absences and last minute changes.