Minimum Wage is Increasing on 1 April 2025 – Is Your Business Ready? As a business owner or manager, it’s crucial to prepare for the upcoming minimum wage increase, which takes effect on 1 April 2025. Staying ahead of these changes ensures compliance with employment laws and helps you manage payroll and budgets effectively.
Minimum Wage Increase Details
From 1 April 2025, the new minimum wage rates in New Zealand will be:
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- Adult minimum wage: Increasing from $23.15 to $23.50 per hour.
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- Starting-out and training minimum wage: Increasing from $18.52 to $18.80 per hour.
These rates are before tax and deductions. If you haven’t yet discussed this change with your accountant, payroll provider, or HR team, now is the time to act.
Preparing for the Minimum Wage Increase
To ensure a smooth transition, businesses should take the following steps:
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- Communicate with Employees: Inform staff earning the minimum wage about the upcoming change well in advance.
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- Update Payroll Systems: Ensure payroll software is updated to reflect the new rates. If you use Smartly or Xero, updating pay rates is straightforward.
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- Review Pay Structures: If employees earn just above the minimum wage, consider whether adjustments are needed to maintain pay equity.
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- Review Payroll Processes & Contracts: This is a great opportunity to update employment agreements. If contracts are outdated or missing, work with employees to ensure compliance. Traktion’s HR Solutions can assist if needed.
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- Assess Business Impact: Factor the wage increase into short- and medium-term budgets. Consider its impact on holiday pay liabilities and plan accordingly.
Understanding Minimum Wage Obligations
The minimum wage applies to all hours worked, unless a higher rate is agreed upon in the employment contract. It covers employees paid by salary, hourly rates, or commission.
Exemptions include:
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- Employees under 16 years of age.
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- Employees with a Labour Inspector-issued minimum wage exemption permit due to a disability affecting their work capacity.
For a full overview of minimum wage obligations, visit Employment New Zealand.
Stay Compliant & Prepared
Keeping up with minimum wage laws protects both your business and your employees. If you need support with payroll updates, budgeting, or employment agreements, get in touch to ensure compliance before 1 April 2025.
