How much to pay your employees
With the recent changes in the minimum wage there has been a lot of talk around how much employees should be paid. There have also been calls to adopt the living wage rate and not the minimum as responsible employers.
So how much should you pay your employees and how much are you legally required to pay.
An employee must be paid whatever rate agreed to in the employment agreement, as long as it is above the minimum wage rate.
Of course employees with experience and/or specific qualifications will demand a higher than minimum wage.
How much is the minimum wage?
From 1 April 2018 the below minimum wage rates apply.
The minimum adult rate applies to any employee aged 16 years and over unless they are eligible for the 'starting-out' wage or the 'training' wage.
There is no legal minimum rate for employees aged 15 years or younger
The table below summarises the minimum hourly rates and the changes:
Other things to note:
It is illegal for an employer to pay an employee a different amount based on their gender, race, ethnic or national origins, marital or family status, age, disability, religious belief, political opinion, or union membership.
Whether or not training is paid 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.
As an employer you are required to comply with the Employment Relations Act 2000 and the Holidays Act 2003.
In particular, you must be able to show that you’ve correctly given your employees all minimum employment entitlements such as the minimum wage and annual holidays.
You also need to keep PAYE records which will be needed in case of an IRD audit. The below record must be keep according to the IRD.
copies of PAYE payment information
Tax code declaration (IR330) forms completed by employees
Tax rate notification for contractors (IR330C) forms completed by contractors
letters from us requesting you change your employee's tax code
letters from us requesting you change a contractor's tax rate
a copy of any written agreements to treat a payment to a contractor as a voluntary schedular payment from which you make a deduction
copies of certificate of exemptions
copies of special tax codes
copies of special tax rate certificates.
All your pay records must be held in New Zealand for at least seven years.