Covid-19: The Minimum Wage

New Zealand’s next minimum wage increase is occuring in the midst of the country being at COVID-19 Alert Level 4. On Wednesday, 1 April 2020 the adult minimum wage rate increased by $1.20, from $17.70 to $18.90 per hour. The starting-out and training minimum wage rates will increase 96 cents from $14.16 to $15.12 per hour, and will remain at 80% of the adult rate.

Minimum wage must be paid for each hour worked

During the national lockdown, those who are actually working must still be paid the minimum wage for the work they do. This means employees regardless of where they are working must be paid at least the new minimum wage for each hour they work.

Affected employers can backdate the increase

The Ministry of Business, Innovation and Employment is advising employers who are unable to process the wage increase due to the lockdown requirements and other impacts of COVID-19 to backdate pay to employees when they can. Employers should process the increase as soon as they are able to do so safely and in compliance with any COVID-19 restrictions in place. Employers will need to pay employees back the increase for any hours that were worked, but for which the required pay rate could not be processed at the time.

Non-working employees earn increase when work again

If no work is being performed, there is no requirement for employers to pay the minimum wage. If employees are not working, they will begin earning the minimum wage when they work again after the lockdown.

Wage Subsidy Scheme

The Government’s Wage Subsidy Scheme requires businesses to pay, their employees at least 80% of their pre-COVID-19 income, if possible. For workers on the minimum wage, they could therefore receive less pay than previously even when the minimum wage has increased. At a minimum, in most cases, businesses must pass on the full subsidy to their employees.