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Workers need to carefully examine their payslips as the KiwiSaver employer and employee contribution rate increases from 2% to 3% from today says Labour’s spokesperson, for Labour Issues Darien Fenton.
“The National Government changed the law in 2008 to enable employment agreements to include a ‘total remuneration’ scheme, where the employer’s contribution to KiwiSaver can be deducted from salaries. This has resulted in some dodgy practices and some workers being caught unawares as their pay reduced by the KiwiSaver contribution amount, or pay increases were offset.
“The worst cases include employers who have tried to apply a total remuneration approach to the minimum wage, effectively reducing the minimum wage payable by law.
“This has recently been challenged in the Employment Court where workers had their employer contributions included in the minimum wage of $13.50 an hour. The court found that the employers concerned were in breach of section 6 of the Minimum Wage Act 1983, and ruled that their compulsory contributions must be paid in addition to the employees’ hourly rate of pay.
"While I'm pleased that the court has clarified this for minimum wage workers, this doesn't apply to other workers, including those who are receiving just above minimum wage.
"Many workers could find they are effectively paying both their own KiwiSaver contribution and that of the employer thanks to the 2008 changes made by National.
"With today's 1% increase in both employer and worker contributions, it's a good time to check up on your KiwiSaver account,” Darien Fenton said.