BDO Releases Employer Guidelines for NZ 2020 Minimum Wage Increase

As of 1 April 2020, the government has increased the minimum wage from $17.70 to $18.90 per hour—an increase of 6.78%, or $1.20 per hour.  For employees working an average 40 hour week, this translates to an extra $48 per week before tax. 

New Zealand also currently operates a training wage, which also increased on the same date, though some may have missed this. The original wage was $14.16, and it is now set to $15.12 per hour. This is because the training wage rate is maintained at 80% of the adult minimum wage rate.  

These increases are expected to be followed by more in 2020, with the government signalling to increase the minimum wage again, to at $20 an hour. 

BDO has released some guidelines for employers who need to make changes based on this increase.  

The first key area to pay attention to is payroll. Many payroll systems will have automatically updated, but some will need to be adjusted manually. It’s best to have systems in place for making these changes in advance, but many payroll systems do provide instructions on doing this. For those that may not, there is also professional accounting assistance.  

Cloud systems are a great way to overcome these hurdles in advance. Cloud-based payroll systems are accessible from anywhere with an internet connection, and update automatically. Often, timesheeting and financing systems can also be directly integrated into the payroll system to reduce errors.  

Budgeting is another area that requires attention after a change to the minimum wage such as this. Annual budgets should ideally be broken down into month-to-month sections with the assistance of an accountant, so that the effects of a minimum wage increase are clearly visible across a range of operations. Digital tools like Spotlight or Futrli can help with this.  

For more guidelines, including how to manage increasing wages for employees that are not on a minimum wage, and how to manage pricing strategies, visit the BDO website here: https://www.bdo.nz/en-nz/minimum-wage-info-for-employers