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Payroll changes for the April 1 minimum wage increase

By SmartPayroll | April 27, 2014

From the first of April 2014 minimum wage is increased from $13.75 per hour to $14.25 per hour. There are also changes to the other minimum wage groups.


Adult Minimum Wage


The Adult Minimum Wage is what people most often mean when talking about minimum wage. It applies to all workers 16 years old and over who are not new entrants or trainees. From April 1st 2014 the adult minimum wage will be increasing from $13.75 per hour to $14.25.


The Starting Out and Training Minimum wages are 80% of the adult minimum wage.


Starting Out Minimum Wage


When people talk about “youth rates” this is generally what they are referring to. The Starting Out minimum wage applies in the following situations (from the Ministry of Business, Innovation and Employment):

– 16- and 17-year-old employees who have not yet completed six months of continuous employment with their current employer.
– 18- and 19-year-old employees who have been paid a specified social security benefit for six months or more, and who have not yet completed six months continuous employment with any employer since they started being paid a benefit. Once they have completed six months continuous employment with a single employer, they will no longer be a starting-out worker, and must be paid at least the adult minimum wage rate.
– 16- to 19-year-old employees who are required by their employment agreement to undertake industry training for at least 40 credits a year in order to become qualified.

From April 1st 2014, the new entrant’s minimum wage increases from $11.00 per hour to $11.40.


Training Minimum Wage

The training minimum wage is for employees aged 20 and over who are required by their employment agreements to undertake at least 60 credits a year of a recognised industry training programme. From April 1st 2014, the training minimum wage also increases from $11.00 per hour to $11.40.

Minimum wage increases and payroll

Hopefully you have already noted in your calendars that April 1 is a new minimum wage. No problems if you haven’t though! So long as you make sure the adjustment is made before your next pay run. When you are processing payroll for the period including April 1, you will need to adjust your rates – keep the original rate up until March 31st, then have a separate rate for April 1 onwards. Then, make sure to adjust your employees rate for all future next payroll processing.


Additional Information about Minimum Wage


Here are a few key facts you may or may not know about minimum wage. Either way, it’s great to brush up!


– There is no set rate for employees under 16 years old.
– The rates are gross before tax.
– Holiday pay must be paid in addition to the minimum wage.


There are serious ramifications for breaches of Minimum Wage requirements (and holiday pay) and Labour Inspectors (Ministry of Business, Innovation and Employment) have the power to issue demand notices if:


– An employee complains and the Inspector believes the employee has not received wages or holiday pay;
– Where the employer has been given a 7 day notice to comment on the complaint and the Inspector is satisfied the employee is entitled to the wages or holiday pay.
– Labour Inspectors can enter the employer’s premises under the provisions of the Act, interview people and require copies of payroll, wages, time and holiday records.


Employers who fail to comply with any ‘requirements’ of Inspectors face penalties under the Act.


Did you know?


It is illegal to have anyone under 16 working between 10pm and 6am.


If you would like more information about how changes to minimum wage affect your payroll setup, about ensuring you get it right in SmartPayroll, or have any other queries, feel free to get in touch by either our online contact form, or by calling 0800 10 10 38