The minimum wage is set to increase from $17.70 to $18.90 on 1 April 2020, a 6.2% payrise for those earning minimum wage.
What does this mean for you as an employer?
- If you have any employees who are currently earning the minimum wage, you will need to increase their wages to $18.90 from April 1st, even if it is in the middle of a pay cycle.
- If you have any employees on a starting-out or training wage, this will also increase to $15.12 per hour, which is 80% of the new adult minimum wage.
Looking ahead for your business:
- This minimum wage increase equates to around an extra $2500 a year in wages, for one employee working a 40-hour week (with Kiwisaver expenses on top).
- This government have signalled they wish to raise the minimum wage again next year to $20 per hour, which will be another increase of around $2300 per year for a 40-hour-per-week employee – meaning $4800 per full-time employee over the next two years. If you have several employees earning the minimum wage, this can all start to add up.
As with any price increases within your business, it is a good time to look at the charge-out rates and selling prices to make sure you are ready to meet these new costs.
If you would like help reviewing these, please don’t hesitate to give us a call.
