HomeFEATURESReaction to the minimum wage increase, and what this means for your employees

Reaction to the minimum wage increase, and what this means for your employees

The Government is delivering on its election pledge to raise the minimum wage for New Zealand’s lowest paid workers by increasing it to $21.20 per hour from 1 April 2022, Workplace Relations and Safety Minister Michael Wood announced last week.

“Many Kiwis who earn the minimum wage have gone above and beyond in our fight against COVID-19. We remain committed to supporting New Zealanders by raising their wages, as we continue to recover and rebuild from the pandemic,” Wood said.

“With the arrival of Omicron, we are once again calling on many of our frontline workers – such as cleaners, supermarket workers, and security guards – to keep the country running as the virus spreads and cases begin to increase. I think everyone agrees those contributing so much to our Covid response deserve a pay rise.”

And while the wage increase set for just six weeks’ time is unquestionably a well-intentioned boost for our lowest paid workers – many of whom work in the retail sector – business organisations are not happy. BusinessNZ Chief Executive Kirk Hope going so far as to say it’s a slap in the face for struggling businesses.

“This increase comes at a time when businesses are under extreme pressure from fast rising costs in labour, capital, and in their supply chains, and when some are fighting for their very existence.

“It is a big increase to the minimum wage, at very short notice, that businesses have had little time to get ready for.

For those sectors that are struggling to stay alive, with no additional support under Red settings, the minimum wage increase is a cruel regulation that adds critically to the burden facing businesses in 2022.

“We call on the Government to increase support for businesses affected by this crushing compulsory increase to the minimum wage,” Hope says.

Increasing the minimum wage by six percent with just seven weeks’ notice is a slap in the face to Canterbury business, explains Leeann Watson, Chief Executive of Canterbury Employers’ Chamber of Commerce.

“For the Government to immediately increase the cost of doing business at a time where businesses are already facing extreme pressure shows a worrying disconnect from the reality that businesses are operating in,” she says.

“Businesses have only been giving a mere seven weeks to prepare for the minimum wage changes, after it was repeatedly stated at the last election that any further changes would be signaled well in advance to provide sufficient notice for employers to prepare – it is disappointing that this appears to be a broken promise.

“Much of the pressures facing businesses have been induced by Government restrictions. The red light settings are a significant handbrake, the cost of doing business is through the roof and our labour market is severely strained.”

The minimum rates apply to all employees. It doesn’t matter if they work full-time, part-time or casually. It also applies if they are paid an hourly rate, a salary, a commission basis, or some sort of piece rate.

As for what to do if you are a business owner, Retail NZ says that when there is a wage rate change, you need to advise your employees of this, and record the change in writing.

“For this, we recommend the Variation Letter for your employee to sign. After signing, you should keep one copy for your records, and give the other to your employee. It’s important to keep a record because you’ll need to show it to Labour Inspectors if you’re ever audited,” the association said in a statement.

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