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Employment law changes come into force

3 April 2013 - MinterEllisonRuddWatts


Over the Easter weekend several legislative changes have come into force affecting employers’ payroll obligations. These include an increase to the minimum KiwiSaver contribution rate and an increase in the minimum wage.

There are also a number of other employment related legislative changes on the horizon, including the introduction of a starting out wage, the Mondayisation of Waitangi Day and ANZAC Day and the employment related changes approved by Cabinet last year.

Changes to KiwiSaver
From 1 April 2013, minimum contributions to KiwiSaver increased from 2% to 3% of gross salary and wages.

This increase will affect all employer contributions made at the minimum rate. It will also affect both new employees and current employees who choose to contribute at the minimum rate. Higher rate employee contributions (4% or 8%) are not affected.

The change takes effect from the first payrun commencing on or after 1 April 2013, so it may take a few weeks to filter through to all employers.
For employers, if you have not already done so, now is the time to:

  • remind your employees of the changes; and
  • ensure that your payroll providers (whether internal or external) will be
  • implementing the changes in the first April pay period.

Minimum wage increase
The adult minimum wage has increased from 1 April 2013, from $13.50 to $13.75. This applies to all employees aged 16 or over who are not trainee employees or new entrants.

The new entrants’ and training minimum hourly wage has also increased to $11.00 per hour, or 80% of the adult minimum wage. This rate applies to:

  • employees aged 16 and 17 who have not completed 200 hours or three months of employment in the workforce (whichever is shorter) (the new entrants’ wage); and
  • employees aged 16 or over who are doing recognised industry training involving at least 60 credits per year (the training wage).

Starting out wage
From 1 May 2013, the new entrants’ wage and training wage will be replaced by a “Starting Out Wage”.

Intended as an incentive for employers to give young people a start in the workforce, the starting out wage will apply to eligible 16-19 year olds who are not supervising or training other workers.

Workers in the following categories will be paid no less than 80% of the minimum wage for adults:

  • 16 and 17 year olds in their first six months of work with their employer;
  • 18 and 19 year olds in their first six months of work with an employer after six months or more on a benefit; and
  • 16 to 19 year olds completing a recognised industry training course involving at least 40 credits per year.
  • Employees already on the new entrants’ wage can remain on it until they have completed 200 hours or three months’ work for their employer.
  • Employees aged 16 to 19 who are on a minimum training wage can remain on that wage.

Mondayisation of Waitangi and ANZAC Days
The Member’s Bill to Mondayise Waitangi and ANZAC Days has passed its second reading in Parliament and looks set to become law following its third reading. National has dropped plans to veto the legislation at the third reading stage and subject to a late change of mind by any of the opposition parties, it looks as though 2015 will see the first Mondayised ANZAC Day holiday.

In practice, the Bill will mean that where Waitangi Day or ANZAC Day falls on a Saturday or a Sunday:

  • the holiday will still be celebrated on that day for non-employment purposes (eg. dawn parades or Waitangi celebrations);
  • for employees who ordinarily work on the weekend, the public holiday will fall on the normal day, with the employee either taking that day off work as a holiday or working on that day and being paid (and provided with an alternative day accordingly);
  • for employees who do not ordinarily work on a weekend, the following Monday will be treated as a holiday for employment purposes, with the employee either taking that day off work as a holiday or working on that day and being paid (and provided with an alternative day) accordingly.

Other changes in the pipeline
A number of other employment related changes were approved by Parliament during 2012. These included changes to flexible working requests, collective bargaining, Part 6A Employment Relations Act (the vulnerable worker provisions) and in relation to the interface between statutory good faith obligations and privacy obligations.
We detailed these changes in our January 2013 newsletter. Legislation is due to be introduced to Parliament in respect of these changes before the end of June 2013, with National looking to enact the changes before the end of the year.

How can we help you?
If you would like to discuss any of the changes outlined above and the implications for your organisation, please feel free to contact us. We will be providing you with further detail regarding the changes proposed for later this year, as soon as it comes to hand.

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Disclaimer: This information has been written for and submitted to HRINZ for publication and has been published in good faith for the general information of HRINZ Members of the Institute. HRINZ accepts no legal responsibility for the contents of the Knowledge Base and appropriate professional advice and assistance should be sought in particular cases.

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