Minimum Wage in New Zealand: The Complete Guide

Who the minimum wage applies to

Almost every employee working in New Zealand is legally entitled to at least the minimum wage, regardless of how they are paid (hourly, salary, commission, piece rate or a combination) and regardless of their visa status, including most temporary work visa holders. It applies whether someone is full-time, part-time, casual, fixed-term or a trial-period employee.

Misclassifying an employee as a contractor to avoid minimum wage obligations is a common compliance trap. What matters legally is the real nature of the working relationship (control, integration, financial risk, ability to subcontract) rather than what the contract calls the person.

Starting-out and training wages explained

The starting-out wage exists for a narrow set of younger or newly-training workers and cannot be applied simply because someone is new to a job. It is set at 80% of the adult minimum wage.

An employee qualifies for the starting-out wage if they fall into one of these categories:

• 16 or 17-year-olds who have been with their current employer for less than six months and have not previously worked for that employer for six months or more continuously
• 18 or 19-year-olds who have been continuously receiving one of certain specified social security benefits for six months or more, for the first six months with a new employer
• 16 to 19-year-olds whose employment agreement requires them to undertake industry training of at least 40 credits a year in order to become qualified

The starting-out wage stops applying, and the adult minimum wage must be paid, once the employee has supervised or managed another employee, or has completed six months of continuous service with the employer, whichever comes first.

The training wage applies to employees aged 20 or over whose employment agreement requires at least 60 credits a year of an approved industry training program, and is also set at 80% of the adult rate.

How to calculate minimum wage pay correctly

The core rule is simple to state and easy to get wrong in practice: every hour actually worked must average out to at least the minimum wage once all qualifying payments are counted, over the relevant pay period.

1. Identify all hours worked, including required training, team meetings, opening and closing procedures, and travel between job sites during the working day (but not the normal commute to and from work).
2. Add up gross pay for the period before tax but including any productivity or incentive-based payments genuinely tied to hours worked.
3. Divide gross qualifying pay by hours worked. The result must be at or above the applicable minimum wage rate.
4. Check every pay period, not just on average across a year — a worker cannot be underpaid in a quiet week on the assumption that a busy week will average it out, unless a lawful averaging arrangement specifically allows this over a defined cycle.

What can and can't be deducted

Deductions from wages are tightly controlled under the Wages Protection Act 1983. An employer cannot make a deduction that would take an employee's pay below minimum wage unless the deduction is one of a specific set of exceptions.

Piece rates, commission and salaried staff

The minimum wage is not just an hourly-rate rule. It applies however someone is paid.

How the rate is set and reviewed each year

The Ministry of Business, Innovation and Employment (MBIE) reviews the minimum wage annually, drawing on submissions from unions, employer groups and economic data, before the Minister for Workplace Relations and Safety recommends a rate to Cabinet. Any change is given effect by an Order in Council and normally takes effect on 1 April each year.

Factors typically considered in the annual review include inflation, wage growth generally, the state of the labour market, potential impacts on employment and small business, and international comparisons. Rate changes are usually announced in the months before 1 April, giving employers lead time to update payroll systems and budgets.

Related obligations: KiwiSaver, ACC and holiday pay

Minimum wage compliance does not exist in isolation — it interacts directly with several other statutory payroll obligations that employers need to budget for on top of the headline hourly rate.

Obligation	Current rate	Notes
KiwiSaver employer contribution	Minimum 3.5% of gross pay	Rose from 3% to 3.5% from 1 April 2026 for both employer and employee; rising again to 4% from 1 April 2028
ACC earner's levy	1.75% of gross earnings, up to $156,641	Deducted from the employee's pay through PAYE; not an additional employer cost on top of wages
Annual holiday pay	4 weeks' paid leave per year, minimum	Paid at the greater of ordinary weekly pay or average weekly earnings over the prior 12 months
Public holidays	11 statutory public holidays	Paid at relevant daily pay if the employee would otherwise have worked; time-and-a-half plus a day in lieu if worked

Employers budgeting for a minimum-wage role should treat the effective cost as meaningfully higher than the headline hourly rate once KiwiSaver, holiday pay and public holiday entitlements are added.

Penalties for underpayment

Paying below minimum wage is a breach of the Minimum Wage Act 1983 and can be pursued through the Labour Inspectorate (part of MBIE) or directly by the employee through mediation and the Employment Relations Authority.

• Employees can recover arrears of unpaid minimum wage going back as far as six years
• The Labour Inspectorate can issue improvement notices, infringement notices and, for serious or repeated breaches, pursue penalties through the Employment Relations Authority
• Individuals can face penalties of up to $20,000 and companies up to $40,000 per breach for serious non-compliance, with higher penalties available for the most serious cases involving migrant exploitation
• Company directors and other individuals involved in a breach can, in some circumstances, be held personally liable alongside the company