Minimum wage increase

On 1 April 2021 the minimum wage increased from $18.90/hr to $20.00/hr (adult wage). This means that someone on a total salary (annual salary before any deductions such as PAYE and agreed rent) of $40,000 a year can only work 38 hours a week before a top-up is required, and for someone on $50,000 a year it is 48 hours a week.

If you employ people on salary, expand the section below and the table will help you work out how many hours your team members can work before they hit the new minimum wage threshold from 1 April.

• Click here to view the maximum hours worked compared to minimum wage table

  Year	2019	2020	2021
  Minimum wage	$17.70	$18.90	$20.00
  Salary ($)	Maximum weekly hours worked before top-up is required
  40,000	43	41	38
  41,000	45	42	39
  42,000	46	43	40
  43,000	47	44	41
  44,000	48	45	42
  45,000	49	46	43
  46,000	50	47	44
  47,000	51	48	45
  48,000	52	49	46
  49,000	53	50	47
  50,000	54	51	48
  51,000	55	52	49
  52,000	56	53	50
  53,000	58	54	51
  54,000	59	55	52
  55,000	60	56	53
  56,000	61	57	54
  57,000	62	58	55
  58,000	63	59	56
  59,000	64	60	57
  60,000	65	61	58

Getting started

• Negotiate and agree a remuneration package (sometimes called total package value) with your employee during recruitment and confirm by signing an employment agreement.
• Keep accurate timesheets as this is a legal requirement and allows you to review hours worked against the remuneration package. This is necessary when an employee is employed on an hourly basis but good practice in all situations. Learn more here.
• Reconcile the number of hours worked each pay period against the wage/salary paid. Legally you must pay at least the minimum wage for each hour worked.
• Wage deductions can only be made where you have written consent from your employee.
• Tax appropriately by making sure that all cash and non-cash benefits are being taxed appropriately.

Remember to...

• Keep up to date with the average industry salary/wages. Federated Farmers publish a report each year, you can seek information through recruitment agencies and even other job adverts, or you can discuss and benchmark with other farmers.
• Review salaries or wages every 12 months. Remember, both cash and non-cash items have value and can be included in these discussions. Discuss any changes (or the lack of) with your employee.
• Monitor legislation -  If you pay your employees close to the minimum wage adjust their pay rate accordingly when the minumum wage increases, usually on 1 April every year.

Quick Questions & Answers

• How do I calculate the total package value?

  Total Package Value (TPV) is the total value of the remuneration package including cash and non-cash benefits. To calculate what the TPV is for a staff member, assign a monetary amount for each item/benefit and add them up. For cash items (e.g. wages/salary) this is obvious, but for some items you may have to investigate what is fair and then use your discretion (e.g. accommodation, meat, meals).

  Learn about the different terms and conditions you can offer your employee as well as remuneration options.
  
  Paying the minimum wage is not likely to attract the best applicants, but it is a minimum legal requirement so you need to know what it is.
  
  Think about other ways you can engage your staff.

• What can I deduct from my employee's wages?

  Check the employee’s employment agreement. As a general rule, an employer cannot make deductions from an employee’s wages unless the employee has requested it, or agreed to it, in writing. A signed employment agreement defining a specific type of deduction is an agreement in writing. The deductions clause needs to be very specific to the situation – you can’t rely on a general catch-all clause such as “the employee agrees that deductions for any monies owing can be taken directly from wages”.

  If the deduction you want to make is provided for in the employment agreement, assess whether the deduction is fair and reasonable given the circumstances. If it is, notify the employee before making the deduction. If the deduction could be contentious, it’s best to meet face-to-face to talk through the details.

• Can I deduct for damage done to my property by an employee?

  It depends on the situation and the terms of your employment agreement. In general, you can only make deductions from an employee’s wages or salary if they have agreed to the deduction in writing. The deduction must also be a fair and reasonable action given the circumstances.

  Learn more by reading this guide to wage deductions.

  Before making any decision, meet face-to-face with the employee to talk through the details and to get their viewpoint. You should offer the employee the opportunity to resolve the problem themselves. This does depend on the particular damage done and whether the employee would have the skills and resources to fix the situation. If you do decide to make a wage deduction, consider a gradual payment plan where the deductions are spread over time. This minimises any potential hardship for the employee.

  Effective communication will be essential for resolving the problem.  Remember as well that any wage deductions need to be fair and reasonable given the circumstances.

  • Ask the employee to sign a specific deduction clause or to repay the amount directly. This option is most likely when the relationship is amicable.
  • Agree that the damage can be deducted from the employee’s bond held with the Department of Building and Housing (if applicable).
  • Resolve the issue through the Tenancy Tribunal.

  If the damage occurred to company property during work time (e.g. damage to a farm building, vehicle or piece of equipment) then you need to carefully consider whether it’s reasonable to expect the employee to pay for the damage. Please seek advice from your lawyer or Farm People Management Consultant. You must conduct a full and fair investigation of the incident before making any decision, including meeting with the employee face-to-face to get their perspective. Consider how the damage occurred. Was it caused by a genuine accident or through deliberate or careless action? Are there any mitigating circumstances? Can the cost be met through insurance instead?

  As a general rule, an employer can only seek damages against an employee if the employee damaged company property on purpose or was negligent. If this is the case, the incident may also become a disciplinary matter.

  Read further about disciplinary procedures. You are required to act in good faith and follow fair process at all times.

  If, after a full and fair investigation, the employer determines the damage was caused deliberately, or through negligence, and the employee accepts liability, then the cost of the damage can be deducted from their wages or salary (provided the employment agreement contains a specific deductions clause or the employee otherwise agrees in writing). If the employee disputes the matter and believes they were not at fault, it’s best to seek advice from your lawyer or Farm People Management Consultant about the best way forward.