Salary and wages
5 min read
Salary and wages in your dairy farming business are about agreeing to and paying a fair remuneration package to your employees, recognising the value they bring to your operation. On 1 April 2023, the minimum wage increased to $22.70 per hour. This page guides you in how to calculate maximum weekly hours before a top-up is required, and provides instructions on how to negotiate, reconcile, and tax wages appropriately. It also covers essential considerations such as keeping accurate records, reviewing salaries, monitoring legislation, and calculating final pay. Additionally, the page addresses various questions related to wage deductions and managing property damages.
Salary and wages is about agreeing and paying a fair wage or remuneration package to your employee. Employees add tremendous value to your business so ensure they are remunerated fairly for their level of responsibility.
On 1 April 2023, the minimum wage increased from $21.20/hr to $22.70/hr (adult wage). This means that someone on a total salary (annual salary before any deductions such as PAYE and agreed rent) of $50,000 a year can only work 42 hours a week before a top-up is required, and for someone on $60,000 a year it is 51 hours a week.
If you employ people on salary the table below will help you work out how many hours your team members can work before they hit the new minimum wage threshold.
|Salary ($)||Maximum weekly hours worked before top-up is required|
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).
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.
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.
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.
For more information about wage deductions visit the Employment New Zealand website.
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.
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.