Salary and wages

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.

Minimum wage increase

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.

Year	2020	2021	2022	2023
Minimum wage	$18.90	$20.00	$21.20	$22.70

Salary ($)	Maximum weekly hours worked before top-up is required
48,000	49	46	44	40
49,000	50	47	44	41
50,000	51	48	45	42
51,000	52	49	46	43
52,000	53	50	47	44
53,000	54	51	48	44
54,000	55	52	49	45
55,000	56	53	50	46
56,000	57	54	50	47
57,000	58	55	51	48
58,000	59	55	52	49
59,000	60	56	53	50
60,000	61	57	54	50

Getting started

Negotiate and agree on a remuneration package (sometimes called total package value) with your employee during recruitment and confirm by signing an employment agreement.
Keeping accurate timesheets is a legal requirement for employees paid by the hour and highly recommended for salaried employees to ensure that their salary remains above minimum hourly wage in any pay period. 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 minimum wage increases, usually on 1 April every year.
Keep accurate records - Employers must keep complete and accurate records of wages, time, leave and other details. Learn more about keeping accurate records.
Correctly calculate final pay - When an employee leaves, their final pay needs to include all hours worked since the last pay, annual holidays, public and alternative holidays owing, and possibly other payments and deductions. Learn more about correctly calculating final pay.

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).

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.

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.

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.

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.