NZ Minimum Wage: Increase from $23.15 to $23.50 - 1 Apr 2025

Published 16 January 2024 | 2 min read

A prolonged period of high interest rates, coupled with recessionary conditions, has placed significant pressure on many New Zealand businesses. In this environment, every decision matters, especially those affecting operational costs and employee relations. For business owners, managers, and HR, the upcoming increase in the minimum wage presents both challenges and opportunities that demand careful planning and action.

NZ minimum wage announcement

From 1 April 2025, the adult minimum wage will rise from $23.15 to $23.50 per hour, while the starting-out and training minimum wages will increase to $18.80 per hour.

This modest 1.5% adjustment is designed to strike a balance between supporting workers and limiting additional costs for businesses.

As announced by Workplace Relations and Safety Minister Brooke van Velden, the decision reflects the current economic recovery and a focus on maintaining employment opportunities without imposing undue strain on employers.

For businesses, this change comes with a set of legal obligations to ensure compliance. Whether you employ workers at the minimum wage or are considering the ripple effects on pay structures, the time to act is now.

The bigger picture

Minister Brooke van Velden’s explanation provides valuable context. While the increase is relatively modest, it aligns with the government’s objectives to support workers without compromising business viability.

Inflation is now within the Reserve Bank’s target band, and the labour market remains competitive, particularly for entry-level roles often filled by younger workers.

By announcing the increase well in advance, the government aims to give businesses sufficient time to prepare.

Legal obligations for NZ businesses

To help you meet your obligations and prepare for the change, here is a checklist of essential actions:

• Communicate the change: Inform affected employees of their new pay rates. This can be done through a formal letter or email, which may serve as a variation to their employment agreement.
• Review payroll systems: Ensure your payroll software or manual systems are updated to reflect the new rates. If you rely on external payroll providers, confirm they are prepared for the change.
• Update employment agreements: Check that all employment contracts are current and compliant with minimum wage laws. Use this opportunity to address any other outdated clauses.
• Consider internal pay relativity: Evaluate how the increase might affect wage gaps within your organisation. Adjust pay rates as necessary to maintain fairness and morale.
• Adjust budgets: Incorporate the increased wage costs into your short- and long-term financial planning, accounting for related liabilities such as holiday pay and KiwiSaver contributions.
• Upskill on minimum wage laws: Familiarise yourself with the nuances of minimum wage regulations, including exemptions and special provisions for starting-out and training wages.

What should employers be doing right now?

The upcoming minimum wage increase is both a challenge and an opportunity for New Zealand businesses. While it may add to your cost base, it also underscores the importance of fostering a fair and equitable workplace.

Proactive steps by communicating early with staff, updating employment agreements, and planning strategically can turn this legislative change into a chance to strengthen your team and enhance your organisation’s resilience. As always, early action is key to staying ahead!

Note: This information is based on official details from Employment New Zealand and is subject to change. Always refer to the latest guidelines for the most accurate information. Visit Employment New Zealand here.