What the minimum wage really pays.

There are three minimum wages, and most of your team is on the top one. From 1 April 2026 the adult minimum wage is $23.95 an hour. The starting-out and training rates are both $19.16, set at 80% of the adult figure. The default is the adult rate. A worker only drops to a lower rate if they clearly meet the narrow rules below, and the moment they do not, they are back on $23.95.

The starting-out wage covers three groups: 16 and 17 year olds who have not yet done six continuous months with you, 16 to 19 year olds in a training agreement worth at least 40 credits a year, and some 18 and 19 year olds who have been on a specified benefit for six months or more. Once a 16 or 17 year old passes six months with you, they move to the adult rate.

The training wage is narrower still. It is for workers aged 20 or over whose employment agreement requires them to complete at least 60 credits a year of an industry training programme. In practice that means apprentices. One hard line sits over both lower rates: if the person supervises or trains other staff, they cannot be on a starting-out or training wage at all. They get the adult rate.

The minimum wage is a floor on every hour worked, not a headline number on a contract. To test it, you divide the gross pay in a pay period by the hours actually worked in that period. The result has to be at least the applicable rate. That rule catches two setups that look fine on paper.

The first is piece rates and commission. If you pay by the bin of fruit picked, the garment sewn, or the sale closed, the total still has to clear the minimum wage for the hours the person put in. A slow week at piece rates does not let the hourly equivalent fall below the floor. You top it up.

The second, and the one that quietly bites small employers, is the salaried-overtime trap. A salary feels safe because the number is big, but the law does not care about the number, it cares about the number divided by the hours. Take someone on $50,000 a year. That is $961.54 a week. At a contracted 40 hours it works out to $24.04 an hour, just over the line. Let them regularly work 50-hour weeks and the same pay becomes $19.23 an hour. That is below the $23.95 adult minimum, and you are now underpaying without a single thing changing on the payslip. Salaried does not mean exempt.

The minimum wage almost always changes on 1 April. The 2026 rise took the adult rate from $23.50 to $23.95, up 45 cents. That sounds small until you scale it. A full-timer on 40 hours a week gains about $18 a week, which is $936 a year in gross pay. Now run that across a team.

Say you have four staff on or near the minimum, all full time. The rise adds roughly $3,744 a year in gross wages, before you touch the follow-on costs. Employer KiwiSaver at 3.5% climbs with the wage, and so does your ACC work levy, which is charged on liable earnings. The change is automatic and non-negotiable, so the smart move is to model it before 1 April every year, not to discover it in the first pay run of April.

If your margins are already tight enough that a 45-cent wage rise is a genuine problem, the pressure is usually coming from somewhere else, and thin enquiry flow is a common culprit. We wrote a plain read on why a site gets traffic but no enquiries if that rings true.

Underpaying the minimum wage is not a slap on the wrist. First, you owe every cent of the arrears, back to when it started, for every affected worker. That alone can be a large, unbudgeted bill. On top of the back pay, the Labour Inspectorate can take an employer to the Employment Relations Authority for penalties, and those have run well into six figures in real cases, part of which the Authority can order paid to the worker.

Since 14 March 2025 there is a sharper edge. The Crimes (Theft by Employer) Amendment Act made intentionally withholding wages or entitlements a criminal offence. For an individual, such as a director, the maximum is a $5,000 fine, up to a year in prison, or both. For a company the maximum fine is $30,000. The law is aimed at deliberate withholding, so a genuine payroll mistake made in good faith is not the target, but it still leaves you paying the arrears in full. The cheap insurance is to run the divide-by-hours check on anyone near the line, especially salaried staff working long weeks, before it becomes a claim.