New Zealand workers on the lowest rung of the pay scale are to get a modest but significant pay rise from 1 April 2025. Part of the government’s ongoing review of wages standards and the drive to take wages in line with economic stability, the Minimum wage will rise by 1.5%, to $23.50 an hour. This change is a sign of New Zealand’s further taming of inflation and to ensure wages continue to support a fair standard of living.
Let’s go through what that means for employees, employers, and the overall economy.
New Minimum wage Rates Effective 1 April 2025
The adult Minimum wage will rise to $23.50 per hour from its previous value of $23.25 per hour. This shift means an extra $14 per week before taxes for someone doing a full-time job, forty hours per week.
Below are hourly updated rates:
| Adult Minimum wage | $23.50 (up from $23.25) |
| Starting-Out and Training Minimum wage | $18.80 (up from $18.52) |
These wages are expressed excluding tax and legal deductions for instance PAYE tax, student loan repayments or deduction for child support.
The boost will be felt by some 141,900 New Zealanders currently earning between the rates to become the new Minimum wage.
Why the Increase?
The pay rise follows positive signs elsewhere in the economy, particularly a big fall in inflation. Reportedly this is the first time over three years that inflation is back in the Reserve Bank’s target range, said the New Zealand Government. The government thinks that this modest pay rise gets the balance right to protect jobs and to enable businesses to continue to invest and grow.
Starting-out and Training Wages Remain at 80%
The starting and training Minimum wages will remain based on 80% of the adult Minimum wage. This includes eligible workers on training or new to the workforce who will receive $18.80 per hour. This structure is designed to motivate employers to give a chance to inexperienced and new workers without paying adult wage rates at the outset.
What Employers Need to Do
As 1 April 2025 approaches it is absolutely important for employers to take action now to prepare themselves for the wage changes.
1. Communicate with Employees
If team members are currently on Minimum wage, tell them about the bump up. This is also a good opportunity to send formal communication in the form of a letter or an updated employment contract stating their updated hourly rate.
2. Check Payroll Systems
Make sure payroll software, accounting packages, or manual systems, are all updated to take account of the new rates from 1 April. Make sure automatic calculations for hourly pay, leave, and holiday pay are correct.
3. Review Training Wage Eligibility
If you pay staff training or entry rates, check whether they are eligible to move to the adult Minimum wage on the grounds of their age or length of service (or completion of training). This results in compliance with employment law.
4. Consider Pay Relativity
Another thing to bear in mind is internal pay equity. When the Minimum wage goes up, it can produce compression on wage structures – employees slightly higher earners may feel underpaid compared to the new Minimum wage earners. Some businesses may elect to redefine wider wage bands to keep a sense of equity and keep great employees.
5. Update Your Budgets
Even a small increase in wages will affect your operating costs. Adjust your short-term and mid-term financial projections considering the new payroll, including the related expenses.
Special Considerations: Minimum wage Exemptions
New Zealand legislation provides that Minimum wage exemptions exist in specific cases. If you have a person employed with a severe handicap that profoundly impacts their ability to perform the work of their appointment, you may apply for a Minimum wage exemption permit from the works inspectorate.
To qualify the following all apply:
- The employee consents to the exemption.
- You have made reasonable adjustments for the employee.
- The request is considered fair and justified.
Permits are considered on an individual case basis to support inclusive employment while taking into account actual constraints.
Know Your Minimum wage Obligations
Minimum wage legislation in New Zealand applies to more than one legal remuneration:
- It includes all time worked, including trial or training period.
- It also covers employees on salary, commission, or piece rate (e.g. pay-per-task roles).
- does not apply to workers with less than 16 years of age.
- Exemption certificates may supersede legal Minimum wage laws only in cases approved for disability.
Firms must comply not only with base hourly wage but also with total compensation for all hours performed, even if pay is not hourly.
Final Thoughts
NZ minimum wage Increase 2025 it a sign of an economic stabilizing and a commitment from the government for fair work practices. As small as it may seem, 1.5% here gives some incrementally amounts that support among low-income wages, supporting work stability while helping living expenses.
And for employers, this should be seen as a timely opportunity to review internal pricing, revamp internal payroll systems and have open communication with their team.
For business owner, HR professionals, and for employees on the Minimum wage alike, staying up to date and keeping ahead will see you sail smoothly into the new rates on 1 April 2025.
Frequently Asked Questions (FAQs)
All adult employees aged 16 and above, not on starting-out or training rates are entitled to the adult Minimum wage. This includes part-time, full-time, salaried, and hourly employees.
The new Minimum wage rates will come into effect from 1 April 2025.
Yes. Salaried employees must receive at least the equivalent of the Minimum wage for every hour worked. Employers should calculate the total hours worked and ensure it aligns with the new Minimum wage rates.
