Understanding Minimum Wage Obligations

January 2026

Employing staff comes with a range of responsibilities, and one of the most important is ensuring wages meet New Zealand’s minimum employment standards. With recent and upcoming changes to the minimum wage on 1st April 2026, it’s critical that employers understand what compliance looks like in practice where salaried roles, long hours, and accommodation are involved.

 

What Is the Minimum Wage in Real Terms?

The minimum wage applies to every hour worked, regardless of whether an employee is paid hourly or on a salary. For on-farm roles there can be additional complexities, with seasonal activities requiring employees to work longer weeks.

Based on a 45-hour work week:

Current minimum wage: $23.50 per hour = Minimum annual base salary: $54,990

Upcoming increase: $23.95 per hour = Minimum annual base salary: $56,043

If an employee works more than 45 hours, their salary must still equate to at least the minimum wage for every additional hour worked. A fixed salary does not override this requirement.

 

Salaries Must Be “Minimum Wage Safe”

By far the majority of roles that Rural Directions places are offered on a salary basis for simplicity. However, after employment starts employers must regularly assess whether the salary remains compliant and keep an eye on the actual hours worked.

For example: If a role is paid $55,000 per year but the employee regularly works over 45 hours per week, the effective hourly rate may fall below minimum wage, putting the employer at risk of non-compliance.

A common misunderstanding is that employer KiwiSaver contributions can be included within the minimum wage figure. However, this is not allowed.

Best practice:

  • Pay the minimum wage as base pay (legal obligation)
  • Clearly state expected hours in employment agreements
  • Review hours worked regularly and ideally utilise a timesheet App
  • Adjust pay when seasonal workload increases
  • KiwiSaver is paid on top of the minimum wage (legal obligation)

This means the true cost of employing someone on minimum wage is higher than the headline salary figure.

 

Accommodation and Minimum Wage

On-farm accommodation can be a valuable benefit, but it does not remove minimum wage obligations and cannot be used to justify paying a lower salary.

  • Any rent or accommodation deduction must be:
  • Agreed to in writing
  • Reasonable and market-aligned
  • Even with accommodation provided, the employee’s cash wages after deductions must still meet minimum wage requirements for hours worked. Deductions and premiums | Employment New Zealand

 

Why This Matters for Farming Businesses

Failing to meet minimum wage obligations can result in:

  • Back-pay liabilities
  • Penalties and fines
  • Reputational damage
  • Difficulty attracting and retaining staff

With increasing scrutiny on employment practices across the primary sector, getting wage structures right is not just about compliance it’s about running a sustainable, professional farming business.

 

Key Takeaways for All Employers

Minimum wage applies to every hour worked. Salaried roles must still be minimum-wage compliant.

Based on a 45-hour week:

  • Minimum wage is increasing to$23.95/hour on 1st April 2026.
  • Employer KiwiSaver contributions are paid over and above.
  • Accommodation does not negate wage obligations.

 

Sources of Information

Employment New Zealand – www.employment.govt.nz

Inland Revenue Department – www.ird.govt.nz

Business.govt.nz – https://www.business.govt.nz/