Minimum wage compliance

Our Employment Information Reports have found many of our members are working for less than the minimum wage when their hours worked are measured against their salary levels.

The basics

The minimum wage is currently $21.20 per hour, per cl 4 of the Minimum Wage Order 2022. This means:

• If you are paid a wage (that is, by the hour), you must be paid at least $21.20 for every hour you work.

• If you are on a salary paid daily, you must be paid at least:

  • $169.60 per day; and

  • $21.20 for every hour over 8 hours that you work in a day.​​

• If you are on a salary paid weekly, you must be paid at least:

  • $848 per week; and​

  • $21.20 for every hour over 40 hours that you work in a week.

• ​If you are on a salary paid fortnightly (or longer), you must be paid at least:

  • $1,696 per fortnight; and

  • $21.20 for every hour every 80 hours that you work in a fortnight.

​Note that this is true even if you are contracted to work fewer than 8 hours a day or 40 hours a week. For example:

Amy is offered a job. The contract says she must work 37.5 hours per week. It also says that her salary will be $41,340, paid weekly at $795 per week (before tax and other deductions).

The employer says this is okay because she is being paid $21.20 per hour for the 37.5 hours she is contracted to work per week.

This is incorrect because the Minimum Wage order simply says that if you are paid weekly, you must be paid $848 per week. It does not matter that you are contracted to work less than 40 hours per week.

Note also that minimum wage is calculated based on hours worked for the length of your pay period, up to a maximum period of a fortnight. This means that employers cannot average out the number of hours you worked over a longer period of time to calculate whether they complied with minimum wage law. For example:

Bob is on a salary of $48,000. He usually gets paid $1,846.15 every fortnight (before tax and other deductions).

During a particularly busy period, Bob works 11 hours every day for two weeks to meet a complex litigation deadline. His hours return to normal the next fortnight.

When Bob asks why he was not topped up for his extra hours for that busy fortnight, his employer tells him that they do not need to because he worked fewer hours the following following fortnight, so on average they are still paying him more than minimum wage.

This is incorrect because Bob must be paid the minimum wage per fortnight. Since he worked 110 hours over that busy fortnight, he was only paid $16.78 per hour for that period. To comply with the Minimum Wage Act, his employer must pay him an extra $353.85, to get him up to $2,200 ($20 x 110 hours) for that fortnight.

How do I know if I've worked for less than minimum wage?

This table shows the maximum number of hours you can work per pay cycle before you are working at minimum wage, based on your annual salary.

• $50,000

  45.4 hours per week
  90.7 hours per fortnight
  9.1 hours per day

• $55,000

  49.9 hours per week
  99.8 hours per fortnight
  10 hours per day

• $60,000

  54.4 hours per week
  108.9 hours per fortnight
  10.9 hours per day

• $65,000

  59 hours per week
  118 hours per fortnight
  11.8 hours per day

• $70,000

  63.5 hours per week
  127 hours per fortnight
  12.7 hours per day

If you think you are not being paid at least minimum wage, or have worked for more than the hours listed above for your salary and pay period, talk to your employer, or get in touch with us.

What counts as work?

"Work" is not limited to time actively producing work, and certainly not limited to billable time. You are working if there are constraints on your freedom as an employee, or if what you are doing benefits your employer.

​This means that the number of hours worked includes all time spent:

• waiting for work;

• taking toilet breaks;

• filing;

• billing;

• dealing with email-related administration;

• attending meetings;

• organising firm social events;

• contributing to firm branding (such as writing articles or preparing seminars); or

• taking part in team building activities.​​

It also includes two paid ten-minute rest breaks (assuming you work a seven- to ten-hour day).

It does not include your unpaid lunch break, but only if you take it. If you work through lunch and eat at your desk, that counts as hours worked.

What counts as pay?

All salary and wages must be paid in money.​

This means your employer cannot simply give you a Prezzy card or give you time off in lieu when you have worked below minimum wage. They must top up your pay for the pay period to at least match the minimum wage for every hour you worked in that period.

Kiwisaver cannot be included in the minimum wage calculation.

Often, firms will contract to pay you a "salary" that includes the employer's Kiwisaver contribution. For minimum wage purposes, Kiwisaver must be subtracted from that figure. You must be paid at least minimum wage, plus the employer's Kiwisaver contribution.

Our recommendations

ALWU recommends all legal employers adopt our Minimum Wage Best Practice Policy. In summary, employers should:

• state clearly that it will pay:

  • at least the minimum sum per pay period as required by the Minimum Wage Order; and​

  • at least the minimum hourly rate required by the Minimum Wage Order for each hour worked over the relevant threshold for the pay period;​

• keep accurate time records for all hours worked;

• adopt a "clock in, clock out" system;

• consistently review employees' time and wage records;

• inform employees that they may seek a review of their time and wage records at any time;

• notify the manager of any employee working more than 80 hours a fortnight and seek an explanation as to why this occurred;

• acknowledge that working for more than 80 hours a fortnight may negatively impact employees in ways that cannot be resolved by a top-up payment.