As a business owner or manager, it is important to be aware of the changes that will affect your business, particularly the increase in minimum wage rates. From Saturday, 1 April 2023, the adult minimum wage rate will increase from $21.20 to $22.70 per hour, while the starting-out and training minimum wage rate will increase from $16.96 to $18.16 per hour. These changes will have significant implications for your business, especially if you have employees on minimum wage.
To prepare for the increase in minimum wage rates, there are several steps you should take. These include advising your team, checking your payroll systems and processes, reviewing your employment records, and updating your business budget. You may also need to consider the potential impact of internal wage relativity and external benchmarking, and upskill on minimum wage obligations.
Advising your team The first step to take is to advise your employees on the minimum wage rate increase. It is important to inform your employees of the new rate and the date on which it will take effect. You can send a letter or email to your employees to notify them of the new rate, and provide them with a variation of their employment contract.
Checking your payroll systems and processes It is important to check that your payroll systems and processes are ready to implement the new minimum wage rate. You should talk to your payroll provider, accountant, lawyer, and HR or finance team to ensure that they are aware of the changes and ready to make the necessary adjustments. If your system is manual or computer-based, you should confirm that the settings will be adjusted for the new rates.
Reviewing your employment records This is also an opportunity to review your employment records, processes, and systems to ensure they are up to date. You should check when your employees on starting-out or training wages will be eligible to move onto the adult rate, and ensure that any employment agreements are current and include all the mandatory clauses required by law. Considering employee pay relativity
You may also need to consider the potential impact of internal wage relativity and external benchmarking. Employees on higher wages may want to negotiate a pay increase to maintain the relative difference. You should be prepared for this and have a plan in place to manage such negotiations.
Updating your business budget It is important to update your business budget to reflect the expected increase in wage and holiday pay liabilities. You can use the Employee Cost Calculator to work out the updated cost of your employees.
Upskilling on minimum wage obligations Finally, it is essential to ensure that you are up to date with the details of the minimum wage rate. You should know that the minimum wage applies to all hours worked, and that it applies to employees paid with a salary, piece rates, or commission. You should also be aware of situations where the minimum wage does not apply, such as to employees under 16 years of age or where a Labour Inspector has issued a minimum wage exemption permit to an employee with a disability.
In conclusion, the increase in minimum wage rates will have a significant impact on your business, particularly if you have employees on minimum wage. By taking the steps outlined above, you can prepare your business for the change and ensure that you are compliant with your minimum wage obligations. This will help you to manage the effect of higher wage and holiday pay liabilities on your business, and enable you to maintain a happy and productive workforce.
Comments