Your guide to the minimum wage increase
The New Zealand Government has just announced a hike in the minimum wage – and here’s what you need to know.
The announcement has the minimum wage rising from $16.50 to $17.70 per hour, on 1 April 2019. There are also plans for further rises to bring the minimum wage up to $20 per hour by 2021.
Workplace Relations and Safety Minister, Iain Lees-Galloway said the rise would result in an extra $48 each week before tax for workers on the minimum wage.
“The Government is determined to improve the wellbeing and living standards of all New Zealanders as we build a productive, sustainable and inclusive economy,” said Lees-Galloway.
“A fair day’s work should equal a fair day’s wage and that is what this Government is seeking to achieve.”
The announcement forms part of the Government’s coalition agreement with NZ First, with Prime Minister, Jacinda Ardern describing the move as “steps along the path” to fulfilling that promise.
“It’s important to acknowledge that at the moment we have very low unemployment at the moment and this will benefit over 200,000 New Zealanders,” said Ardern.
The announcement is accompanied by a number of proposed amendments and additions to the Employment Relations Act (2000), including restoring statutory rest and meal breaks, increasing protections for vulnerable workers such as cleaners and caterers, and extending parental leave.
And with the increases in the number of labour inspectors charged with making certain employers are doing the right thing, there’s even more reason for you to stay abreast of these shifts.
So now that the announcement to raise the minimum wage has been made, what can you do to prepare ahead of April next year?
Payday filing: the other big compliance change that affects all employers
The other big compliance change that comes into effect from 1 April, is the way all employers report payday information to the Inland Revenue.
All employers will be required to report to the IR on the day they pay staff. Businesses who make over $50,000 PAYE/ESCT deductions a year, will be required to file electronically and those that pay less than this can choose to file electronically or on paper.
Employers will no longer be required to file an Employer Monthly Schedule on the 20th of the month.
The tax system is changing to make it simpler and faster for businesses to meet their tax obligation and payday filing is an easier way to report your payroll information directly when done straight from your payroll software.
Now is the time to review your payroll system and processes and consider moving to an online payroll solution before payday filing becomes compulsory.
If you’re using a MYOB payroll solution
If you’re on an MYOB payroll solution, payday filing functionality will be ready in the New Year, well ahead of the compliance deadline.
The best approach here is to make sure your chosen payroll software or support subscription is up to date so that you are the first to know when it’s available.
If you’re not an MYOB customer, the simple solution would be to try it out – it will make paying people and accounting for any further changes in awards or wages a breeze.
Download our handy checklist to get ready for payday filing
What does this mean for your business?
If you’re employing people on the minimum wage, there’ll be a change in the costs of doing business that you need to account for.
If you do think the minimum wage increase will have an impact on your business, here are four key ways to counteract it:
To get an idea of what impact the minimum-wage increase will have, it’s important to forecast out by about three years to gauge what sort of impact it will have.
Remember, there are further minimum wage increases scheduled for at least the next few years, so you can begin forecasting for those as well.
In any case, it’s important to have a good handle on your numbers so you can deal with challenges that your way.
2. Automate processes
A great way to save time and money in your business is to automate where possible.
For example, MYOB software automates admin tasks like bank feed reconciliation, debtor management, business record keeping and time sheets.
You can use the time saved on these tasks to monitor and coach your team, to make sure you’re getting the biggest bang for your buck now you’re paying more for labour.
3. Review your prices
Look at your sales and see whether increasing your prices could potentially cover the increase in labour costs.
This, again, is where having a handle on your numbers is a huge benefit.
If your labour costs go up about three percent, would increasing the cost of your product or service by one percent be enough to cover the increase?
How would your customers react to a price increase?
4. Review your expenses
On the other side of the coin, review your expenses.
You may not be able to do much about the increase in labour cost, but are there other areas of your business you can look at?
For example, are there expenses which could be reduced or cut out?
When did you last review your list of suppliers? Could you renegotiate with those you use regularly or look around for a better deal?
Whichever way you want to go, dealing with a key increase in the cost of doing business is either about increasing revenue or cutting back.
The key to finding extra money in your business is having a great handle on your numbers, and that starts with having great accounting software geared to help you get stuff done.