2017-Jun 02: Employment Agreements and the Minimum Wage Act

Visa Pak 312: Advice for staff on the Minimum Wage that an application should be earning for Immigration New Zealand to recognise the job offer as acceptable.

Visa Paks

02 June 2017

A number of work visa categories require an employment agreement to be submitted and assessed as part of the visa application. An employment agreement between a natural person and a New Zealand employer creates a relationship where New Zealand employment legislation applies. Under the Minimum Wage Act 1983, an employer must pay its employees at least the current minimum wage. This must be paid for every hour actually worked. The wage cannot be ‘averaged’, for example, over a year or a season.
 
Employees must be paid their wages in money; they cannot be paid through other non-cash benefits. Employees can, however, agree to deductions from their wages by their employer before payment, including the provision of accommodation or other goods or services. Employers and employees may agree that the employer will provide non-cash benefits such as accommodation to an employee, and that the cost of that accommodation will be deducted from the employee’s wages before they are paid. Any agreement relating to accommodation should clearly detail the accommodation arrangement and its costs to the employee, and should be reasonable. Where there is no specific agreement as to the cost of accommodation, an employer can deduct up to 15% of the employee’s wages calculated at the relevant minimum wage rate for board or 5% for lodging.

There have been instances of work visas being granted based on offers of employment which were below the relevant minimum wage; however the employer had offered non-cash benefits such as accommodation and maintenance in addition to the proposed wage. If valued in monetary terms, this would mean their total remuneration package exceeded the minimum wage when calculated against the proposed hours to be worked. This practice is not compliant with New Zealand legislation.

Immigration officers should not approve a work visa where an applicant’s base wage is below the current minimum wage rate but they are being compensated in terms of other non-cash benefits. Where the remuneration package contains non-cash benefits such as accommodation and maintenance, this should be outlined clearly in the employment agreement and lawfully deducted from the employee’s pay. This does not substitute the requirement to pay a wage or salary that is above the current minimum wage.

See sections 4, 5, and 5A of the Wages Protection Act, and section 7 of the Minimum Wage Act for further information.