Increased pay and new sick leave entitlements for RSE workers from 1 October 2023

An increase to the minimum pay rate and a new sick leave entitlement for Recognised Seasonal Employer (RSE) workers came into effect on 1 October 2023.

This guide has advice on applying the changes to your work practices.

ATRs and RSE Limited Visas

All ATR and RSE Limited Visa applications from 1 October 2023 must have employment agreements containing the new minimum pay rate and sick leave entitlement.

ATRs approved before 1 October

If your ATR has already been approved, from 1 October 2023 submit with your RSE Limited Visa applications updated employment agreements. These must contain the new minimum pay rate and sick leave entitlement. 

Increase to minimum pay

From 1 October 2023 you must pay all your RSE workers the minimum wage rate plus 10%.

This applies to all RSE workers linked to an existing ATR and who hold a valid RSE Limited Visa, including those workers granted RSE Limited Visas before 1 October 2023. 

If you do not pay RSE workers the new rate as of 1 October 2023, you will breach the ATR requirements.

Hourly rate from 1 October

The minimum hourly rate from 1 October for all RSE workers is $24.97 (New Zealand minimum wage $22.70 + 10%). 

An example of what you could add into your employment agreement template:

• The employee will be paid no less than $24.97 per hour (or the minimum hourly rate for RSE employees as directed by RSE Instructions).

Weekly wage — minimum remuneration 30 hours

With the increase to the minimum hourly rate, the RSE minimum weekly wage will also increase from 1 October. Table 1 shows the before and after 1 October weekly wage amounts.

• If your employment agreement states that pay to the worker will be by piece rate, you must pay them at least the minimum weekly wage (30 hours × RSE wage rate).
• If the total weekly payment (excluding 8% holiday pay), based on piece rates, results in less than the minimum weekly wage, you must top it up. If the payment based on piece rates is more than the minimum weekly wage, a top up is not required.
• When your employment agreement specifies a rate per hour higher than the minimum RSE wage rate, calculate the minimum weekly wage using the rate specified in your employment agreement.
• When there is a joint ATR, the worker must be paid in line with the ‘per hour’ rate specified in each employment agreement for a minimum of 30 hours per week.

Minimum remuneration requirements in employment agreements

Employment agreements that are 6 weeks or more

The minimum remuneration for an agreement of 6 weeks or more is the greater of the following amounts:

• payment at no less than 240 hours at the 'per hour' rate, regardless of the actual availability of work, or
• payment for a minimum of 30 hours per week at the 'per hour' rate for the period worked.

Employment agreements that are less than 6 weeks

The minimum remunerations for an employment agreement of less than 6 weeks is payment for 40 hours per week, at the 'per hour' rate, over the period of work offered in the agreement. This is regardless of the actual availability of work.

Providing sick leave entitlement from 1 October

From 1 October 2023 you will be required to provide your RSE workers granted a RSE Limited Visa from 1 October 2023 (eligible RSE workers) paid sick leave entitlement. 

This change is in line with the changes proposed by Holidays Act Taskforce in their review of the Holidays Act 2003. 
Holidays Act review

Paid sick leave entitlement for eligible RSE workers means:

• giving them 2 days paid sick leave from their first day of employment and an additional 2 days each month until they reach a total entitlement of 10 days’ sick leave on their 4-month anniversary, and
• recording the new sick leave entitlement in written employment agreements.

For example, if an eligible RSE employee starts their employment on 10 October 2023 their entitlement to paid sick leave will look like this:

Incorporating new paid sick leave entitlement into payroll systems

Every electronic payroll system will have different functionality for accurately recording and providing the new sick leave entitlement to eligible RSE workers. If you use a payroll system discuss the options within the system with your payroll provider.

The options available in a payroll system could include:

• the addition of the new sick leave entitlement type specifically for RSE workers if the payroll provider can implement system changes by 1 October 2023
• using an additional leave or payment type currently within the system (for example, a contractual leave type). Where possible, this leave should be clearly noted as ‘RSE sick leave’ (or similar) in the system to distinguish it from other types of leave or payments, including any leave provided in advance of entitlement
• using ‘sick leave in advance’ as the relevant leave type if this is the only option available in the system.

Manual process when using 'sick leave in advance' or similar option

Where using 'sick leave in advance', or a similar option, you will need to have a manual process in place to ensure:

• 2 days of sick leave is added to eligible RSE workers’ sick leave entitlement balances from their first day of employment. Then an additional 2 days of sick leave is added to that balance on completion of each month. This continues until a total of 10 days’ sick leave has been provided to the worker upon the completion of 4 months of employment, and
• when an eligible RSE worker’s employment ends that payments for the new sick leave entitlement are not deducted from the worker’s final pay, regardless of whether there is a general deduction clause in the employment agreement (or some other form of written consent has been obtained from the worker). 

Sick leave entitlement record keeping for eligible RSE workers

Regardless of the payroll system you use, you should ensure that your record keeping relating to the sick leave entitlement for eligible RSE workers is accurate and complete.

This is likely to involve:

• recording or flagging in your payroll system those workers who are eligible RSE workers
• ensuring that 2 days of sick leave is added to eligible RSE workers’ sick leave entitlement balances from the first day of employment, with an additional 2 days of sick leave added to their balances on completion of each month. This is until a total of 10 days’ sick leave has been accumulated for each eligible RSE worker who has completed 4 months of employment.
• recording the date and the amount paid when an eligible RSE worker takes a day of paid sick leave that they are entitled to receive under their employment agreement 
• implementing any manual processes or work arounds required if your payroll system does not have the functionality to record the entitlement or payments (for the new sick leave entitlement).

Keeping accurate records — Employment New Zealand website

Paying the sick leave entitlement

Payment should be an amount that is equivalent to the RSE worker’s 'relevant daily pay (RDP)' or 'average daily pay (ADP)' (if applicable).

Relevant daily pay (RDP) and average daily pay (ADP) — Employment New Zealand website

Eligible RSE workers who leave before completing 4 months of employment

When an eligible RSE worker leaves before completing 4 months of employment, check if they have been paid sick leave:

• during their employment that they were entitled to under their employment agreement, or
• ‘in advance’ of entitlement.

Your payroll system should have the functionality to manage the new sick leave entitlement for eligible RSE workers and distinguish payments for the entitlement from other types of leave (or payments). If not, put in place a manual process to check whether sick leave paid to the worker was:

• payment they were entitled to under their employment agreement, or
• provided ‘in advance’ of entitlement.

When to deduct from the worker's final pay

Deductions are allowed, in line with with the Wages Protection Act 1983.

For example, an eligible RSE worker starts work with you on 1 October. They leave before completing 2 months with you. In that time they took 5 days of paid of sick leave, 4 days of the sick leave was leave they were entitled to. You treat as sick leave ‘in advance’ their fifth day of paid sick leave.

In the example, while there is no provision in the Holidays Act to recover sick leave in advance, you may deduct 1 day of sick leave from the worker's final pay if you:

• complied with the Wages Protection Act 1983 and the RSE requirements for employment agreements, and
• made sure your employee was paid at least the minimum remuneration for the week sick leave in advance was taken in line with RSE requirements.

Deductions under the Wages Protection Act 1983 — Employment New Zealand website

RSE requirements for employment agreements and minimum remuneration 

'Paying out' unused sick leave entitlement to an eligible RSE worker who ends their employment

There is no requirement to pay out any balance of the new sick leave entitlement.