Fortnightly Minimum Wage Order

This is in response to a recent Court ruling that found a week is the longest period which salaried workers could be assessed for compliance with the Minimum Wage Act.

Mr Bridges says the ruling does not adequately reflect current work practices, such as salaried employees on fortnightly rosters.

“Before the Court ruling, salaried employees might work 30 hours in one week and 50 hours the next, and be paid 80 hours for the fortnight. However, following this ruling, employers would need to pay 90 hours at the minimum wage rate for the 80 hours worked. This is because the first week must be paid at a minimum of 40 hours and the second week for every hour over forty.

“A central concern is that the ruling could see an increase of casual working arrangements, for both current workers and new workers, to avoid the extra costs. This would create issues for workers around certainty of their income.

“By including a fortnightly minimum wage rate, employees will still be paid for every hour they work, and the expectation is that employers must continue to keep an accurate record of hours worked and wages paid. But employees will continue to benefit from the certainty and stability that a salary can offer.

“While some groups advocated for a monthly or longer pay period to be included, a fortnightly pay period balances the need for employers to have some flexibility in the hours their salaried employees work with the need for employees to be protected from being required to work long hours for long periods without appropriate remuneration.

“It also aligns with the most common pay period for employees who receive an annual salary,” Mr Bridges says.

Most employers and employees will be unaffected by the new Order. It affects primarily minimum wage earners who are paid salaries. Employer groups and unions were consulted prior to the decision.

The new Order will take effect from 26 June 2014.

 Source: beehive.govt.nz