Minimum wage boost: Employment expert's warning to employers

New employment laws come into effect on Monday alongside a minimum wage increase, but an employment law specialist thinks the changes are "too brutal". 

The Government announced in December it would raise the minimum wage by $1.20 from April 2019 to $17.70 an hour from the current $16.50 giving over 200,000 New Zealanders a comfortable boost. 

Minister for Workplace Relations and Safety Iain Lees-Galloway said on Wednesday the increase aims to improve the wellbeing and living standards of New Zealanders, as well as "build a productive, sustainable and inclusive economy". 

"Lifting the incomes of Kiwi workers will contribute to improved living standards and reduce poverty. Our Government has committed to increasing the minimum wage to $20 by 2021."

But Max Whitehead, employment law specialist from Whitehead Group Employment Solutions, thinks the Government's approach is too harsh on employers and will affect small businesses that struggle to make ends meet. 

"I think this is too brutal and I think [the Government] should do it a better way," he told Magic Talk, adding that employers will be forced to "have go to find that extra money from somewhere". 

Max Whitehead and Iain Lees-Galloway
Max Whitehead and Iain Lees-Galloway Photo credit: Whitehead Group, Newshub

"Most employers, 97 percent, are small businesses with fewer than 20 staff, and you're going to be asking them, 'You need to fork out more money'," Whitehead said. 

"And look, some of them can afford it and should have been paying it a while back, but some businesses are going to struggle, so it'll be interesting to see what happens."

Whitehead is concerned that the Government is coming down too hard on employers - the majority of which are small businesses. 

"There are bad employers out there who will take advantage of workers and pay them the bare minimum. The same way there's bad employees there are bad employers," he said.  

Under the Government's new pay boost, the starting-out and training wage rates also increase on Monday to $14.16 per hour, in order to remain at 80 percent of the adult minimum wage.

Whitehead believes the Government is misguided, telling Magic Talk: "The Government is made up of ex-union officials who predominantly hang around with big businesses and they think that's life."

He said MPs are "surrounded" by members of the New Zealand Public Service Union (PSA) and "think all businesses are big business and they're getting it wrong". 

But trade unions such as E tū have supported the Government's move to increase the minimum wage, arguing that the boost - together with the upcoming amendments to the Employment Relations Act and Human Rights Act - will take New Zealand in the right direction. 

New Zealand Educational Institute president Lynda Stuart said she welcomed the minimum wage increase, but said it "highlights the appallingly low remuneration of education staff by successive Governments". 

Lees-Galloway pointed to results of the 2017/18 Stats NZ's Household Economic Survey that showed that a third of people said their current household income was either not enough or only just enough to meet their everyday needs.

Other upcoming changes 

Those other changes, which also come into effect on Monday, will include a requirement all of New Zealand employers to help employees affected by domestic violence under the Domestic Violence - Victims' Protection Act 2018.  

The Act will now protect those employees who violence may have been having an effect on their employment. An employee affected by domestic violence may take up to 10 days leave in each 12 month period in addition to their annual leave entitlement. 

Other changes, looking ahead, include a crackdown on 90-day trial periods for businesses - meaning employers can terminate a contract without giving a reason. After May 6, only businesses with fewer than 20 employees will be able to do it.