Understanding market competitive salaries is crucial for both employers and employees in New Zealand. It ensures fair compensation for employees while allowing businesses to attract and retain top talent. Here's a breakdown of key factors influencing market competitive salaries in New Zealand:

Industry and Occupation

Salary expectations vary significantly across industries. Sectors like Engineering, Science, and Information Technology boast some of the highest average salaries, exceeding $90,000 NZD per year. Conversely, Retail, Hospitality & Travel, and Food Services roles typically have lower averages around $50,000 NZD. Within industries, specific occupations also command distinct salary ranges. For instance, CIOs in the technology sector can expect substantially higher salaries compared to software developers, even though both fall under the tech umbrella.

Location

Geographic location plays a role in determining market competitive salaries. Generally, major cities like Auckland and Wellington have higher salary expectations compared to regional areas. Auckland boasts the highest average salary in New Zealand, followed by Otago and Taranaki. This often reflects the higher cost of living associated with urban centers.

Skills and Experience

An employee's skillset and experience significantly influence their market value. Specialized skills, advanced qualifications, and proven experience in a particular field can lead to higher salary offers.

Additional Considerations

Beyond these core factors, other aspects can influence market competitive salaries. These include:

• Company Size and Reputation: Larger, well-established companies might offer more competitive salaries and benefits packages to attract talent.
• Qualifications and Certifications: Holding relevant professional certifications can enhance an employee's marketability and potentially command a higher salary.
• Supply and Demand: In fields with a skills shortage, employers may need to offer competitive salaries to attract qualified candidates.

New Zealand enforces a national minimum wage, ensuring all employees above a certain age receive a fair baseline income. The key regulations are outlined in the Minimum Wage Act 1983.

Minimum Wage Rates

The Act establishes different minimum wage rates depending on the employee's age and experience level:

• Adult Minimum Wage: This applies to all employees aged 16 years or older who are not eligible for the starting-out or training minimum wage. As of April 1, 2024, the adult minimum wage is NZ$23.15 per hour.

• Starting-out Minimum Wage: This rate applies to employees aged 16 to 19 years during their first six months of employment, or for as long as they are undertaking recognized industry training. It is set at 80% of the adult minimum wage, currently NZ$18.52 per hour.

• Training Minimum Wage: This applies to employees 20 years or older who are undergoing training. Similar to the starting-out rate, it is set at 80% of the adult minimum wage, currently NZ$18.52 per hour. After completing three months or 200 hours (whichever comes first), the employee becomes entitled to the adult minimum wage.

Exceptions and Exemptions

The Minimum Wage Act does not apply to all employment situations. Some exceptions include:

• Volunteers
• Employees under 16 years old (although other minimum employment standards still apply)
• People with disabilities who hold an exemption permit

Enforcement

The Ministry of Business, Innovation and Employment (MBIE) is responsible for administering the Minimum Wage Act. Employees who believe they are being underpaid can file a complaint with MBIE.

In New Zealand, many organizations offer additional benefits beyond the base salary to attract and retain talent. These benefits often come in the form of bonuses and allowances.

Performance-Based Bonuses

Performance-based bonuses reward employees for exceeding expectations or achieving specific targets. Examples include:

• Annual Bonuses: These are tied to the company's overall performance or an individual's contribution throughout the year.
• Commission-Based Bonuses: These are often seen in sales roles, where employees earn a percentage of the value of their sales.
• Performance Incentives: These are variable bonuses awarded for exceeding specific performance metrics like exceeding sales quotas or completing projects on time and within budget.

Allowances

Allowances are designed to help cover work-related expenses incurred by employees. Common types include:

• Meal Allowances: These are provided to offset the cost of lunches or dinners, especially for employees required to work extended hours.
• Car Allowances: These are reimbursements for using personal vehicles for work purposes, often calculated based on mileage or a fixed monthly amount.
• Clothing Allowances: For professions with specific uniform or clothing requirements, employers may provide an allowance to help defray costs.
• Mobile Phone Allowances: These are provided to contribute towards the cost of a mobile phone plan needed for work communication.

Other Benefits

Several other perks can be seen as indirect forms of compensation:

• Company Car or Vehicle Fleet Access: This is provided to some employees for work purposes, often including fuel and maintenance costs.
• Health Insurance: Some employers offer subsidized or fully-covered health insurance plans.
• Professional Development Allowances: This is financial assistance for employees to pursue relevant courses or certifications to enhance their skills.

The prevalence and specifics of these bonuses and allowances can vary depending on factors like industry, company size, and employee position. Offering a competitive combination of base salary, bonuses, and allowances can create an attractive compensation package that motivates and retains top talent.

Understanding payroll cycles is crucial for both employers and employees in New Zealand. It ensures timely compensation and facilitates financial planning.

Frequency of Payment

There's no mandated minimum payment frequency in New Zealand by law. However, common practices include:

• Weekly: Often seen in industries with hourly wages, like retail and hospitality.
• Fortnightly (Twice-monthly): The most prevalent payment cycle in New Zealand, particularly for salaried employees. This aligns with tax filing requirements, as employers must file information within two days of each payday.
• Monthly: Less common but used by some organizations, particularly for senior positions or salaried roles.

The specific pay frequency should be clearly outlined in the employment agreement between the employer and employee.

Payday and Processing

Employers have flexibility in choosing the specific payday within their chosen cycle (weekly, fortnightly, or monthly). It's important to maintain consistency and ensure timely payments as per the agreed-upon schedule.

The payroll processing typically involves:

• Recording employee hours worked.
• Calculating deductions for taxes (PAYE), compulsory contributions (if applicable), and any other authorized deductions.
• Finalizing net pay after deductions.
• Electronically filing pay information.
• Arranging for salary payment, usually via direct deposit into the employee's nominated bank account.

Leave and Overtime

• Leave Pay: Employees are entitled to receive their regular wages for various leave types, including sick leave, vacation leave, and bereavement leave, as outlined in their individual employment agreements.
• Overtime: Work performed beyond the standard hours (typically 40 hours per week) is considered overtime. Whether overtime is paid, and at what rate, is determined by the employment agreement or relevant collective agreement.