Starting from 1 May 2025, the minimum wage in New Zealand will increase, as confirmed by the Workplace Relations and Safety Minister. The adult minimum wage will rise to $23.50 per hour, reflecting a 1.5% increase from the previous rate of $23.25. Meanwhile, training and starting-out wages will also increase to $18.80 per hour, staying at 80% of the adult wage.
This move affects more than 141,000 workers, many of whom currently earn between the old and new wage rates. For someone working 40 hours per week, the $0.35/hour bump equates to an extra $14 per week before tax.
Current and New Minimum Wage Rates in NZ (Effective 1 May 2025)
| Category | Current Rate | New Rate (from 1 May 2025) |
|---|---|---|
| Adult Minimum Wage | $23.25/hour | $23.50/hour |
| Starting-Out Wage | $18.52/hour | $18.80/hour |
| Training Minimum Wage | $18.52/hour | $18.80/hour |
All figures are before tax and deductions (e.g., PAYE, student loan, child support).
Why the Wage is Increasing
This wage rise reflects New Zealand’s economic rebound and the government’s focus on aligning wages with living costs. Notably, inflation has returned to the Reserve Bank’s target range for the first time in over three years, giving the government room to act on wages while maintaining economic stability.
Minimum Wage Exemptions for Workers with Disabilities
Employers may apply for a minimum wage exemption permit for workers whose disabilities significantly affect their job performance. These permits require:
- The employee’s agreement.
- Proof that reasonable accommodations were attempted.
- Justification that the exemption is necessary.
Permits are only issued following a fair assessment by the Labour Inspectorate.
What Employers Should Do to Prepare
Advise Your Employees
Notify any workers earning the current minimum wage of their upcoming increase. This should be formalized through an updated employment agreement or written notice.
Review Payroll and HR Systems
Ensure your payroll software or provider is ready to apply the new rates. Manual systems should also be checked for correct calculation settings.
Monitor Wage Progression for Training/Starting Workers
Double-check when employees under training or starting wages will qualify for the full adult wage, and update records accordingly.
Reassess Internal Pay Structures
A change in minimum wage can impact broader pay structures. Employees earning just above the minimum may expect a pay adjustment to maintain fair wage differentials.
Update Budget Forecasts
Incorporate the increase into your short- and medium-term budgets. Account for higher payroll and annual leave costs.
Stay Compliant with Wage Rules
The minimum wage applies to:
- All hours worked
- Employees paid hourly, salary, commission, or piece rates
Exclusions apply to:
- Employees under 16
- Workers with an approved exemption permit
Conclusion
The 2025 minimum wage increase in New Zealand reflects economic recovery and a renewed focus on fair compensation. While modest, the change impacts a wide range of workers and employers. With the new rates set to take effect on 1 May 2025, now is the time for businesses to prepare.
FAQs
What is the new minimum wage in NZ from May 2025?
From 1 May 2025, the adult minimum wage will increase to $23.50 per hour.
How much will training and starting wages increase in 2025?
These will rise from $18.52 to $18.80 per hour, maintaining their link to 80% of the adult rate.
Does the new wage apply to all workers?
No. It applies to most, but not to employees under 16 or those with a valid exemption due to disability.
Can I delay updating my payroll system?
No. Employers are legally required to implement the change from 1 May 2025.
Is the increase enough to offset living costs?
While moderate, the increase helps offset recent inflation and brings relief to low-income earners.
What happens if I don’t comply?
Non-compliance can result in penalties and employment disputes. Stay proactive.
Do salaried employees benefit from the increase?
If their calculated hourly rate falls below $23.50, their pay must be adjusted.
Should I renegotiate all employee contracts?
Not necessarily, but contracts affected by the new rate should be updated or formally acknowledged.
How many workers are affected?
An estimated 141,900 workers are expected to see a pay increase.
Where can I get more help?
Visit Employment New Zealand’s website or contact a workplace relations advisor for detailed support.
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