The 2026 minimum wage: what $23.95 an hour costs an employer

A 45-cent rise in the minimum wage doesn’t sound like much. For an employer with a team on or near the minimum, it’s the start of a chain of changes that touches holiday pay, KiwiSaver, ACC and the pay of everyone a little further up the ladder. Here’s what changed in April 2026 and how to plan for it.

What are the 2026 minimum wage rates?

MBIE announced the rates in December 2025, and they took effect on 1 April 2026:

Rate	Before 1 April 2026	From 1 April 2026	Change
Adult minimum wage	$23.50	$23.95	+$0.45
Starting-out minimum wage	$18.80	$19.16	+$0.36
Training minimum wage	$18.80	$19.16	+$0.36

MBIE estimated that an employee working 40 hours a week on the adult minimum wage earns an extra $18 a week, or $936 a year, and that about 122,500 workers earning below the new minimums would get a pay rise.

The starting-out and training rates have specific eligibility rules. Check Employment New Zealand’s guidance before using either; applying them wrongly creates back-pay liabilities.

What does the rise cost an employer per worker?

The 45 cents is only the direct part. Several other costs move with it:

• Holiday pay and public holidays are paid at rates based on ordinary or average earnings, so they rise too.
• KiwiSaver employer contributions are a percentage of gross pay. From 1 April 2026, the default rate also rose, from 3% to 3.5%.
• ACC work levies are based on liable earnings, so a bigger payroll means a bigger invoice.

Illustrative example. A full-time adult minimum wage employee (2,080 paid hours a year):

Item	At $23.50, KiwiSaver 3%	At $23.95, KiwiSaver 3.5%
Gross wages	$48,880	$49,816
KiwiSaver employer contribution	$1,466	$1,744
ACC work levy (illustrative 1% of earnings)	$489	$498
Total	$50,835	$52,058

The increase is about $1,223 a year per full-time employee who’s a KiwiSaver member, roughly 2.4%, about a quarter more than the 1.9% wage rise on its own.

What about staff paid above the minimum?

This is often the bigger cost. If a team leader earns $26 an hour and a new starter now earns $23.95, the gap has narrowed. Many employers lift rates across the board to keep relativities, especially in hospitality, retail, horticulture and cleaning, where many roles sit within a few dollars of the minimum. There’s no legal requirement to do so unless an employment agreement says so, but pay compression causes resignations, and replacing staff is expensive.

How should you plan for each April?

The minimum wage normally changes on 1 April after an annual review, so the change is predictable even if the amount isn’t. A sensible annual rhythm:

1. December to January: note the announced rates for the coming April.
2. February: rebuild your wage budget, including on-costs and any relativity adjustments. Our true cost of an employee page sets out the on-costs.
3. March: reprice. Work out the price changes needed to hold your margin and give customers notice. See repricing after the minimum wage rise.
4. 1 April: update payroll rates, KiwiSaver settings and price lists on the same day.

Our feature on the April cost reset puts the minimum wage, KiwiSaver, ACC and the new tax year together in one plan.

How does the minimum wage affect salaried staff?

Salaried employees are covered by the minimum wage too: their salary divided by the hours they actually work must not fall below the hourly minimum. A salary of $52,000 for a 40-hour week works out at $25 an hour, comfortably above $23.95. But if that employee routinely works 45 hours, the effective rate falls to about $22.22, below the minimum. Busy seasons, owner-operated businesses where managers cover gaps, and roles with unpaid “quick” tasks before or after shifts are where this shows up. Keeping accurate time records for salaried staff, and checking the effective hourly rate each April and during busy periods, protects both the employee and the business.

What are the risks of getting it wrong?

Paying below the minimum wage, even by accident, creates arrears that you’ll need to repay, and can lead to penalties. Common traps: forgetting to update payroll rates on 1 April, salaried staff whose hours have crept up so their effective hourly rate falls below the minimum, and unpaid “trial” shifts or training time. A quick check of every employee’s effective hourly rate each April avoids most of these.

Payroll records matter here too. Employers must keep wage and time records, and accurate records are the best evidence that every employee has been paid correctly if a question ever arises.

When higher wages meet tight margins

For labour-heavy businesses, the April change can squeeze margins for a month or two while new prices flow through. If you’re also planning to hire for a busy season, the combined cost can strain cash. You can check your funding options without a credit check.

Planning the year’s payroll with confidence

Wage rises are a fact of running a business; surprises don’t have to be. If your plans for the year include more staff, longer hours or a new site, and you’d like working capital in place behind them, talk to us. We look at unsecured options for trading businesses and loans secured on residential or commercial property. Enquiring won’t touch your credit file, your enquiry isn’t passed around to other lenders, and a real person on our New Zealand team reads it. Answer accurately and our first call can get straight to the point. See if you qualify.