Back in December 2025, Workplace Relations and Safety Minister, Brooke van Velden, announced a planned rise in the adult minimum wage.
This rise has now taken place, with the [adult minimum wage] (https://www.employment.govt.nz/news-and-updates/minimum-wage-is-increasing-on-1-april-2026) now set at $23.95 per hour, as of 1 April 2026. This is an increase of 45 cents per hour from the previous hourly rate of $23.50.
In addition, the training and starting-out minimum wages have also increased to $19.16 per hour, remaining at 80% of the adult minimum wage.
What’s the payroll impact of this rise?
Any rise in wages obviously has a knock-on effect on your payroll costs as a business. From 1 April, an employee working 40 hours per week on the adult minimum wage will earn an extra $18 per week or $936 per annum (before tax) compared to the current minimum wage.
This will extend your overall payroll expenses and could have a potential impact on your cashflow position.
Let’s take a look at five potential ways to mitigate the impact of this wage increase.
1. Make use of the lower training rates
You can hire eligible staff at the starting-out or training rate of $19.16 per hour, which remains 80% of the adult wage. Hiring workers in the 16-19 age bracket on the starting out or training rate helps you manage your wage costs while also providing opportunities to younger workers.
2. Think about your staff rostering
Make sure you’re matching staffing levels to busy and quiet times in the business. Having too many staff, all on minimum wage, standing around idle during quiet times can have a significant impact on your wage costs. Look at historical data to optimise your staffing levels.
3. Increase prices to cover the wage increase
To get your cashflow back on track, you’ll need to offset the $936 annual cost increase per full-time employee. One way to do this is to apply small, transparent price adjustments to products or services to maintain the best possible profit margins. But be aware that these price increases need to be sustainable and not so big that they alienate customers.
4. Invest in digital tools, AI and automation
Implementing business process automation in key areas is one way to reduce your labour needs. Automating admin tasks or customer ordering can reduce the total man-hours required for daily operations, allowing you to run efficiently with a leaner team (and lower wage costs).
5. Focus on retaining your existing staff
Retaining staff is one of the hidden costs of being an employer. Retaining experienced staff helps you mitigate higher wage costs by avoiding the expensive recruitment fees needed to source and hire new talent. It also ensures that every dollar paid buys high-speed, expert productivity rather than the slower output of a new trainee.
Working with you to keep wage costs manageable
If you’re concerned about the short and longer-term impacts of the rise in the adult minimum wage, come and talk to our team.
We can review your current wage costs, staffing levels and resourcing to deliver the most productive workforce, as a cost that doesn’t negatively affect your cash position.
