Payments & deductions
The Wages Protection Act 1983 sets out the way wages must be paid, and prevents unlawful deductions from wages.
When and how should wages be paid
Employees should be paid on the day and at the intervals agreed that have been agreed with the employer. Employers cannot change the normal pay day without the agreement of the employee.
Employers are obliged to pay wages in cash (i.e. New Zealand coins or banknotes) unless:
- the employee is employed by the Crown (government) or a local authority – then they can be paid by cheque
- an employee has requested in writing or given the employer written consent to pay wages by postal order, money order, cheque or direct credit
- the employee is away from the proper or usual place for the payment of their wages – then they can be paid by postal order, money order, or cheque
- the employment agreement permits some other form of payment.
Employers can’t put any requirements on their employee about how the employee spends their wages.
Employers generally can’t make deductions (take money) from employees’ wages. Employers can only do this where:
- an employee has agreed to or requested the deduction in writing. The employee can vary or withdraw this consent by giving notice in writing at any time. The employer must then vary or stop the deductions within two weeks of receiving the notice or as soon as practicable
- an employment agreement says the money can be taken out (for example, for union fees in a collective agreement)
- an employer wishes to recover overpayments where the employee has been absent from work without the employer's authority, been on strike, locked out or suspended. The employer may only recover an overpayment where it was not reasonably practicable to avoid making the overpayment. The employer must tell the employee of their intention to recover the overpayment before deducting any money and then make that deduction within two months of telling them.
- a Court directs that a deduction be made
- a bargaining fee arrangement applies to the employee
- an employee is required by law (for example, income tax, child support payments or other statutory purposes) to make payments.
If an employee is provided with board and lodging the employer may deduct the costs of board or lodging where the amount is fixed under any Act, determination or agreement. If the amount payable is not fixed, the employer may deduct no more than 15% for board, or no more than 5% for lodging.
If there is a breach of the Act or an employment agreement, call the Department of Labour on 0800 20 90 20.
What is KiwiSaver?
KiwiSaver is a voluntary work-based savings initiative to help New Zealanders with their long-term saving for retirement. It is open to all New Zealanders aged under 65. The Inland Revenue Department’s (IRD) website (www.KiwiSaver.govt.nz) provides further information on the benefits of joining KiwiSaver.