New Zealand’s Payroll Changes: A Positive Opportunity for Business Improvement
Upcoming changes to minimum wage rates and kiwisaver prompt an opportunity to review your business processes.
These changes will take effect from 1 April 2026.
We have prepared a summary of the main changes that may require your attention.
These updates affect employee pay and employer contributions. It is important that payroll systems are updated accordingly.
Kiwisaver rate changes from 1 April 2026
- KiwiSaver contribution rate will increase from 3% to 3.5% for both employees and employers.
- Employees who are eligible may apply to Inland Revenue (IRD) to temporarily remain at 3% for a limited period. This option to remain at 3% must be approved by the IRD. An employer will be able to match this reduced rate.
- The changes will affect all pay days from 1 April even if the pay period covers days prior to 1 April, the whole contribution for that pay period will need to be deducted at the new rate.
- Kiwisaver members aged 16 and 17 will qualify for employer contributions as long as they meet other eligibilty criteria
To ensure a smooth transition, we recommend the following:
- Update payroll systems to reflect the new 3.5% KiwiSaver contribution rate for all staff.
- You may want to talk to your employees about the changes and let them know about the temporary rate reduction (Temporary KiwiSaver Rate Reduction)
- Collect any IRD approval certificates from employees who have had approval for temporary rate reduction and ensure correct rate applied for employee and employer contributions.
- Check your employment agreements. Are they based on total remuneration (salary is inclusive of kiwisaver) If so you will need to carefully consider how you handle this increase.
Minimum Wage Changes from 1 April 2026
- Adult minimum wage increase from 23.50 to $23.95 per hour, a 2% increase.
- Starting-out/training minimum wage increase from 18.80 to $19.16 per hour
- ACC Earners’ Levy will increase to $1.75 per $100 of liable earnings, with the maximum threshold rising to $156,641.
To ensure a smooth transition, we recommend the following:
- Ensure employee hourly rates are updated.
- While most payroll systems will automatically apply the updated ACC earners levy rate, we recommend reviewing calculations to confirm accuracy.
- Recalculate your budgets and cashflow as they increase will have an impact.
- You may want to review other pay rates in light of increases to minimum rates.
- You may wish to also review your pricing strategy due to increased costs.
Click here to contact your Bentleys advisor if you have further queries regarding the changes.
Did you know Bentleys can process your payrolls Click here to learn more.
A Perfect Time to Review Your Business
Although any rise in wage costs can create additional pressure for employers, this change presents a timely and valuable opportunity for business owners to review their operations, strengthen internal structures, and ultimately increase long‑term enterprise value.
When costs rise, even modestly, it becomes more important than ever for business owners to understand the strengths, weaknesses, and efficiency of their operations. A thoughtful review of business performance can help identify:
- Areas where resources are being underutilised
- Opportunities to streamline tasks or processes
- Roles that may no longer align with the business’s strategic direction
- Capabilities required for future growth
- Pricing strategy
This internal assessment not only helps reduce unnecessary spending but also contributes to a clearer understanding of your business’s overall value and potential.
Reassessing Human Resource Structures
Human resources are one of the largest cost centres for many businesses. With wages increasing, now is an ideal time to evaluate:
- Whether your staffing structure is aligned with business needs
- Which roles are essential and which could be redefined
- Whether current employees are working to their strengths
- Opportunities to improve productivity through upskilling or shifting responsibilities
This exercise can reveal opportunities to enhance efficiency without compromising service quality or growth potential.
Considering Outsourcing as a Strategic Advantage
One powerful tool available to business owners looking to manage costs and increase profitability is outsourcing. Outsourcing allows businesses to shift certain functions to specialised external providers.
Benefits of outsourcing
- Tasks completed by experts
- Turns cost from fixed cost to a variable cost
- Ensuring tasks are completed efficiently, cost‑effectively, and at a consistently high standard.
- Easy scalability
- Eliminates need for fulltime salaries, payroll taxes, benefits, training, IT, leave
- Can create indirect savings through reduction of office space, utilities, furniture, software licenses
Turning Rising Costs Into Opportunities
While the upcoming minimum wage increase represents an additional cost for employers, it also serves as a catalyst for positive transformation. By reviewing business processes, strengthening human resource structures, and leveraging outsourcing where appropriate, business owners can not only absorb additional wage pressures but also unlock new efficiencies and increase profitability.
In the long run, these improvements can help build stronger, more resilient, and more valuable enterprises—well positioned for future growth.
Contact us if you would like to discuss your business improvement strategies (contact Toni and Owen)
