Payroll Changes and What They Mean for Your Business – 1 April 2025

The start of a new financial year brings more than just fresh beginnings; it also brings crucial changes to payroll that every New Zealand business owner needs to be aware of. This 1 April 2025, several key adjustments come into effect, impacting your payroll obligations. Let’s break down these changes and understand their implications for your business.

Minimum Wage Increase

Perhaps the most significant change is the increase in the minimum wage. From April 1st, the adult minimum wage will go up from $23.15 to $23.50 per hour. The starting-out and training minimum wage will go up from $18.52 to $18.80 per hour.

What it means for you:

• You will need to update your payroll systems to reflect these new rates.
• Budget for the increased costs, which could impact your overall operational expenses.

ESCT Rate Increase: Employer Superannuation Contribution Tax

Alongside the minimum wage, the Employer Superannuation Contribution Tax (ESCT) rates are also seeing adjustments.

Why it matters:

• Accurate calculation is vital to avoid penalties and ensure compliance.
• It is crucial to correctly apply the correct ESCT rate based on the employees income.

ACC Rates: Changes in Levies

The Accident Compensation Corporation (ACC) levies are another area of change. These levies contribute to the scheme that provides accident cover for employees.

Key takeaways:

• ACC rates change annually, and it’s essential to stay updated on the latest figures.
• If your accounting software isn’t updated automatically, then ensure your payroll system is updated with the new ACC levy rates to avoid discrepancies.
• Important Note: Due to the increase in ACC levies, your employees might see a slight reduction in their net pay.

What You Need to Do Now:

• Update Your Payroll System: Ensure your payroll software or systems are updated to reflect the new minimum wage, ESCT rates, and ACC levies.
• Communicate with Employees: Inform your employees about the changes, particularly the minimum wage increases.
• Review Your Budget: Reassess your budget to account for the increased costs and levy adjustments.
• Seek Professional Advice: If you’re unsure about any of these changes, consult with a payroll specialist or accountant.

By staying informed and taking proactive steps, you can smoothly transition to the new payroll regulations and maintain a compliant and efficient business.