Pay Equity FAQ’s
Our most frequently asked questions about Pay Equity. If you can not find the answer to your question here, then please call our CEC on 0508 462 427.
What is Pay Equity?
The Care and Support Workers (Pay Equity) Settlement Act 2017 came into effect on July 1, 2017. It sets minimum pay rates for eligible workers based on their qualifications. These rates increase each year for three years. Under the Act, employers must:
- Pay their eligible care and support workers the new minimum pay rates (in most cases, this will be an increase in pay rate); and
- Ensure, where possible, that care and support workers can attain qualifications.
Who is covered in the settlement?
The settlement covers all care and support workers who provide services under Individualised Funding (IF), Enhanced Individualised Funding (EIF) and Enabling Good Lives. It also covers anyone who is providing a service under MSD-VHN or DHB-Individualised Funding.
Please note: if you have support workers who pay tax as IR56 Taxpayers (sometimes referred to as Private Domestic Workers), they are employees and as such the Pay Equity Settlement applies to them.
Who isn’t covered by the settlement?
Contractors, carer support payments and sleepover rates. Please note: while sleepover staff are not covered by the Settlement, you still need to pay them at least the NZ minimum wage of $17.70/hr.
When do the new rates come into effect?
From 1 July 2019, if your employee’s hourly rate is below the minimum for the band they are in, you will need to increase it to this rate.
How do I update my employees’ details?
How do I know which pay rate my employee should be on?
Check if they have an NZ Certificate in Health & Wellbeing or equivalent. If they have a qualification check the below table for pay rates. If they do not have a relevant/recognised qualification, then they are on L0.
What are the new pay rates?
|Qualification||1 July 2018
|1 July 2019
(Year 3 & 4)
|1 July 2021
|L0 (no qualifications)||$19.80||$20.50||$21.50|
* Qualifications are those recognised by NZQA
Please note these are minimum pay rates, you can choose to pay your employee a rate higher than the minimum.
What qualifications are recognised?
Visit Careerforce for more information on recognised qualifications.
Do I have to pay the new rates?
YES. The minimum pay rates are a legal requirement. If you do not increase your employees pay rate to the minimum for their band, you are in breach of legislation and could be subject to a personal grievance claim.
What happens if I don’t update my employees’ details before 1 July 2019
They will be entitled to back pay to 1 July which could result in a bulk payment coming out of your funding and will affect their taxes. You could also be subject to a personal grievance claim from your employee.
Will my employment agreements need to change?
In most cases you will not need to change your agreements. However, it would be prudent to write a letter to your employees outlining the change in their wage rate by the new Settlement rates. This will reassure them that the new legislation has been implemented.
Will I get additional funding to cover the Pay Equity rate changes?
Yes, the Ministry has decided to increase IF Personal Care and Household Management rates from $30.43 to $31.23. This is only for hours you have not used as of 1 July 2019.
I get funding from different sources; does the additional funding apply to all of them?
No, the rate increase applies to IF (Personal Care, Household Management, and Respite), EIF and EGL Funding only. All other budgets will remain the same.
Will the additional funding apply to my full year’s budget allocation?
No, the increase (2.63%) will only apply to the unused portion of your budget. There will be no increase to the part of your budget you have already spent.
Do I need to change my budget?
No, we will make the change on your behalf. Your new budget will be shown in your statement from mid-July.
What happens to leave accruals?
Funding was adjusted to account for leave accruals for the July 2017 – June 2018 year. There are no further adjustments going forward. If you feel your funding is insufficient to meet the increased costs of annual leave accruals, and to do so would cause you undue hardship please contact the Ministry of Health.
What happens if I don’t have enough funding to cover my support costs?
The Ministry of Health has said that they expect people to operate within their current budget. This may mean you need to adjust your hours of support to meet the new rates. If you have very high needs and do not believe you can manage your supports within your allocated budget due to Pay Equity wage rate increases, please contact your Coach or our Customer Experience Centre. If your needs have changed please contact your NASC.
Do I have to pay for my employees to attain qualifications?
An employer must take all reasonably practicable steps to ensure that a care and support worker is able to attain qualifications. You can use your IF to pay for this training if you have sufficient funds. You may also be eligible for a Training Grant from Te Pou that will cover a portion of the training costs. Manawanui can help you with any grant applications and has an in-house assessor. Contact Learning & Training for more information about this.
What is the definition of a contractor versus an employee?
A contractor is someone who is contracted to provide a specific service, usually for a specified period.
You are probably a contractor if you:
- Control how and when you work
- Pay your own tax, ACC premiums and insurance
- Usually supply your own work materials
- Can sub-contract work to another party.
You are probably an employee if:
- You have an agreement that reflects the intention is to form an employment relationship
- The employer controls the hours you work
- Your employer deducts ACC premiums and PAYE tax on your behalf
- Your employer supplies any materials you need for work.
Pay equity minimum rates do not apply to people who are contracted rather than employed to deliver services.