Skip to main content

Types of pay

There are different ways to be paid when employed. Pay should be set out by the employer in the employment agreement.

There are different types of pay an employee can get, including wages, salary, commission, and piece rates.

  • Wages is payment based on the time worked, and is usually payment per hour.
  • People paid wages may have penal rates in their employment agreement. Penal rates are special rates for:
    • doing certain tasks
    • working particular days or shifts
    • extra hours.
  • Penal rates are negotiated between an employee and an employer. They may be included as part of the employment agreement or negotiated as a one-off. Employees should check their employment agreement to see if they're entitled to any penal rates.

Salary is normally a fixed amount per year. The salaried hours to be worked should be in the employment agreement; if an employment agreement doesn’t have the salaried hours then the salary earned by the employee must still be equal to or higher than the minimum wage for each hour worked.

A commission is when an employee is paid based on sales they have made or other targets they have met, for example, a percentage of the total value of a sale made. Some people are employed on commission only, others may have an hourly wage rate and be paid a sales commission on top of this, some may have a capped commission, while others have an unlimited ability to earn commission. Employees paid on commission must still get at least the relevant minimum wage.

A piece rate is a commission where the employee is paid for the number of pieces they worked on, for example, being paid for the number of bins of fruit picked, or the number of garments sewn. Employees paid per piece must still receive at least the relevant minimum wage for each hour worked.

Whether or not training is paid for (both the cost of the training and the time taken to attend training) depends on the type of training. Training that is required by the employer and undertaken as part of the employee's normal working hours (on the job training) must be paid. This includes new employees starting a job who need some form of training that is commonly undertaken on the job.

Training can also be given through conferences, after-hours seminars and workshops, or there may be opportunities to take more formal courses that lead to qualifications. An employer may choose to give study leave to attend these types of courses and/or pay for the cost of the course.

Training outside of work hours or more formal courses of study are a matter for negotiation between an employer and employee. It’s best practice to discuss upcoming training or study in advance and agree whether or not such training will be paid. Whatever is agreed should be put in writing to ensure everyone understands the terms and conditions of the training.

Protective clothing

Employers have to pay for and provide employees with protective clothing if it's needed to reduce potential exposure to an identified hazard.

Uniforms

Dress requirements, such as the type or standard of clothing when at work, may be in the employment agreement or workplace policies; employees should clarify requirements with thir employer if they're in doubt. If there is an agreement about uniforms or dress requirements, both parties must keep to that agreement. An employer may have dress requirements to identify staff, for staff protection, or to reflect the nature of the business.

The cost of buying and cleaning the uniform should be agreed by the employee and employer, but if the employee is paying, the employer can’t make the employee buy the uniform from their shop or a certain place.

Payment of wages/salary

Employees must be paid in cash (NZ banknotes and coins) unless:

  • their employer is the Crown or a local authority, then the employer can choose to pay the employee by cheque
  • the employee agrees or asks in writing to be paid by postal order, money order, cheque or bank deposit. If the employee wants to change to be paid in cash, they need to tell their employer in writing. Their employer then has to make the change as soon as possible and within 2 weeks
  • 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 provides some other form of payment.

Employers can’t tell employees how they must spend their money.

Still haven't found what you're looking for?