Pay Equity Q&A

Pay Equity Settlement implementation Q&A

What happens with accrued annual leave?

Accrued annual leave will be paid at the whatever rate applies when your employee takes that leave regardless of when they accrued it. We are aware that many people have employee’s with large accrued leave balances and are waiting on the Ministry as to how they will address this issue.

What does length of service mean?

Number of consecutive years with the current employer. When a worker moves to another employer their service restarts at 0 years.

What qualifications are recognised?

Careerforce are updating what qualifications are recognised for the purposes of Pay Equity regularly. Please go to for more information.

If your qualification is not listed in their table then you will need to apply to Careerforce for your qualification to be assessed.

International qualifications

Someone with a relevant NZ qualification higher than a Level 4 on NZQA, e.g. Registered Nurse (level 7) or Enrolled Nurse (level 5), who are working as a support worker come under the L4b pay band.

Please note:
– You must have completed the Qualification for it to be recognised under the settlement.
– An Enrolled Nurse is a Level 5 NZQA qualification, registered with the Nursing Council of NZ. It is not someone who is enrolled in a nursing qualification.

How much will our IF budget be increased by?

The Ministry have indicated that the hourly rate they use to calculate your IF budget will increase to $30.43 per hour (currently $26.40/hour). This is not the amount you pay your staff but the amount the Ministry pays you to cover the costs of employment, training, leave and service fees. There will be an equivalent percentage increase with a different calculation for IF Respite, EIF and EGL as these funding streams use $10 units rather than an hourly rate. (Waikato, Bay of Plenty, Lakes, Tairawhiti & Taranaki DHBs will have different rate increases)

Changes to Host fees in addition to the Settlement

In addition to a budget increase, the Ministry is changing how host providers are paid for mandatory host services. IF Managers will no longer have to pay baseline host fees from their budgets. The Ministry will pay hosts directly for mandatory host services which include set-up, ongoing coaching and claiming funding from the Ministry. Charges for other services, such as payroll, will still need to be funded from your budget. The service charge for the Manawanui Payroll Service will be a set fee of $15 per fortnight regardless of the number of employee’s you have, your funding allocation.or whether you submit a timesheet or not.

When does the settlement comes into force?

July 1 2017.

Who is eligible for the settlement?

  • People using Individualised Funding (IF), Enhanced IF, and Enabling Good Lives
  • Carer Support rates are NOT affected by the change in rate
  • Sleepover rates are NOT included in the settlement, so your arrangements can continue as usual, however, you can increase them should you wish to.

When will people get the extra money to fund the new pay rates?

The new pay rate will be applied from Monday July 3. Because the increase is being added to your remaining budget only, the Ministry will send updated budgets to us in July, which we will update our system with. You will not be able to see what your new budget until we receive this information from the Ministry.

How do I work out what band my employee is in?

Please note: any new employees that start after 1 July are paid according to qualifications not length of service. Length of service only applies to existing support staff employed before July 1. So if you start on 11 July 2017, you will stay on Pay Band L0 unless you get a qualification no matter how many years you work for the same person.

Do I have to change my employees pay rate?

Only if their current hourly rate is below the band they are in. You can change your employee’s pay rate here.

Do I have to pay my employees according to the bands? Can’t I just continue as I am?

You must allocate all your employees to a pay band and pay them the minimum rate for their band. 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. The rate for each band is a minimum payment – you can choose to pay your employee’s whatever rate you wish so long as it is higher than the minimum for their pay band and that you keep within your annual budget.

New employees from 1 July

All new eligible care and support workers from 1 July will progress through the pay bands on the basis of obtaining qualifications only (eg no length of service is applicable).

Working for Families guidance for employees

Please advise your employees of the following information from Inland Revenue.

Working for Families Tax Credits
Your pay increase from 1 July may affect your payments for Working for Families Tax Credits.  Make sure you check your family income estimate and let Inland Revenue know if it needs to be changed. This will help make sure you get paid the right of Working for Families Tax Credits and avoid an overpayment.

Changes that you need to let Inland Revenue know about include:

  • an increase or decrease in your family income
  • the number of hours you and/or your partner work
  • children coming into, or leaving, your care
  • a partner change.

You can make changes online anytime through myIR at

Or, you can call Inland Revenue on 0800 227 773, Monday to Friday 8am to 8pm, and Saturday 9am to 1pm. You can now call them from your mobile phone.

Student loans and KiwiSaver
If your pay increases you may notice your Student loan repayments and KiwiSaver contributions changing too. An increase in wages is likely to see the amount deducted increase.
If you now go over the weekly repayment threshold of $368 for student loans you may see deductions start happening. Please ensure you are using the correct tax code.

What is the definition of an employee?

An employee means a person who is an employee as defined in Section 6(1)(a) or (b)(i) of the Employment Relations Act 2000.  It does not include people who are contracted rather than employed to deliver services.


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 in accordance with the new Settlement rates.  This will reassure them that the new legislation has been implemented. Please seek advice from your host provider if you are unsure. You can download an example of a letter here.