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Payroll is set for some meaningful changes on 1 April 2026, and now is the ideal time for employers to get prepared. With increases to the minimum wage, shifts in KiwiSaver contribution rules, and rising ACC levies, these updates will affect both what you pay your team and what they take home. In this blog, we break down what’s changing, what it means for your business, and the practical steps you can take to stay ahead.  

Changes Taking Effect from 1 April 2026 

Minimum Wage Increases: 

• Adult Minimum Wage goes from $23.50 to $23.95 

• Starting Out and Training Wage (80% of Adult Minimum Wage) goes to $19.16 

  
  

KiwiSaver Minimum Contribution Rises and Eligibility Widens 

• Minimum Employer and Employee contributions rise to 3.5%; an exemption can be applied for by the employee and is valid for 3-12 months 

• 16-17 year olds are now eligible for Employer contributions 

• KiwiSaver minimum contributions increase to 4% from April 2028 

  
  

ACC Levy Increase 

• ACC Levies employees pay on their income are increasing from 1.45% to 1.75% 

• Maximum liable earnings increases to $156,641. 

  
  

What do these changes mean for you? 

With several changes landing at once, employers will benefit from reviewing their payroll setup ahead of time, to confirm wage rates and confirming KiwiSaver settings are correct. The minimum wage increase applies for every hour worked from 1 April 2026 which is a Wednesday, employers processing payroll will need to ensure they apply the increased rate from 1 April 2026. 

Check that Starting Out and Training Wage are still applicable to your employees. Many employers enter the Starting Out rate when employees first start and then forget to update it once the employee has completed 6 months continuous service. Or for the Training Wage, check that your employee is still undertaking the required qualification, if they’ve qualified, they’re entitled to Adult Minimum Wage. 

Review your budgets and forecasts, including cashflows. Ensure increases in minimum wages, any additional pay rate increases you’ll provide, KiwiSaver employer contribution increases are allowed for.  

Talk to your team – Young employees may be excited(?) but confused about the new eligibility to Employer KiwiSaver contributions. Those not in KiwiSaver will be questioning whether it’s a good idea, those in KiwiSaver will experience a drop in their “cash in hand”, but benefit the long-term. 

What does this mean for your employees? 

Many employees who earn more than minimum wage will feel what is known as “the compression” effect. They feel that their skills, tenure or responsibilities are no longer fairly recognised if their pay remains at the same levels. 

What can employers do? Prepare yourself for these conversations, or better yet, if you’re in the position to offer the same or better increase, initiate these conversations. 

Increased KiwiSaver contributions will mean smaller net pay (cash in hand) for employees, and for many employees on tight budgets this may cause a real concern. Your employees can apply to IRD from NOW to have their contribution remain at 3% for anywhere from 3-12 months. Be warned, Employers cannot insist their employees apply for a temporary rate reduction, however if the employee is granted a temporary rate reduction the employer may match that. 

FAQs 

Are the minimum wage increases compulsory? 

Yes. Employees are entitled to be paid at least minimum wage under the Minimum Wage Act 1983. 

If my employee is on a KiwiSaver Contributions Holiday does the increase Employers Contributions apply? 

Not immediately. It will apply to both the Employer and Employee Contributions when the KiwiSaver Contributions Holiday ends. 

As an Employer, can I keep paying Employer Contributions of 3%? 

No. Unless your employee applies and is granted a temporary rate reduction. Once the temporary rate reduction period has ended then both parties must contribute 3.5%.  

Will Employees notice a difference in their take home pay? 

Yes. Whilst minimum wage is going up, the increased ACC Levies and KiwiSaver Contributions are also going up and they directly influence an employees take home pay.  

If you need our support with these changes please get in touch!