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Disclaimer: Educational purposes only. Not legal advice. Consult a qualified NZ legal practitioner for your specific circumstances.

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employment

Can an employer pay you in goods or accommodation instead of cash?

Key Takeaway

In New Zealand, employers must generally pay wages in money, not goods or accommodation. Agreements to pay in kind are usually illegal and void. While specific, capped deductions for employer-provided board and lodging can be made from cash wages, the minimum wage must still be met in money after any such deductions.

Payment of Wages: Cash vs. Goods or Accommodation

New Zealand employment law primarily requires employers to pay wages in money. Paying employees in goods or accommodation instead of money is generally prohibited, with very limited exceptions for specific deductions.

The General Rule: Payment in Money

Under New Zealand law, wages must generally be paid entirely in money. An agreement between an employer and an employee for the whole or any part of the worker's wages to be payable in any way other than money is illegal and void [Source: Wages Protection Act 1983, s 5]. This means an employer cannot legally agree with an employee to pay them in items like company products, services, or provide accommodation as their primary form of remuneration, or to meet their minimum wage obligations.

Minimum Wage Requirements

The Minimum Wage Act 1983 mandates that all employees must receive at least the prescribed minimum wage for all hours worked [Source: Minimum Wage Act 1983, s 6]. Critically, any amount payable by an employee to an employer for board (food) or lodging (accommodation) cannot be counted as payment of wages for the purposes of meeting the minimum wage obligation [Source: Minimum Wage Act 1983, s 7(1)]. This reinforces that the minimum wage must be paid in cash.

Limited Exception: Deductions for Board and Lodging

While an employer cannot pay an employee in accommodation or board instead of money, they may be able to make specific deductions from an employee's wages for board and/or lodging that the employer provides to the employee [Source: Minimum Wage Act 1983, s 7(2)]. These deductions are strictly limited by law:

  • Maximum Amounts: The maximum amount an employer can deduct for board and/or lodging is prescribed by the Minimum Wage Regulations 2017 [Source: Minimum Wage Regulations 2017, cl 4]. These regulations set out specific weekly limits for deductions for board only, lodging only, or board and lodging combined. These amounts are subject to periodic review.
  • Cash Remuneration: After any permitted deduction for board and lodging, the employee's take-home pay in money must still be at least the applicable minimum wage [Source: Minimum Wage Act 1983, s 7(1)]. This means the employee must still receive cash payment that meets or exceeds the minimum wage after the deduction.
  • Agreement Required: Any such deduction must be agreed upon in the employment agreement or otherwise in writing with the employee [Source: Wages Protection Act 1983, s 16].

It is important to distinguish this from 'payment in kind.' This is a deduction from a cash wage for a service provided by the employer, not the provision of goods or accommodation as wages.

Employment Agreements and Good Faith

All employment relationships in New Zealand are governed by the principle of good faith, meaning parties must be active and constructive in their employment relationships [Source: Employment Relations Act 2000, s 4]. An employment agreement, which must be in writing, typically sets out the terms of remuneration, including how and when wages will be paid [Source: Employment Relations Act 2000, s 57]. Any provisions regarding non-monetary payments or deductions must comply with the Wages Protection Act 1983 and the Minimum Wage Act 1983.

Consequences of Non-Compliance

Employers who fail to pay wages in money, or make unlawful deductions, may face penalties and orders for payment of unpaid wages. Employees may raise a personal grievance or apply to the Employment Relations Authority for resolution [Source: Employment Relations Act 2000, s 103, s 135].

When to Seek Independent Legal Advice

It is recommended that individuals seeking to understand their specific rights and obligations concerning payment of wages, including deductions for board and lodging, consult with an employment law specialist or seek guidance from official government agencies. Community Law Centres (https://communitylaw.org.nz/) offer free legal advice and information to those who qualify. Employers or employees facing disputes or questions about remuneration should seek independent legal advice tailored to their particular circumstances.

Key Resources