# Types of pay Official source: https://www.employment.govt.nz/pay-and-hours/pay-and-wages/types-of-pay Scanned: 2026-06-07T03:31:31.402Z Use this as a current official guidance reference, not as a substitute for legal advice. ## Page Text Home Pay and hours Pay and wages Types of pay Pay and wages Pay and hours Pay and wages Minimum wage Holidays and leave pay Types of pay Allowances Deductions and premiums Pay periods and paydays Payslips Final pay Setting pay, pay reviews and pay rises Hours and breaks Everyone Types of pay There are different types of pay, including wages, salary, commission or piece rates. How and when an employee will be paid should be recorded in the employment agreement. Employee rights Employees Any person, whatever their age, who is employed by an employer to do any work for hire or reward under a ‘contract of service’ (commonly called an ‘employment agreement’). must be paid in money (NZ banknotes and coins) unless: their employer is the Crown or a local authority, then the employer An individual or organisation that hires 1 or more employees and contracts them to work in exchange for wages or salary under a ‘contract of service’ (commonly called an ‘employment agreement’). 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 be paid by bank deposit, the account must be in their name — this includes joint accounts when the employee is named with others wants to be paid in cash, they need to tell their employer in writing and their employer then has to make the change 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 A written document setting out the terms and conditions of employment agreed by the employer and employee (also known as a ‘contract of service’). It can include other contractual documents and agreements made by the employer and employee. Every employee must have a written employment agreement. provides some other form of payment. Employers must pay: for all the hours you work in money – employees cannot be paid for work with just accommodation or board. Employers cannot tell employees how, when, or where they spend their money. Employee rights and responsibilities Wages and penal rates Wages are a type of payment based on the time worked and are usually paid per hour. Employees paid wages may have penal rates An identifiable additional amount that is payable to an employee under their employment agreement for doing certain tasks, working on a particular day or type of day, or working extra hours. in their employment agreement. Penal rates are special rates for: doing certain tasks working particular days or shifts working extra hours. Penal rates are negotiated between an employee and an employer. They may be included as part of the employment agreement A written document setting out the terms and conditions of employment agreed by the employer and employee (also known as a ‘contract of service’). It can include other contractual documents and agreements made by the employer and employee. Every employee must have a written employment agreement. or negotiated as a one-off. Employees should check their employment agreement to see if they are entitled to any penal rates. Overtime or extra shifts Rostering Salary A salary An employee’s yearly pay, which is normally a fixed amount per year. is normally a fixed amount per year. The salaried hours to be worked should be in the employment agreement. Salaried employees can divide their pay by the number of hours they work in a pay period to get a rough idea if they are getting paid the minimum wage. Minimum wage Hours of work Part-time employees should have their pay specified per hour, day, or week and these amounts must be equal to or higher than the minimum wage The lowest amount an employee can be paid per hour. There are 3 types of minimum wage: adult, starting-out and training. There is no minimum wage for employees younger than 16 years old. . Permanent or fixed term Commission 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 people may have a capped commission (where there is a limit on the amount you can earn as a commission). Others have an unlimited ability to earn commission. Employees paid on commission must still get at least the relevant minimum wage. Minimum wage rates and types Piece rates A piece rate is 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. Allowances Certain allowances Extra payments paid to an employee to cover employment-related expenses, for example, a reimbursement, something specific related to the job (like a night-shift allowance), or in recognition of extra skills that they bring to the job. are considered as a type of pay such as: allowances for work-related travel allowances for uniforms or work clothes. Allowances Equipment, vehicles and clothing Payment for travelling time Whether or not an employee gets paid for travel time depends on the circumstances, and the employment agreement A written document setting out the terms and conditions of employment agreed by the employer and employee (also known as a ‘contract of service’). It can include other contractual documents and agreements made by the employer and employee. Every employee must have a written employment agreement. or workplace policy Workplace policies and procedures explain the rules and expectations in the workplace. . An exception to this are home and community support workers, if the Home and Community Support (Payment for Travel Between Clients) Settlement Act 2016 applies. Many employees have a fixed place of employment and do not get paid travel time for getting to and from their workplace. However, for some employees time travelling to, and between different worksites is a part of their work and so that time must be paid. Examples of situations where it is likely that travel is part of work and must be paid include: employees in forestry who travel for lengthy periods to remote sites horticultural employees who use vehicles provided by the employer to change locations or move from one location to another employees working as commercial cleaners who travel from one location to another during a shift or work day. Working for accommodation Employers cannot just pay a person in accommodation or board. Payment for work must be in money. Employer rights and responsibilities The employer and their employee are free to enter into an accommodation arrangement and the employer can deduct a reasonable cost of the accommodation from wages. Such agreements need to be in writing. The value of the work must be written down in the employment contract and agreed to by the employee. The job cannot be contingent on the employee staying in the accommodation. If no specific written agreement exists as to the cost of the accommodation to be deducted, the legislation defaults to provisions set out in the Minimum Wage Act 1983. Deductions Hiring temporary migrants Minimum Wage Act 1983 - New Zealand Legislation (external link) Providing accommodation to an employee in connection with their work makes the value of the accommodation taxable. Tax implications of working for accommodation — Inland Revenue (external link) Work for accommodation — Frequently Asked Questions [PDF, 476 KB] Training pay 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. Published: 29 February 2024 Last modified: 14 April 2026 Written for: Everyone Share this page: Print this page: