Minimum Pay Thresholds
How do Pay Thresholds affect Visa Applications?
Pay thresholds are partly used to determine the type and length of Work Visa you can apply for.
Pay thresholds determine whether or not you can make a Skilled Migrant application for Residence.
It is important to stay on top of this as Immigration reviews and changes the required rate on a regular basis.
Why is a pay threshold important?
Immigration New Zealand has always required evidence that employers are paying “market rate” for a role, to ensure that migrant workers are treated fairly, and they do not undermine or displace local workers by accepting lower pay.
It also helps to maintain a more level playing field in the market, so that companies cannot underpay staff to undercut pricing.
What are the pay threshold rules now?
In the past, Immigration accepted that different occupations may have different pay levels and the requirement was to prove market rate for your industry.
Now the “median wage” is the benchmark for everyone, no matter what their industry.
Until July 2020, there were different minimum pay rates required for an Essential Skills Work Visa and Skilled Migrant Residence.
Now the same pay rate applies to both Essential Skills Work Visa and Skilled Migrant Residence applicants.
Prior to July 2020 it was possible to support a 3-year Essential Skills Work Visa for people earning $21.50/hour.
Now anyone applying for a 3-year Essential Skills Work Visa or Skilled Migrant Residence must earn $25.50/hour.
Changes in median wage requirements can incur huge implications on your ability to extend staff work visas, support people for residence, and on your financial ability to support migrants. You risk blowing out your cost structure if you do not have an Immigration Strategy to plan for these changes.
Different pay thresholds, different visas
Employees earning less than $25.50/hour can only apply for a 6-month Essential Skills Work Visa and there is a maximum cap of 3 years total on Essential Skills Work Visas.
Employees earning at or above $25.50/hour can apply for a 3-year Essential Skills Work Visa and may also be eligible to make a Skilled Migrant Application for Residence depending on several other factors.
Employees who want to make a Work to Residence Application supported by an Accredited Employer (under current rules) must be earning 1.5 times median wage or $38.25/hour.
Employees who are not eligible to make a Skilled Migrant application for residence on $25.50 due to the skill level of their role may be able to at $38.25/hour.
Employees earning double median wage or $51/hour may be able to make a fast-track residence application. This can also make it easier for someone outside New Zealand to be granted a Critical Purpose Visa - allowing them to travel to New Zealand while the borders are closed.
There are many other pay thresholds which may have been ‘grand-parented’ or carried over from previous visa rules, if your employee has a visa that was issued under earlier rules.
More changes to come…
Covid-19 had a perverse effect on the New Zealand labour market, with many jobs being lost in lower paid industries such as retail and hospitality. Therefore, the median wage has increased to $27/hour.
Immigration New Zealand will be changing all the required pay thresholds to base them on the new rate of $27/hour in July 2021. And there will be other changes to come.
Do you understand how Immigration pay changes will impact your business and migrant staff?
We live and breathe this stuff daily, so get in touch to discuss further.