Paying a living wage in contracts

All public service departments, listed in schedule 2 of the Public Service Act, must include requirements in their cleaning, catering and security guard contracts that workers undertaking these services are paid, at a minimum, the New Zealand Living Wage, with annual increases.

The requirement applies to people that are employed or contracted by providers to deliver the following services to public service departments and departmental agencies:

• cleaning services
• catering services
• security guard services.

This document has example contract clauses and RFx questions to help you meet these requirements.

Annual increases to the living wage

To help agencies and providers with their budget planning, the Ministry of Business, Innovation and Employment (MBIE) provides a 5-year projection of increases to the living wage, to be used in government contracts under this policy. It seeks to approximate and anticipate changes to the New Zealand Living Wage rate over time using Labour Cost Index projections.

MBIE will review the 5-year rate increases annually for alignment with the New Zealand Living Wage. MBIE reserves the right to make adjustments as appropriate, including if the rate is materially out of step with the New Zealand Living Wage. Any amended table will be re-published on 1 September each year.

Any adjustments in the rates only apply to new contracts or renewed contracts that are entered into after that date. Agencies with existing contracts do not need to require providers to amend their existing terms to align with the changed rates, until those contracts are renewed.