The Government plans to get tough with employers it says are abusing the KiwiSaver scheme.
It is proposing a law change because it says some employers are giving smaller pay rises to workers in the scheme, to cover the costs of the employer contribution.
From 1 April this year, employers started paying the equivalent of 1% of employees salaries to KiwiSaver. That increases by 1% every year until 2011, when the total employer contribution is set at 4%.
The Government says in some situations, employees in KiwiSaver have been paying the employer's contribution out of their own salary.
It says in bad cases the employee is getting a 1% pay cut, which the employer uses to pay their compulsory contribution. The employer then pockets the $20 per week tax credit the Government provides.
The matter was originally left to employers and employees to agree, but the Government says that clearly has not happened in certain cases.
Labour Minister Trevor Mallard says it is particularly an issue for employees on total remuneration packages.
Mr Mallard says a change to the Employment Relations Act would allow employees to make a personal grievance claim over the scheme.
