A Lower Hutt Rest home has lost a case at the Court of Appeal over deducting KiwiSaver contributions from its employees' wages, effectively taking their income to below the minimum wage.
Two caregivers, Vasivasi Faitala and Dalrene Goff, took Terranova Homes and Care Limited to court last year over having both the employer and employee KiwiSaver contributions of 26 cents taken from their wages.
That took the women's pay to $12.98 an hour, below the minimum wage of $13.50.
The women claimed that breached the minimum wage act, which was upheld in the Employment Court.
The Court of Appeal has also found in favour of the employees.
It says compulsory contributions are governed by part of the Kiwisaver Act, which says they must be paid on top of gross wages unless otherwise agreed.
Terranova's executive director, Terry Bell, says the company has increased the pay rates for some of its staff and says the ruling clarifies that the basic cost of employing a worker on the minimum wage is $14.17 an hour, not $13.75 - assuming most workers join Kiwisaver.
However, he says the ruling adds financial pressure to the Government-funded aged residential care sector.