Q I am an international final year PhD student. I've got a job offer to work part-time till I submit my thesis and then move towards a full-time position with the employer. My employer intended to contribute 8% towards my KiwiSaver but as I'm not a permanent resident or a citizen, I cannot join the scheme. My question is, should the employer pay that 8% directly to me or there is no obligation for them to do so?
A Employers have two options when it comes to KiwiSaver — either paying their share on top of the employee's wages or rolling it up as 'total remuneration'.
The required employer rate is currently 3%, so at 8% your employer is being very generous. But if you are not eligible to receive that, it means you will be earning less than an eligible employee in a similar role.
Read through your employment contract and see if it has a 'total remuneration' clause. This is how it may be worded: "The Employee will be paid a total remuneration package, on a total cost to the Employer basis (including compulsory employer contributions to KiwiSaver at the rate of 3% of gross earnings) comprised as follows: Base (salary/wage) plus Employer Contributions to KiwiSaver (3%) equals total remuneration (which, for the avoidance of doubt is referred to as the 'ordinary hourly wage rate' in the 'Your Remuneration' section of the Letters of Appointment below)."
If your employment agreement does have a total remuneration clause, then both employer and employee contributions are taken from the employee's salary if the member is in KiwiSaver, or the money is paid out to them directly if they are not. Total remuneration arrangements can be used to treat employees doing the same job equally — i.e. such arrangements mean that employees joining KiwiSaver do not get remunerated in total at a higher level than those who choose not to join KiwiSaver, or like you are not eligible to join because of their residence status. The rationale behind it is that employees can choose how their remuneration is spent. The exception is if someone is on the minimum hourly wage, currently at $18.90. Employers cannot lawfully include a 'total remuneration' clause in an employment agreement if the worker is on the minimum wage, since this would effectively mean they are being paid less than the minimum wage — a breach of the Minimum Wage Act.
