10 signs you’re being underpaid (and what you can do about it)
Don’t settle for less than you deserve.
2 February 2023
What you’ll learn:
- What is the minimum wage in NZ?
How to tell if you’re being underpaid
What to do if you’re being underpaid
Being underpaid can mean one of two things. In the legal sense, in New Zealand, there is a minimum wage that all employers must pay their staff, or else they’ll be breaking the law.
However, there’s also a second way in which you could be being underpaid. Here, we’re referring to a salary that’s legal, but that isn’t fair with respect to your unique blend of skills and experience. Under this definition. it can be a lot harder to tell whether you’re being underpaid, but it’s still possible.
Here, we’ll look at both of these ways in which you might find yourself being underpaid, and suggest what action you can take to resolve this situation.
10 signs you might be being underpaid
First, let’s talk about salaries that are legal, i.e. more than minimum wage, but aren’t fair in terms of reflecting the value that you bring to the table. If you have a feeling that your employer isn’t paying you as much as they should be, it might, quite literally, pay to think about some of the following:
1. Your salary is lower than comparable roles in our Salary Guide
Trade Me Jobs’ free NZ salary guide should be your first port of call if you suspect that you could be earning more in your current role. We use data from job listings on our site to provide up-to-date salary information that you can trust. The category breakdowns allow you to quickly review average salaries for your role type and see how they tally with what you earn.
There are a number of red flags to look out for when it comes to being underpaid.
2. You’ve taken on additional responsibilities, but no additional earnings
Your salary should reflect the work you’re doing. So, if you’ve taken on extra responsibilities, additional to the ones described in your initial employment agreement, you should be rewarded through an increase to your salary.
Of course, it wouldn’t be a good look to ask for a pay rise if you simply helped out with an additional task one time. But a consistently heavier workload should come with a consistently higher salary.
3. Your pay hasn’t risen in line with inflation
As we’re all keenly aware right now, the rate at which the prices of goods and services IS rising (inflation) is very high. This means that, unless your salary has grown too, you’re earning less in real terms. In other words, your salary doesn’t go as far now as it did a few years ago.
Some NZ employers, including Trade Me, have recently raised the salaries of their permanent staff in order to help keep up with the costs of living. If your organisation hasn’t done the same, and if your individual salary has stayed the same over recent years, you’re likely to be missing out.
4. Colleagues with similar education and experience are earning more than you
Today people are much more comfortable talking about salary than we used to be, so it’s perfectly possible that you might find out about how much a colleague is earning.
Finding out that someone with similar qualifications and experience is earning more than you can be jarring, and it definitely indicates that you should be talking to your manager about your salary. However, as we’ll explain later, it’s not a good idea to use this as an actual argument when making your case for a raise.
5. You didn’t negotiate your salary when you took the job
We always recommend that you try to negotiate your salary when you accept a new role. However, we totally understand that, in the heat of the moment, you might have accidentally lowballed yourself by skipping this step.
Given that most employers will expect candidates to try and negotiate the salary, they often come in with an offer that’s slightly lower than what they’d be happy to pay. As such, there might well still be money left on the table in the negotiating process.
6. You haven’t had a performance review
Even if you did a good job on negotiating your salary when you took the role, that might have been some time ago now. If you haven’t had a performance or pay review since you started the job, and you’ve worked in the organisation for a while, you could well be underpaid. This is because your skills, and therefore value to the company, will have increased since starting, and so it could be time to request a review.
Performance reviews are a great time to discuss pay. So, if you haven't had one, it might be time to ask why.
7. New hires are being paid more
NZ has experienced a talent shortage for sometime now, which was made significantly worse during the height of the COVID pandemic. As a result, many companies were competing hard for the best candidates, which sometimes meant offering higher than usual salaries.
If this is the case, but your salary has stayed the same, you’d be within your rights to ask for a payrise.
8. You’re being headhunted for higher paying roles
Even if you aren’t actively searching for a new job at the moment, you might receive interest from employers who think you’d be a good match for a job vacancy they have. For example, one of the benefits of having a Trade Me Jobs Profile is that employers can contact you for a role, as long as you allow them to see your contact details.
If you’re being approached for roles paying more than you’re earning currently, this is a pretty good indication that your skills aren’t being valued by your employer as well as they should be.
9. A recruiter indicates you should be paid more
If you’re actively looking for a job, and you’re meeting with recruiters, one of the first questions they’ll ask will be about how much you expect to earn, based on your current salary.
As they’ll have also had a close look at your CV and cover letter, and will have spoken to you in-depth about your competencies and experience, they’ll be able to tell you whether what you’re earning is too low.
It’s also worth considering that many recruiters will often offer careers advice services, so you can talk to them about these matters even if you don’t want to change jobs in the near future.
10. You have highly specialised skills
There are some skill sets that are much rarer than others, or which take a lot longer to master. If you’re one of these people, and have only just come to realise that your combination of experience and qualifications isn’t common, it could well mean that you didn't price yourself as highly as you should have done when you first took the job you’re in.
If your skills are highly specialised, your employer needs to recognise this through how much they pay you.
What to do if you’re being underpaid
1. Remain professional
Depending on how you find out that you’re being underpaid, you might respond by experiencing a whole host of negative emotions. This is particularly true if you learn this by finding out from a co-worker doing the same job, that they’re being paid more than you.
However, it’s important that you control these emotions so they don’t impact your work, or your relationships with those around you. It’s unfair to take it out on people who probably had no say in your pay and it might also damage your chances of getting a pay rise.
2. Gather your facts
If you’ve decided that you’re going to request a raise, you’ll need to be able to make a good case. You can get reliable salary information from sources such as our salary guide and recruitment professionals, and this data should be the bedrock of your case.
You’ll also need to be able to demonstrate the value you bring to the organisation. So the other half of your case should centre around your greatest hits – the headline grabbing achievements you’ve had in your time as an employee.
The following are not good arguments to use when asking for a raise:
“He/she is earning more than me:” while you might have found out about a salary discrepancy in this way, comparing your salary to others around you isn’t a strong argument. In your employer’s mind, there might be a perfectly valid reason for this, and they may be unwilling to budge.
“I’ll quit if I don’t get one:” this amounts to blackmailing your manager, which is never a good look. Also, if you don’t get a raise, are you really prepared to quit?
“I need money for X or Y:” the cost of living is bad at the moment, and perhaps you really do need money to cover your increased expenditure. However, your employer is going to be much more interested in the tangible reasons why they should want you to stay at the business than what’s going on in your personal life.
3. Organise a meeting
You need to pick your moment well when organising a meeting to discuss a pay rise. If your manager is between a rock and a hard place in terms of their workload, or if the organisation is having a tough time financially, you might want to wait a beat.
This meeting should be solely about your pay. Don’t include this in a regular 1:1 with your manager, or tack this onto the end of a meeting about someone else. Give it the time it deserves.
If you feel you're being underpaid, you need to oraganise a meeting with your manager and have a professional conversation.
4. If your raise is rejected, consider changing jobs
If your pay rise request is rejected, what you do next is up to you. You might decide that you’re willing to stick it out, if it’s a role you love or if your manager has indicated that you’ll be eligible for a pay rise in the near future.
However, it’s perfectly understandable if you’re being underpaid, that you might decide it’s time for a change of scene. In this case, it’s time to dust off that CV and start looking for jobs.
What is the minimum wage in NZ?
As the name suggests, the minimum wage refers to the lowest legal hourly amount an employer can pay their staff. It’s set by the Government, is reviewed every year, and it’s legally enforceable. In other words, it’s illegal for an employer to pay you less than this amount, unless they have an exemption. It’s important to note that there’s no minimum wage for people younger than 16 years old, however all other employment rights are still applicable.
Employers can sometimes be issued minimum wage exemptions, for example if they take on staff who have disabilities that prevent them from carrying out all the duties of the specific role. However, an organisation would need to go through all of the proper processes to gain such an exemption, meaning it’s not a decision they can make for themselves.
At the time of writing (January 2023) the minimum wage is as follows:
More information on which of these three wage types applies to you can be found here.
If you’re being paid an annual salary, as opposed to an hourly wage, it’s easy to work out whether you’re being paid in line with minimum wage. You can do this by simply dividing how much you earn per pay period by the number of hours you worked. As long as this is more than the relevant amount listed above, you’re all good.
What to do if your employer isn’t paying you the minimum wage?
As mentioned, if you’re an adult in NZ, and you’re not covered by a minimum wage exemption, there’s no excuse for your employer to be paying you less than the minimum wage. Vitally, this doesn’t just cover NZ citizens and residents. The NZ minimum wage applies to overseas-born workers who are currently working inAotearoa.
If you, or someone you know, think you’re being paid below the minimum wage, or indeed if you think you’re being paid less than is specified in your employment agreement, you can report this to Employment New Zealand by calling 0800 20 90 20. Of course, you want to be really sure that your employer is in the wrong before you take this step, as it’ll make your day-to-day a lot tougher if you falsely accuse them of underpaying you.
However, if you’re sure, this step is definitely worth taking. And, indeed, if your employer is paying less than the minimum wage, is this the company you want to work for in a good job market?. They should be valuing your contribution, not trying to get away with paying you below what the law mandates.
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