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Minimum wage laws: Rates and exemptions

Key Takeaway

New Zealand's minimum wage laws ensure workers receive a minimum hourly rate, with different rates for adult, starting-out, and training workers. Specific exemptions exist for certain individuals. The Minimum Wage Act 1983 and annual Minimum Wage Orders define these rates and employer obligations.

Minimum Wage Laws in New Zealand: Rates and Exemptions

New Zealand law establishes a minimum hourly wage that employers must pay to most workers. This is designed to protect workers and ensure a basic standard of living. The primary legislation governing minimum wage is the Minimum Wage Act 1983, supplemented by annual Minimum Wage Orders that set the specific rates.

Understanding Minimum Wage Rates

There are different minimum wage rates depending on the worker's age and experience or if they are undergoing approved training. These rates are reviewed and updated annually by the New Zealand Government.

Adult Minimum Wage

The adult minimum wage applies to workers aged 16 years or older who are not eligible for the starting-out or training minimum wage [Source: Minimum Wage Act 1983, s 5(a)].

As of April 2024, the adult minimum wage is $23.15 per hour [Source: Minimum Wage Order 2024, clause 4(1)].

Starting-Out Minimum Wage

The starting-out minimum wage is a lower rate that applies to specific categories of young workers. A starting-out worker is defined as someone who is:

  • 16 or 17 years old and has not completed 6 months of employment with their current employer, or
  • 18 or 19 years old and has been on a social security benefit for 6 months or more, and has not completed 6 months of employment with their current employer, or
  • 16 to 19 years old and undertaking industry training involving at least 40 credits a year, provided they are not a 'training worker' [Source: Minimum Wage Order 2024, clause 3].

As of April 2024, the starting-out minimum wage is $18.52 per hour [Source: Minimum Wage Order 2024, clause 4(2)].

Training Minimum Wage

The training minimum wage applies to workers aged 16 years or older who are undergoing approved industry training that requires them to undertake at least 60 credits per year in a recognised training programme. This training must be provided by the employer or involve a formal training agreement [Source: Minimum Wage Act 1983, s 5(b); Minimum Wage Order 2024, clause 3].

As of April 2024, the training minimum wage is $18.52 per hour [Source: Minimum Wage Order 2024, clause 4(2)].

What Counts as Wages?

For the purposes of the Minimum Wage Act 1983, wages generally include money payments made to a worker for their work. This excludes certain payments such as penal rates, allowances, or reimbursements for expenses [Source: Minimum Wage Act 1983, s 2]. Deductions from a worker's pay are only permitted if they are authorised by legislation or by the worker's written consent, and even then, such deductions cannot reduce the worker's take-home pay below the minimum wage rate, unless specifically allowed by law (e.g., for PAYE tax) [Source: Minimum Wage Act 1983, s 7].

Exemptions from Minimum Wage

The Minimum Wage Act 1983 does not apply to all workers. Specific exemptions mean that certain individuals are not entitled to receive the minimum wage rates [Source: Minimum Wage Act 1983, s 4]. These exemptions include:

  • Prisoners: Individuals who are lawfully detained in any penal institution and are engaged in work [Source: Minimum Wage Act 1983, s 4(a)].
  • Certain apprentices: Workers under an apprenticeship order made under the Apprenticeship Act 1983 (this Act has been repealed, but the exemption historically applied) [Source: Minimum Wage Act 1983, s 4(b)]. Note: Modern apprenticeships are typically covered by minimum wage rules.
  • Work experience in schools: Individuals who are undertaking work experience as part of a school curriculum [Source: Minimum Wage Act 1983, s 4(c)].
  • Disabled workers: Workers who have a disability that limits their capacity to perform the work for which they are employed. In such cases, a special minimum wage rate can be fixed by a permit from the Chief Executive of the Ministry of Business, Innovation and Employment (MBIE) [Source: Minimum Wage Act 1983, s 4(d)].

Employer Obligations

Employers have a legal obligation to pay their workers at least the applicable minimum wage rate for all hours worked [Source: Minimum Wage Act 1983, s 5]. This includes ensuring that deductions do not reduce the worker's net pay below the minimum wage, except for legally mandated deductions [Source: Minimum Wage Act 1983, s 7]. Employers must also keep accurate wage and time records for all their employees [Source: Employment Relations Act 2000, s 130].

Employee Rights

Workers in New Zealand have the right to be paid at least the minimum wage applicable to their situation for every hour worked [Source: Minimum Wage Act 1983, s 5]. If a worker believes they are not being paid correctly, they have the right to raise a personal grievance with their employer or seek assistance from a labour inspector [Source: Employment Relations Act 2000, s 103].

When to Seek Independent Legal Advice

Individuals seeking specific guidance on their employment situation, including minimum wage entitlements, disputes, or their eligibility for particular rates or exemptions, should consult with a qualified legal professional or an employment relations specialist. Assistance can also be sought from Employment New Zealand or Community Law Centres for free advice. Community Law Centres provide free legal services to those who qualify based on income or circumstances, and their services include legal information, advice, and representation. [https://communitylaw.org.nz/]

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