Employers – New Entrants and the Minimum Wage

Changes to the Minimum Wage from 1 April 2008

If you employ young people in your business then changes to the Minimum Wage Act 1983 and minimum wage rates which come into force on 1 April 2008 may affect how much you pay these employees.

On 1 April 2008 the youth minimum wage will be replaced by a minimum wage for new entrants, which will apply to some employees aged 16 or 17 years.

There is no statutory minimum wage for employees under 16 years of age.

Who is a New Entrant?

A new entrant is an employee who:

• is 16 or 17 years of age; and
• has not completed 3 months or 200 hours of employment, whichever is the shorter; and
• is not supervising or training other workers; and
• is not subject to the minimum training wage

The new entrants minimum wage rate is $9.60 an hour before tax as of 1 April 2008. That’s $76.80 for an eight hour day, and $384 for a 40 hour week.
The adult minimum wage will apply to a 16 or 17 year old employee who is not subject to the minimum training wage if they:

• have completed 3 months or 200 hours of employment, whichever is the shorter; or
• are supervising or training other workers

The adult minimum wage is $12.00 an hour before tax as of 1 April 2008. That’s $96 for an eight hour day, or $480 for a 40 hour week.

How do I know when one of my employees has completed 3 months or 200 hours of employment?

By law employers are required to keep wage and time records for all employees (including new entrants). The wage and time records for employees aged under 20 years are required to show the employee’s age.

Provided the minimum training wage is not applicable; after 1 April 2008, a 16 or 17 year old employee who has completed 3 months or 200 hours of employment since turning 16 will be entitled to be paid at least the adult minimum wage.

When determining if an employee has completed 3 months or 200 hours of employment, you must include all hours worked by the employee before 1 April 2008 provided the employee was 16 years old at the time of that employment. Hours worked before the employee turned 16 years does not count towards the 3 months or 200 hours of employment.

The 3 months or 200 hours includes employment undertaken with other employers. However, please note that if an employee works for more than 1 employer during a month, then this only amounts to 1 month of employment. For example, if one of your employees worked for you and another employer in May 2008, then this only amounts to 1 month (not 2 months) of employment.

Therefore you need to know how many hours the employee has worked with different employers, and the periods over which they have worked. This information will help you determine if the employee has already completed their 200 hours or 3 months or when this will occur. You can ask the employee over what periods and how many hours they have worked since turning 16 and if they are working for another employer when you offer them the job or when you are agreeing a wage rate.

You may wish to provide the employee with a written statement about the period of time the employee has worked for you. A template statement is provided on http://ers.govt.nz/pay/newentrant.html

“Supervising or training other workers”

If you employ 16 or 17 year olds who are supervising or are training other workers as part of their job, then (provided the minimum training wage does not apply to them) they will be entitled to the adult minimum wage rate from 1 April 2008 regardless of how many hours worked or the period of employment.

There is no legal definition of “supervising or training other workers”. Who is considered to be a worker supervising or training other workers will depend on the facts of each individual situation.

In general, if an employee is 16 years of age or older and is overseeing the performance of another employee, or instructing another employee in the performance of their job it is likely he or she will fall within the category of supervising or training other workers. It is not necessary for an employee to have direct line management responsibility for other employees in order to qualify as an employee who is supervising or training other workers.

To fall within this category, the role of supervising or training would need to be a part of that person’s job, not a one-off event.

What is the minimum training wage?

The minimum training wage applies to people who are required by their employment agreements to undertake recognised industry training involving at least 60 credits a year. The new entrants minimum wage does not apply to trainees. The training minimum wage will remain unchanged.

The minimum training wage rate rises to $9.60 an hour before tax as of 1 April 2008. That’s $76.80 for an eight hour day, and $384 for a 40 hour week.

These changes only set the minimum rates of pay. Employers and employees may agree to terms that are more than the legislative minimum. You may not agree to terms that are less.

Examples

Some examples are provided below of how the changes to the Minimum Wage Act and minimum wage rates apply in certain situations.

Example 1

Andrew is 17 years old and has been employed at a cafe since 1 August 2007. Andrew is not a trainee and does not supervise or train other workers. He regularly works 10 hours per week. His current rate of pay is $9.50 an hour before tax. By 1 April 2008 he would have worked for 8 months and also completed 360 hours of employment. From 1 April 2008 Andrew will be entitled to be paid at least the adult minimum rate of $12.00 an hour before tax.

Example 2

Kate is 15 years old. She has worked at a Garden Centre for two years. She works 10 hours per week at the Centre. Kate is not a trainee and does not supervise or train other workers. Kate will turn 16 on 1 May 2008. Her current rate of pay is $8.00 an hour before tax.

On 1 April 2008 the changes to the Minimum Wage Act and minimum wage rates will come into force. On 1 May 2008 Kate will be a new entrant because she will be 16 years old and have worked less than 3 months or 200 hours at the Garden Centre since turning 16. As a new entrant she must be paid at least $9.60 an hour before tax.

On 1 August 2008 Kate will have worked three months at the Garden Centre since her 16th birthday, and will have completed 130 hours of work. Although she will not have completed at least 200 hours of employment, she has worked 3 months at the Garden Centre since her 16th birthday (May 2008 – August 2008). Therefore from 1 August 2008 she will be entitled to the adult minimum rate of $12.00 an hour before tax.

Example 3

Shane is 16 years old and studies at Polytech. He turned 16 on 1 February 2008. He has worked a newspaper round every summer since he was 14. Shane is employed to work 2 hours per day, 5 days a week in the summer holidays (December – February). His current rate of pay for delivering newspapers is $9.00 an hour before tax. He does not train or supervise other workers as part of his job. By 1 April 2008 Shane would have worked over 3 months and 200 hours delivering newspapers. However he has only worked 1 month (40 hours) delivering newspapers since he turned 16.

Shane also started work at his local Video Store on 1 February 2008. His current rate of pay at the Store is $9.50 an hour before tax. He works 20 hours per week at the Store and is not a trainee and does not supervise or train other workers. By 1 April 2008 Shane would have worked for 2 months (160 hours) at the Video Store since his 16th birthday.

On 1 April 2008 the changes to the Minimum Wage Act and minimum wage rates will come into force. Since he turned 16 years of age, Shane would have worked on the newspaper round in February (1 month of employment) and at the Video Store in February and March (2 months of employment). Therefore he has worked 2 months since he turned 16. Although he worked for 2 employers in February, this only counts as 1 month of employment. Shane would not have completed 3 months of employment, but Shane has worked a total of 200 hours from both jobs since turning 16 years of age (40 hours delivering newspapers + 160 hours at the Video Store). By 1 April 2008 he would have completed at least 200 hours of employment. Therefore from 1 April 2008 Shane will be entitled to be paid at least the adult minimum wage of $12.00 an hour before tax in both his jobs.

Example 4

Tasha is 15 years old. She turns 16 years on 1 August 2008. She works in Checkout at her local supermarket and has done so since she was 14 years of age. Tasha works at the supermarket for 10 hours per week. Her current rate of pay is $11.00 an hour before tax.

As part of her role Tasha trains and supervises new employees at the checkout.

On 1 April 2008 the changes to the Minimum Wage Act and minimum wage rates will come into force. These changes will not affect Tasha as she is younger than 16 years of age and therefore the minimum wage rates do not apply to her.

On 1 August 2008 Tasha will turn 16 years of age. Because she trains and supervises other employees Tasha will be entitled to be paid at least the adult minimum wage rate of $12.00 an hour before tax when she turns 16.

I’m having a problem at work - how do I get help?
Contact your union if you are a member, or call us free on 0800 20 90 20.