Information for employing people with disabilities in sheltered employment and or business enterprises

The employment rights of people with disabilities change in December 2007. This follows the repeal of the Disabled Persons Employment Promotion Act.

Employers in organisations known as ‘sheltered workshops’ should read this fact sheet to ensure they understand the new law.

What has changed for employers at sheltered workshops?

Since December 2007, all employers at ‘sheltered workshops’ must pay their employees at least the minimum wage, unless individual workers have a minimum wage exemption permit.

Employers in ‘sheltered workshops’ will no longer have a blanket exemption from paying their employees the minimum wage or from providing their employees with minimum holiday entitlements. All employment law now applies to people with disabilities in sheltered workshops.

Labour Inspectors will visit ‘sheltered workshops’ to see which people are in employment, and which people are doing other activities such as community participation. The change in law only applies to employees.

Employers should already have a written employment agreement for each employee. This agreement must now meet all other minimum employment rights, such as paid holidays, and adequate health and safety conditions.

What exemptions are still available?

Labour Inspectors can still issue minimum wage exemptions. An exemption enables employers to pay a particular employee less than the minimum wage under certain circumstances.

Labour Inspectors will issue a minimum wage exemption only if they think it is reasonable and appropriate to do so. They can refuse to issue one if they think the employee should be paid the minimum wage, or if the wage you offer is unfair.

What is taken into account before a permit is issued?

Before issuing an exemption permit, a Labour Inspector will look at:

• Whether the employee’s disability really stops them from earning the minimum wage
• What impact the disability has on the employee’s work performance
• Whether you have done, or could do, anything that would help the employee to do the work more effectively.

How to apply for a minimum wage exemption

Before you contact the Labour Inspector, you and the employee (or prospective employee) should discuss the job and possible wage rates. The employee should have the opportunity to have an independent representative or advocate present during these talks.

Labour Inspectors only become involved if the wage rate offered is less than the minimum wage. If you intend to pay a new employee less than the minimum wage you should contact a Labour Inspector as soon as possible.

When doing this, think about how you could help the employee to earn more effectively by doing things such as:

• Providing training
• Tailoring the content of the job to the employee’s abilities
• Providing supervision or support
• Making physical changes to the workplace, or changing the way the work is done
• Asking the employee to do a different job.

You and the employee have to negotiate the wage rate in good faith, that means openly, honestly and without misleading each other.

Once you’ve negotiated a possible wage, you should contact a Labour Inspector in your region. The Inspector will visit your organisation to confirm that the wage and process is fair and reasonable. They will also check that the employee has a written employment agreement.

How do I show that the wage is fair?

You will have to give reasons for the wage level you have negotiated. To do this, you may find it helpful to use a wage assessment tool to estimate the employee’s job performance and to provide concrete evidence for why you think the proposed wage is reasonable. The Labour Inspector will need to be satisfied that the employee agrees with the rate.

Before approving the negotiated wage, the Labour Inspector will want to confirm that:

• The employee has had an independent representative
• The work is suitable for the employee and they will get appropriate supervision
• You are offering the employee an employment agreement that meets all other minimum employment standards
• The wage is consistent with the wages of other people in similar circumstances who have exemptions for similar work
• The wage rate relates to the employee’s ability to do the work.

What happens if employees are union members?

If the employee is a union member with a minimum wage exemption permit the union has to agree to the employee being paid at the rate stated in their permit, rather than at the pay rate in the collective agreement.

Where can I get more information?

For more information contact the Department of Labour through our website www.dol.govt.nz, or call centre 0800 20 90 20.

If your employee has any concerns about how the wage rate may affect their benefit or tax exemption then you could refer them to Work and Income. Contact Work and Income by calling 0800 559 009 or by emailing information@msd.govt.nz .

The fact sheet is a guide only and may not be accurate for all situations. It should not be used as a substitute for legislation, or legal or other expert advice.

Further information & guidance

We welcome the opportunity to help you further. If you can't find an answer to your question, or you want further clarification, more detailed information or guidance on any matter covered here, please contact us. We value your query and will respond to you as quickly as possible.

Call us free on 0800 20 90 20 or visit our website at www.ers.dol.govt.nz.

The content of this document covers common problems. It will not answer every question and should not be used as a substitute for legislation or legal advice.

The Department of Labour takes no responsibility for the results of any actions taken on the basis of information on this website, or for any errors or omissions.