minimum wage exemptions for people with disabilities

The Minimum Wage Act 1983 helps some people with disabilities to get work by allowing Labour Inspectors to give minimum wage exemptions in certain circumstances.

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 anything could be done that would help the employee to do the work more effectively.
  

Information for employers

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 is, 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.

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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 rate 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
  

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Information for employees

Every employer has to pay at least the minimum wage unless an employee has a minimum wage exemption permit. (The minimum wage rose to $12.00 an hour before tax for employees aged 16 and over, except for new entrants and employees subject to the minimum training wage as of 1 April 2008. The minimum wage for new entrants and the minimum training wage is $9.60 an hour before tax as of 1 April 2008.). For more information about new entrants visit www.ers.govt.nz/pay/newentrant.html

Your employer can apply for an exemption permit if you both agree there is a good reason why you should be paid less than the minimum wage. 
Before a Labour Inspector will issue a minimum wage exemption permit, they will make sure that:

• Your disability really stops you from earning the minimum wage
• You have been given the opportunity to have an independent support person or advocate with you when you are talking about your wages with your employer
• The work is suitable for you and you get appropriate supervision and training
• You are offered a written employment agreement that meets all employment rights, such as paid holidays and sick leave, and adequate health and safety conditions (except minimum wage)
• The wage rate relates to your ability to do the work
• The wage is consistent with the wages paid to other people whose circumstances are similar to yours, and who have exemptions
• Your employer has done everything they can reasonably be expected to do to help you do the job well

Labour Inspectors will not issue a minimum wage exemption permit unless they are sure that the wage rate is fair and that you agree with it.

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What happens if I am a union member?

If you are a union member with a minimum wage exemption permit the union has to agree to you being paid at the rate stated in your permit, rather than at the pay rate in the collective agreement that covers you.

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Where can I get more information?

We welcome the opportunity to help you further. If you want further clarification, more detailed information or guidance on any matter covered here, contact the Employment Relations Infoline.

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.

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