Work and Wages

Minimum Wage

New Zealand was the first country to implement a national minimum wage, enacted by its government through the Industrial Conciliation and Arbitration Act 1894. Current minimum wage law is described in the Minimum Wage Act 1983.  The Minimum Wage Act 1983, as amended.  Minimum Wage Order 2016 gives effect to the current minimum wage. The Minimum Wage (New Entrants) Amendment Act 2007 provided that the rates for 16- to 17-year-olds and those in training cannot be lower than 80% of the adult rate.

Minimum wage rates are stipulated by a single statute.  The adult minimum wage applies to all employees aged 16 and over who are not starting-out workers or trainees, and all employees who are involved in supervising or training other employees.  The starting-out wage applies to starting-out workers aged 19 years or less.  The training minimum wage applies to employees aged 20 years or over.  Under the starting-out wage, eligible 16-to-19-year-olds can be paid 80% of the adult minimum wage for 6 months or for as long as they are undertaking recognised industry training of at least 40 credits per year. Under the training wage scheme, after completing 3 months or 200 hours of employment (whichever is completed first) at not less than 80% of the minimum adult rate, the worker is entitled to be paid at the minimum adult rate.

The Workplace Relations Minister (formerly Minister of Labour) may make recommendations to the Governor-General regarding the adjustments that should be made to that minimum rate. The Governor-General may, by Order in Council, prescribe a minimum adult rate of wages payable to workers.

The Employment Standards Legislation Bill came into force on 1 April 2016. Changes include strengthening enforcement of employment standards, including the Minimum Wage Act 1983

 

The Ministry of Business, Innovation and Employment's (www.employment.govt.nz) The Labour Inspectorate monitors and enforces compliance with employment standards in New Zealand. Labour Inspectors investigate potential breaches impartially before making a decision. In cases where rights have been breached repeatedly or blatantly, Labour Inspectors may look at penalty actions, publicise the case and even aim to remove employers from the labour market. For less serious breaches of employment standards (e.g., one-off accidental mistakes) an inspector might use tools such as enforceable undertakings or improvement notices, to require employers to change their workplace practices and repay any arrears owing.

 

The Employment Relations Authority, an independent institution established under the Employment Relations Act 2000, now hears only cases involving minor to moderate breaches of employment standards, including the Minimum Wage Act 1983.  For serious, ongoing and sustained breaches of the law, cases will now be heard at the Employment Court, a specialist judicial body. The new law provides an indicative list of factors for the Employment Court to consider when determining whether a breach of minimum standards is serious, such as the amount of money involved, how long the breach has gone on for and whether it was intentional or reckless.

Labour Inspectors may apply to the Employment Relations Authority or Employment Court for a penalty against an employer or person involved in a breach of employment standards. Employees can apply for penalties against an employer too, but not against a person involved in a breach.

 

Cases heard at the Employment Court now carry maximum penalties of $50,000 for an individual and the greater of $100,000 or three times the financial gain for a company. Maximum penalties at the Employment Relations Authority remain at $10,000 for an individual and $20,000 for a company.

 

Labour Inspectors may apply to the Employment Relations Authority to recover from the employer (or people involved in a breach), wages or other money owed as a result of the breach of minimum entitlements.  Employees can do this too, but they need the permission of the Authority to take an action against a person involved in a breach.

 

Under the recently enacted Employment Standards Legislation Bill, employers are now publically named if the Employment Relations Authority or Employment Court finds they have breached minimum standards.

 

In addition, either the Employment Relations Authority or Employment Court may, by means of a compliance order, require an employer (or representative of that employer) to do any specified thing or to cease any specified activity for the purpose of preventing further non-observance of or non-compliance with employment standards, including the Minimum Wage Act 1983.  Individuals also now face the possibility of being banned as employers by the Employment Court if they commit serious or persistent breaches of employment standards. Accountability has been extended to persons other than the employer, such as payroll officers, who are knowingly and intentionally involved in breaches of employment standards.

 


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