Source document: https://docs-lawep.s3.us-east-2.amazonaws.com/1698834641998.pdf (New Zealand)
Minimum Wage (Starting-out Wage) Amendment Bill Government Bill Explanatory note General policy statement This Bill amends the Minimum Wage Act 1983 (the principal Act) to make a number of changes to the ways in which minimum rates of wages may be prescribed by Order in Council under the principal Act.
These include introducing the ability to set 1 or more starting- out rates of wages (payable at not less than 80% of the minimum adult rate of wages) for eligible young people aged 16, 17, 18, or 19 years who are not supervising or training other workers, repealing the ability to set the current new entrant rate, and changing the criteria for setting the current training rate.

If passed, the changes proposed by the Bill will come into effect on 1 April 2013.
Minimum starting-out rates of wages Minimum starting-out rates of wages are designed to support young people entering the workforce, including those who have been on a benefit, and young people who are undertaking industry training for their work.

Starting-out wages provide an incentive for employers to take on young workers at a reduced rate of pay while foundational work skills, experience on the job, or training is gained.
The Bill implements Government policy that is aimed at influencing employers’ demand for young workers.

The policy supports train- 69—1 2 Minimum Wage (Starting-out Wage) Amendment Bill Explanatory note ing opportunities for young people who are working, is intended to work alongside other measures aimed at improving the skills of young people in the workforce, and complements the Government’s reform of the welfare system.
Orders in Council made under the Bill will set out the specific re- quirements for paying minimum starting-out wages and set the rate of payment.

The Bill specifies the factors for defining the classes of workers to whom minimum starting-out rates of wages are payable.

One of the factors is the length of time, being a period of not less than 6 months, that the worker has been continuously paid a benefit under the Social Security Act 1964.
The Bill lists the benefits under that Act that are relevant to setting minimum starting-out rates of wages, which include benefits for which there is not an expectation that the recipient will be seeking paid work (for example, the invalid’s bene- fit).

This recognises that young people receiving these benefits may also be disadvantaged in the labour market in the same way as young people receiving benefits for which there is expectation of seeking paid work are.
The Bill provides that where a minimum starting-out rate is prescribed by reference to the length of time workers have been paid 1 or more social security benefits or the length of time workers have been in continuous employment, an employer may only pay a starting-out rate to a worker for up to 6 months of continuous em- ployment with that employer.

Young people transitioning into work The Bill acknowledges the importance of young people entering the workforce.
Those who remain out of work (particularly those who are not in education or training) are at risk of the scarring effects of long-term unemployment.

Young people with a work history are seen as less risky for employers to take on.
Therefore, requiring a period of continuous work experience of not more than 6 months with an employer in order to transition to the minimum adult rate of wages reinforces a focus on gaining work experience, commitment to the job, and becoming better equipped for future employment.

The Bill also recognises that young people who have been on a bene- fit, including those who cycle in and out of work and benefits, can find it difficult to gain employment.
The ability to set minimum start- ing-out rates of wages that are lower than the minimum adult rate for Explanatory note Minimum Wage (Starting-out Wage) Amendment Bill 3 young people who have been on a benefit provides an incentive for employers to take them on.

Minimum training rate of wages The Bill also aims to increase industry skills among young people aged 16 to 19 years old.
Currently, to be eligible for the minimum training rate of wages, a trainee must undertake at least 60 credits per year in an industry training programme as prescribed in the Minimum Wage Order 2012.

The Bill changes the status quo by providing for young persons aged 16 to 19 years and employed under contracts of service that require them to undergo training to be paid at the minimum starting-out rates of wages rather than the minimum training rate of wages.
This allows for different credit requirements to be specified for trainees aged 16 to 19 years and for trainees aged 20 years or older and is intended to support more young people into industry training by providing incentives for employers to invest more in training for young people (particularly vocationally based training).
Trainees who are 20 years or older The Bill changes the current criteria for the minimum training rate of wages so that it applies to workers who are aged 20 years or older, who are not supervising or training other workers, and who are em- ployed under contracts of service under which they are required to undergo training for the purpose of becoming qualified for the occu- pation to which their contract of service relates.
As with minimum starting-out rates of wages, the Bill provides that the minimum train- ing rate of wages must not be set at less than 80% of the minimum adult rate of wages.

Other amendments The Bill re-enacts the ability to set the minimum adult rate of wages without change and repeals the current ability to set the minimum new entrant rate of wages.
Regulatory impact statement The Ministry of Business, Innovation, and Employment produced a regulatory impact statement on 25 July 2012 to help inform the main 4 Minimum Wage (Starting-out Wage) Amendment Bill Explanatory note policy decisions taken by the Government relating to the contents of this Bill.
A copy of this regulatory impact statement can be found at— http://www.dol.govt.nz/publications/general/gen-ris.asp • http://www.treasury.govt.nz/publications/informationre- • leases/ris Clause by clause analysis Clause 1 is the Title clause.

Clause 2 provides that the Bill comes into force on 1 April 2013.

Clause 3 states that the Bill amends the Minimum Wage Act 1983 (the principal Act).
Part 1 Amendments to principal Act Clause 4 replaces section 4 of the principal Act, which authorises the Governor-General, by Order in Council, to prescribe minimum rates of wages with new sections 4 to 4B.
In broad terms, new sections 4 to 4B maintain the status quo in re- lation to the criteria for setting the adult minimum rate of wages, modify the criteria for setting the minimum training rate of wages, do not carry over the ability to prescribe a minimum new entrant rate of wages, and introduce the ability to prescribe 1 or more minimum starting-out rates of wages.
New section 4 re-enacts the authority to set a minimum adult rate of wages by Order in Council that is payable to workers— • • who are aged 16 years or older; and to whom any other minimum rate of wages prescribed under new section 4A or 4B does not apply.

The Bill provides that the minimum adult rate must be prescribed as a monetary amount (new section 4(2)).

New section 4A introduces the ability to prescribe 1 or more min- imum starting-out rates by Order in Council.
These new rates are payable to 1 or more classes of workers who are aged 16, 17, 18, or 19 years, who are not involved in supervising or training other work- Explanatory note Minimum Wage (Starting-out Wage) Amendment Bill 5 • • ers, and who are defined in the order by reference to the age (or range of ages) of the workers and to 1 or more of the following: • the length of time, being a period of not less than 6 months, that the workers have been continuously paid 1 or more specified social security benefits: the length of time, being a period of not more than 6 months, that the workers have been in continuous employment with 1 employer: whether or not the workers are employed under contracts of service that require the workers to undergo training, instruc- tion, or examination for the purpose of becoming qualified for the occupation to which their contracts of service relate.
Minimum starting-out rates must not be set at less than 80% of the minimum adult rate and may be prescribed either as a monetary amount or as a percentage of the adult rate (new section 4A(2)).
The Bill provides that where a minimum starting-out rate is pre- scribed by reference to the length of time that workers have been continuously paid 1 or more specified social security benefits or the length of time workers have been in continuous employment with 1 employer, an employer of a worker to whom the rate applies may pay the worker in accordance with that rate only until the worker has completed 6 months’ continuous employment or the worker ceases to satisfy the other criteria for the payment of the starting-out rate, whichever is earlier (new section 4A(3)).
In addition, the Bill clarifies that if more than 1 starting-out rate ap- plies to a worker, then the worker is to be paid at the higher or high- est rate (new section 4A(4)).

It also clarifies when a worker is to be treated as having been continuously paid a specified social security benefit, defines the term continuous employment, and lists the speci- fied social security benefits for the purposes of prescribing minimum starting-out rates (new section 4A(5) and (6)).
New section 4B re-enacts, with some modification, the ability to pre- scribe a minimum training rate by Order in Council.

As at present, a minimum training rate is payable to 1 or more classes of workers who are employed under contracts of service under which they are required to undergo training, instruction, or examination for the pur- pose of becoming qualified for the occupation to which their contract of service relates.
6 Minimum Wage (Starting-out Wage) Amendment Bill Explanatory note The main changes from the status quo under the principal Act are that new section 4B— • alters the class of workers to whom the rate is payable from workers who are 16 years or older (as specified in the Min- imum Wage Order 2012) to workers who are aged 20 years or older and who are not involved in supervising or training other workers; and provides that the minimum training rate must not be set at less than 80% of the minimum adult rate.
• Clause 5 consequentially amends section 5(1), which requires the Minister of Labour to review minimum wages annually, to refer to new sections 4, 4A, and 4B.

Part 2 Miscellaneous provisions Clause 6 consequentially amends the Accident Compensation Act 2001 to update the cross-references in clause 42(3)(a)(i) and (b)(i) of Part 2 of Schedule 1 of that Act (which relates to weekly compensa- tion entitlements) to the minimum adult rate of wages as prescribed under new section 4.
Clause 7 is a transitional and savings provision that preserves the status quo for workers who, immediately before the commencement of the Bill, were being paid wages by their employers at the new entrant rate (which is not re-enacted by the Bill) in accordance with clause 5 of the Minimum Wage Order 2012.
It provides that on and after the commencement of the Bill, a worker— • is entitled to continue to be paid at the minimum new entrant rate as if the Bill had not been passed or at the highest starting- out rate prescribed under new section 4A for workers aged 16 or 17 years (whichever rate is the higher); and after fulfilling the present conditions for the new entrant rate (which relate to completing 3 months or 200 hours of employ- ment, whichever is completed first) transitions to the minimum adult rate.
• Hon Kate Wilkinson Minimum Wage (Starting-out Wage) Amendment Bill Government Bill Contents Title Commencement Principal Act Part 1 Amendments to principal Act Section 4 replaced (Prescription of minimum wages) 4 4A 4B Section 5 amended (Annual review of minimum wages) Prescribed minimum adult rate of wages Prescribed minimum starting-out rates of wages Prescribed minimum training rate of wages Part 2 Miscellaneous provisions Consequential amendments to Accident Compensation Act 2001 Transitional and savings provision relating to minimum new entrant rate 69—1 Page 2 2 2 2 2 2 4 5 5 5 1 cl 1 Minimum Wage (Starting-out Wage) Amendment Bill The Parliament of New Zealand enacts as follows: 1 2 3 4 Title This Act is the Minimum Wage (Starting-out Wage) Amend- ment Act 2012.
Commencement This Act comes into force on 1 April 2013.

Principal Act This Act amends the Minimum Wage Act 1983 (the principal Act).
5 10 Part 1 Amendments to principal Act Section 4 replaced (Prescription of minimum wages) Replace section 4 with: Prescribed minimum adult rate of wages “4 “(1) The Governor-General may, by Order in Council, prescribe a 15 minimum adult rate of wages payable to workers— “(a) who are aged 16 years or older; and “(b) to whom any other minimum rate of wages prescribed under section 4A or 4B does not apply.

“(2) A rate prescribed under subsection (1) must be prescribed as 20 a monetary amount.
“4A Prescribed minimum starting-out rates of wages “(1) The Governor-General may, by Order in Council, prescribe 1 or more minimum starting-out rates of wages payable to 1 or more classes of workers who— “(a) “(b) are aged 16, 17, 18, or 19 years; and are not involved in supervising or training other work- ers; and are defined in the order by reference to the age (or range of ages) of the workers and 1 or more of the following: 30 the length of time, being a period of not less “(i) than 6 months, that the workers have been con- 25 “(c) 2 Minimum Wage (Starting-out Wage) Amendment Bill Part 1 cl 4 “(ii) tinuously paid 1 or more specified social security benefits: the length of time, being a period of not more than 6 months, that the workers have been in continu- ous employment with 1 employer: 5 “(iii) whether or not the workers are employed under contracts of service that require the workers to undergo training, instruction, or examination (as specified in the order) for the purpose of becom- ing qualified for the occupation to which their 10 contracts of service relate.
“(2) A rate prescribed under subsection (1) must not be less than 80% of the minimum adult rate prescribed under section 4 and may be prescribed as— “(a) “(b) If a minimum starting-out rate is prescribed under subsection (1) by reference to a factor specified in subsection (1)(c)(i) or (ii) (or both), an employer of a worker to whom that rate applies— “(a) may pay the worker in accordance with that rate only a monetary amount; or a percentage of the minimum adult rate.
“(3) 20 15 until the earlier of— “(i) the date on which the worker has completed 6 months’ continuous employment with that employer: the date on which the worker ceases to satisfy 1 or more of the criteria in subsection (1)(a) or (b); and 25 “(ii) “(b) then must pay the worker no less than the minimum adult rate prescribed under section 4.

30 “(4) To avoid doubt, if more than 1 minimum starting-out rate pre- scribed under subsection (1) applies to a worker, only the higher or the highest rate applies.
“(5) For the purposes of subsection (1)(c)(i), a worker is to be treated as having been continuously paid a specified social se- 35 curity benefit— “(a) whether or not the benefit has been reduced due to any sanction imposed under the Social Security Act 1964 or for any other reason: 3 5 10 15 20 Part 1 cl 4 Minimum Wage (Starting-out Wage) Amendment Bill “(6) “(b) during any period when the benefit was suspended under the Social Security Act 1964 for any reason.
In this section,— “continuous employment includes any employment under- taken by the worker before— “(a) “(b) the worker turns 16: the commencement of the Minimum Wage (Starting-out Wage) Amendment Act 2012 domestic purposes benefit: emergency benefit: independent youth benefit: invalid’s benefit: sickness benefit: unemployment benefit: “specified social security benefit means any of the following benefits paid or payable under the Social Security Act 1964: “(a) “(b) “(c) “(d) “(e) “(f) “(g) widow’s benefit: “(h) young parent payment: youth payment.
“(i) “4B Prescribed minimum training rate of wages “(1) The Governor-General may, by Order in Council, prescribe a minimum training rate payable to 1 or more classes of workers who— “(a) “(b) are aged 20 years or older; and are not involved in supervising or training other work- 25 ers; and are employed under contracts of service under which they are required to undergo training, instruction, or examination (as specified in the order) for the purpose of becoming qualified for the occupation to which their 30 contract of service relates.
“(c) “(2) A rate prescribed under subsection (1) must not be less than 80% of the minimum adult rate prescribed under section 4 and may be prescribed as— “(a) “(b) a monetary amount; or a percentage of the minimum adult rate.” 35 4 Minimum Wage (Starting-out Wage) Amendment Bill Part 2 cl 7 5 Section 5 amended (Annual review of minimum wages) In section 5(1), replace “section 4” with “section 4, 4A, or 4B”.
Part 2 Miscellaneous provisions 5 6 (1) (2) Consequential amendments to Accident Compensation Act 2001 This section amends the Accident Compensation Act 2001.

In Schedule 1, Part 2, replace clause 42(3)(a)(i) with: “(i) the minimum weekly adult rate prescribed under 10 section 4 of the Minimum Wage Act 1983; or”.

(3) In Schedule 1, Part 2, replace clause 42(3)(b)(i) with: “(i) the minimum weekly adult rate prescribed under section 4 of the Minimum Wage Act 1983; or”.
7 (1) Transitional and savings provision relating to minimum 15 new entrant rate This section applies to a worker who, immediately before the commencement of this Act, was entitled to be paid wages by his or her employer in accordance with the minimum new en- trant rate prescribed in clause 5 of the Minimum Wage Order 20 2012.
(2) On and after the commencement of this Act,— (a) the worker is entitled to be paid the higher of— (i) the minimum new entrant rate as if this Act had not been passed: the highest minimum starting-out rate prescribed under section 4A for workers aged 16 or 17 years; and (ii) 25 (b) after completing 3 months or 200 hours of employment (whichever is completed first), the worker is entitled 30 to be paid at the minimum adult rate prescribed under section 4 of the principal Act (as replaced by this Act).
In subsection (2), employment includes employment under- taken by the worker— (a) before or after the commencement of this Act: 35 (3) 5 Part 2 cl 7 Minimum Wage (Starting-out Wage) Amendment Bill (b) with more than 1 employer.

12 6 Wellington, New Zealand: Published under the authority of the New Zealand Government—2012