Minimum wage exemptions for people with disabilities: Information for employers
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.
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 offered is unfair. (View the current minimum wage rates).
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 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.
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’s disability really stops them from earning the minimum wage
- the employee has had an independent representative
- the work is suitable for the employee and they will get appropriate supervision and training
- you are offering the employee an employment agreement that meets all other minimum employment standards
- the wage relates to the employee’s ability to do the work
- the wage is consistent with the wages of other people in similar circumstances who have exemptions for similar work
- you have done everything that can reasonably be expected to do to help the employee do the job well.
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?
Contact the Ministry of Business, Innovation & Employment through our website or call 0800 20 90 20 during business hours.If an employee has any concerns about how the wage rate may affect their benefit or tax exemption they can contact Work and Income by calling 0800 559 009 or by emailing email@example.com.