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Minimum Wage (Starting-out wage) Amendment Bill (Consistent) (Section 19(1)) [2012] NZBORARp 51 (14 September 2012)

Last Updated: 28 April 2019

Minimum Wage (Starting-out wage) Amendment Bill

14 September 2012 ATTORNEY-GENERAL

Legal Advice

Consistency with the New Zealand Bill of Rights Act 1990: Minimum Wage (Starting-out wage) Amendment Bill

1. We have considered whether the Minimum Wage (Starting-out Wage)

Amendment Bill (PCO 15650/1.16) (‘the Bill’) is consistent with the rights and freedoms affirmed in the New Zealand Bill of Rights Act 1990 (‘the Bill of Rights

Act’). We understand that the Bill will be considered by Cabinet at its meeting on Monday 17 September 2012.

2. We have concluded that the Bill appears to be consistent with the rights and freedoms affirmed in the Bill of Rights Act. In reaching that conclusion, we have considered the consistency of the Bill with s 19(1) of the Bill of Rights Act (the right to freedom from discrimination).
   

The Bill

3. The Minimum Wage Act 1983 empowers the Governor-General to make Orders in Council prescribing minimum wage rates, including for certain new entrant workers who are 16 or 17 years of age, and classes of workers (to be defined in the order) “who are employed under contracts of service under which they are required to undergo training, instruction, or examination for the purpose of becoming qualified for the occupation to which their contract of service relates”.
   
4. The Bill modifies the criteria for setting the minimum training rate and introduces the ability to prescribe one or more minimum starting-out rate(s) (in place of the minimum new entrant’s rate).
   
5. The Bill empowers the Governor-General to prescribe a minimum starting-out rate of wages (set at a rate of no less than 80% of the adult minimum wage) for workers who are aged 16, 17, 18 or 19 years, not involved in supervising or training other workers, and defined by reference to one or more of a list of categories.
   
6. The categories are defined by the age, or range of ages, of the workers and any one or more of the following:
   
   1. the length of time the workers have received at least one specified social security benefit in their own right (being not less than six months):

2. the length of time the worker has been in continuous employment with a single employer (being not more than six months): or
   
   100. whether the workers are employed under contracts of service that require them to undergo training, instruction, or examination for the purpose of becoming qualified.
        

7. New s 4A(2) of the Bill provides that once a worker who falls within the categories listed under 6(a) and (b) above has completed six months of continuous employment with the same employer, that employer must be pay the worker the adult minimum wage.
   

Consistency with the Right to Freedom from Discrimination

8. Section 19(1) of the Bill of Rights Act affirms the right of everyone to be free from discrimination on the grounds of discrimination set out in the Human Rights Act 1993. The grounds of discrimination are set out in s 21 of that Act, and include age (commencing at 16 years of age) and employment status.
   
   9. A provision may limit the right to freedom from discrimination where:
      
      1. it draws a distinction on one of the prohibited grounds of discrimination; and
         
         2. the distinction involves disadvantage to one or more classes of individuals.
            
10. New s 4A in cl 4 of the Bill provides for an Order in Council to be made that allows a wage lower than the adult minimum wage to be set for workers aged 16, 17, 18 or 19 years, on the basis of the worker’s age and either the length of time they have received a specified benefit (being no less than six months) or been in continuous employment with a single employer (being not more than six months).
    
11. These distinctions have the potential to result in financial disadvantage for young workers and those who have received a social security benefit. We therefore consider the Bill to give rise to prima facie discrimination under section 19(1) of the Bill of Rights Act on the basis of age and employment status.
    

Justified limitations

12. Where a provision appears to limit a particular right or freedom, it may nevertheless be consistent with the Bill of Rights Act if it can be considered a reasonable limit that is demonstrably justified under s 5 of that Act. The s 5 inquiry may be summarised as:1
    1. does the objective serve a purpose sufficiently important to justify some limitation of the right or freedom?
       
       2. if so, then:
          
1. Hansen v R [2007] NZSC 7

1. is the limit rationally connected with the objective?
   
   2. does the limit impair the right or freedom no more than is reasonably necessary for sufficient achievement of the objective?
      
   3. is the limit in due proportion to the importance of the objective?
      

Importance of the objective

13. The intent of the Bill is to assist young and inexperienced workers to enter into the labour market and to avoid long-term welfare dependency. We consider this objective to be sufficiently important to justify a limitation on the right to be free from discrimination.
    
14. Overall youth employment has dropped sharply over the past five years. Between 2007 and 2012 employment of 16 and 17 year olds fell from 58,900 to 39,000 and employment of 18 to 19 year olds fell from 70,800 to 59,700. Currently there are 13,700 18 and 19 year olds on a benefit, 5,100 of whom have been on a benefit for six months or longer.
    
15. Young people who are not in employment, education or training are at risk of becoming discouraged from seeking training or employment opportunities, and prolonged unemployment and spells of inactivity may permanently lower young people’s employability.2
16. There are negative long-term economic and social effects associated with young people being out of work, especially if they remain unemployed for significant periods of time. These young people are often disadvantaged in the labour market.
    

Rational Connection

17. The provisions in the Bill appear to be rationally connected to the objective of assisting young and inexperienced workers to get employment, because they seek to remove disincentives to employing young workers by reducing associated costs to employers. Such costs relate to the additional training and supervision that employers have to provide when employing younger workers, and the potential reduction in productivity due to younger workers being less experienced.
    

Proportionality

18. In assessing whether the limitation on the right to be free from discrimination is proportionate to the objective, we have considered whether the Bill could authorise Orders in Council that are broader than is necessary to achieve the
    
2. OECD, Off to a good start: Jobs for youth, 2011, and Øivind Anti Nilsen and Katrine Holm Reiso, Scarring Effects of Unemployment, Institute for the Study of Labor, December 2011.

objective.3 In our view, it does not appear to authorise Orders in Council that are inconsistent with the Bill of Rights Act.

19. The language of the Bill is enabling, rather than prescriptive and includes safeguards to help ensure that the scope of Orders in Council made in respect of young workers are not overbroad in their application.
    
    20. Such safeguards include:
        
        1. new s4A(2), which limits the length of time a starting-out wage can apply to a young worker (other than those employed under contracts of service and undergoing training) to the first six months they are continuously employed with the same employer; and
           
        2. new s 4A(1)(c)(i), which provides that an Order in Council can only be made in accordance with that section in respect of someone who has been on a benefit continuously for at least six months.
           
21. We also note that, to be consistent with the purpose of the Bill, any Order in Council must be rationally connected to the intent of the Bill, being to assist young and inexperienced workers into employment and avoid welfare dependency.
    
22. These restrictions limit the potential disadvantage and closely target the problem of youth unemployment.
    

Conclusion

23. We have concluded that the Bill appears to be consistent with the rights and freedoms affirmed in the Bill of Rights Act.
    

Melanie Webb

Acting Chief Legal Counsel Office of Legal Counsel

3. See Drew v Attorney-General [2001] NZCA 207; [2002] 1 NZLR 58, in which the Court of Appeal held that regulations that are inconsistent with the Bill of Rights Act would be ultra vires and invalid unless the empowering statute authorises the making of regulations that are inconsistent with that Act.

In addition to the general disclaimer for all documents on this website, please note the following: This advice was prepared to assist the Attorney-General to determine whether a report should be made to Parliament under s 7 of the New Zealand Bill of Rights Act 1990 in relation to the Minimum Wage (Starting-out wage) Amendment Bill. It should not be used or acted upon for any other purpose. The advice does no more than assess whether the Bill complies with the minimum guarantees contained in the New Zealand Bill of Rights Act. The release of this advice should not be taken to indicate that the Attorney-General agrees with all aspects of it, nor does its release constitute a general waiver of legal professional privilege in respect of this or any other matter. Whilst care has been taken to ensure that this document is an accurate reproduction of the advice provided to the Attorney-General, neither the Ministry of Justice nor the Crown Law Office accepts any liability for any errors or omissions.