Lower wage for youth

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The pockets of young people may have felt lighter since May 1, when the Government "starting-out wage" came into effect.

The new wage modifies the previous "training wage" regime and affects three groups:

16- and 17-year-olds in their first six months of work with a new employer;

18- and 19-year-olds entering the workforce after more than six months on a benefit; and

16- to 19-year-old workers in a recognised industry training course involving at least 40 credits a year.

An employee cannot be paid the starting-out wage if they are training or supervising other workers.

The starting-out wage gives employers the ability to set starting-out rates of no less than 80 per cent of the minimum wage for a blanket six months after starting work with the new employer.

This effectively doubles the duration of the previous regime, while also extending the age bracket to include those aged 18 and 19.

The starting-out wage has come under fire from some youth groups and unions that say it will create genuine hardship for young workers. Business and many employers have backed the policy.

Supporters of the starting-out wage believe it will make youth workers more attractive to employers, providing an incentive to take a chance on a young person, enabling them to earn money, gain skills and work experience.

The starting-out wage is not compulsory; it is an option for employers to use if they want to take on a young person. The employee also has to agree to being paid a starting-out wage.

Training courses

The most popular AgITO course for entry-level farmers is the National Certificate in Agriculture: General Skills. If an employee is aged 16 to 19 and undertaking this course as part of their employment agreement, their employer has the option to pay them the starting-out wage.

Service tenancies

If you are party to a service tenancy, where an employer provides an employee with a property to live in during their period of employment, you may be wondering how this arrangement affects minimum-wage rates.

Employers must ensure that the total remuneration paid to an employee is not below the minimum wage - either the standard rate of $13.75 or the starting-out rate of $11 if applicable - before any deductions for rent are made.


The reason rent can be deducted from total remuneration where there is a service tenancy is because in such circumstances rent is considered a lawful deduction.

KiwiSaver, however, is not.

Employer contributions to KiwiSaver must be paid in addition to the minimum wage. Therefore, total remuneration paid to an employee must not be less than the minimum wage or the starting-out wage, if applicable, plus the value of the compulsory KiwiSaver employer contribution, which is 3 per cent.

If you have specific questions about the starting-out wage, call 0800 FARMING to get free, independent legal and employment advice.

- Hamilton News

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