Why is it legal to pay disabled woman $2.30 an hour to untangle Air NZ earphones?

A woman with a disability is being paid $2.30 an hour to untangle Air New Zealand earphones, while many of her colleagues are earning just a fraction of the minimum wage.

But it's all perfectly legal, and is, in fact, being done with the blessings of the Labour Inspectorate.

The employee, who is blind, works at Altus Enterprises, an organisation that provides work for people with disabilities, and Air NZ is one of its clients.

The woman, who did not want to be named, said her take-home pay was about $2 an hour, which barely covered her transport to and from work.

She is paid for between six and eight hours' work per day, working Monday to Thursday between 8.30am and 4pm with an unpaid half-hour break.

An Air New Zealand spokeswoman said the national flag carrier airline was proud to be associated with Altus.

"Air NZ has worked with social enterprise Altus for more than 50 years, and we are proud to play a part in supporting people who might not otherwise be employed," she said.

The airline said it played no part in setting how much employees at Altus were paid.

But Minister of Social Development Carmel Sepuloni has slammed the rules which allowed businesses to legally pay disabled people less than minimum wage as "discriminatory".

According to the Ministry of Business Innovation and Employment (MBIE), 975 minimum wage exemptions are currently issued for businesses that employ disabled people.

The Herald understands some of these workers are being paid less than $1 an hour, when the minimum wage in New Zealand is $17.70.

"There are approximately 900 disabled people who are being legally paid less than minimum wage," Sepuloni said.

"The policy is discriminatory towards disabled people and a commitment was made to reviewing it as part of the 2014-2018 Disability Action Plan."

An industry-wide consultation on a wage supplement as an alternative to current policy closed last month, and the minister said officials were currently analysing the submissions.

"We want to make sure disabled people and their families agree with the proposed direction and to find out how employers think the proposals will affect their businesses," Sepuloni said.

"An underlying principle of the work ... was that no disabled person should be made worse off as a result of the change."

The employee, who works at Altus untangling airline earphones, said she took on the job to "build confidence" and "have some self worth".

"I know that with my disability, it would be nearly impossible to get a job anywhere else," she said.

"But taking home $2 an hour, that hardly covers what I pay for transport, and it would be nice if we were paid enough to actually have a little bit of extras."

Altus chief executive Martin Wylie said he could not comment on what an employee "is or is not paid".

"Our employees continue to get their disability benefits from the Ministry of Social Development while employed here and are in addition paid by us," Wylie said.

"Their wages are set in conjunction with a Labour Inspector and their benefits are reassessed slightly to allow for their wages. The net effect is they, on average, get about the minimum wage in total but paid by two sources."

But the worker in question insisted she was not getting any benefits or allowances from MSD or any other Government agencies, and that the $2.30 an hour job was her only income.

Wylie said Altus was a business enterprise and charity which provided employment to people with intellectual disabilities and mental health issues.

It provided a range of services, including packaging, recycling, simple assembly and breaking bulk, to commercial clients on a competitive basis.

"These people can't do equal work, their productive capacity is extremely low which is why they work here," Wylie said.

"It's really to help them develop, we're a charity focused just on finding employment for those people who couldn't otherwise work.

"In exchange, they get feelings of self-worth, they've got motivation, somewhere to go in the day, learn some skills, they've got social contact, all of those things and we give them ongoing education."

In February, Sepuloni and Workplace Relations Minister Iain Lees-Galloway announced they were seeking feedback on an alternative to ensure all Kiwis with disabilities get paid at least the minimum wage.

"The disability sector has argued for some time now that Minimum Wage Exemption Permits [MWEPs] are discriminatory, and Government agrees," Gerard Clark, manager of employment standards policy for MBIE, said.

"Targeted consultation has now come to an end, and MBIE are working with the Ministry for Social Development to analyse the feedback received from across the disability sector, including from individuals who currently have MWEPs, their families, and employers."

An Inspectorate spokesman said it was aware of contract work undertaken by Altus, which had 236 exemptions granted.

"Workers or their caregivers are encouraged to discuss any work relations concerns with the employing business first," the spokesman said.

They could call MBIE's contact centre on 0800 209020 if the matter couldn't be resolved at that level.