Action - Identify better alternatives to enable removal of wage exemption process

The action outlined below will help achieve this outcome. This work was started under the existing Disability Action Plan.

2. Priority: Increase the number of disabled people, including long-term unemployed disabled people, in paid employment and self-employment on an equal basis with others

2 B: Building on work in action 2(a), identify better alternatives so that the minimum wage exemption process can be removed.

Update on progress (September 2018)

Status: Orange - Minor risks to achieving milestones

Action is behind original timeframe, but progressing. Further work needs to be undertaken before coming back to Ministers later in the year.

Action on Milestones

Revised scope approved - March 2016 [Complete]

Revised scope approved at the 11 March 2016 meeting of the Chief Executives’ Group on Disability Issues and Disabled People’s Organisations.

Drafting options for better alternatives – March 2016 [Complete]

Testing draft options with the disability sector – Late March/April 2016 [Complete]

The reference group met twice in the period March to May 2016 and has identified some options to consult with the disability sector on.
Officials also sought views from Business Enterprises at the Inclusive NZ Business Enterprise Forum in March 2016.

Options development – May 2016 [Complete]

Developing preferred options/package and identifying what it will take to implement.

Report to Ministers – August 2016 [Ongoing, delayed]

Report to seek agreement to consult on preferred approach

Consultation with the wider sector – September 2016 [Unknown]

Decision by Ministers (and/or Cabinet) – December 2016 [Unknown]

Officials have provided preliminary advice for Ministers.

Lead: Ministry of Social Development and Ministry of Business, Innovation and Employment

DPOs Lead: People First

Scope of action

Scope approved at the 11 March 2016 meeting of the Chief Executives' Group on Disability Issues and Disabled People's Organisations.

Action 2 b: Building on work in action 2(a), identify better alternatives so that the Minimum Wage Exemption (MWE) process can be removed.

1 Lead

Ministry of Social Development and Ministry of Business, Innovation and Employment

2 Context: brief background, what is this action intended to achieve?

The Minimum Wage Act 1983 was amended in 2007 to include the provision for MWEs. It followed the repeal of the Disabled Persons Employment Promotion Act (DPEP), which was done alongside the Government’s Pathways to Inclusion strategy for vocational services. The legislation enables employers to apply for exemptions in respect of some or all of their disabled employees (individually), which, if granted by a Labour Inspector, means that employers are able to pay those disabled employees below the minimum wage, at a rate that reflects their productivity for the work. There is an expectation that tools are used to determine individual productivity and wage rates, however, there is anecdotal evidence suggesting that the tools used are not consistent with one another, so there may be variation in the wage rates being approved across the country. Approximately 800 people have MWEs currently. A large majority of the MWEs in place apply to disabled employees working in business enterprises.

While the current system of MWEs has progressed from, and offers better protection for employees than the previous system of sheltered workshops and Under-Rate Worker’s Permits (URWPs)[1], it remains discriminatory to pay disabled people wages based on their individual productivity when this process is not used elsewhere in the New Zealand employment sector[2].

Further, the MWE process does not align with the UN Convention on the Rights of Persons with Disabilities, which recognises the right of disabled people to the “opportunity to gain a living by work freely chosen or accepted in a labour market and work environment that is open, inclusive and accessible to persons with disabilities.” New Zealand became a party to this Convention in 2008, and in doing so has committed to the progressive realisation of the principles in the Convention for all disabled people in New Zealand.

Action 2 b) in the Disability Action Plan will identify better alternatives to the Minimum Wage Exemption Process, giving consideration to both existing and new mechanisms, so the process can be removed. This will ensure that disabled people have the same employment rights as other New Zealanders.

3 Proposed scope

The purpose of this action is to identify better, and more equitable, ways to support disabled people who are working and receiving minimum wage exemptions, so that the Minimum wage Exemption Process can be removed. Options will be developed for consideration by Ministers.

The scope includes:

Identifying what is meant by “better alternatives”
In line with the agreed definition (4.2.1), identifying alternative options within existing legislation or policy that would support the removal of the Minimum Wage Exemption process
In line with the agreed definition (4.2.1), identifying alternative options that sit outside existing legislation or policy settings, but which would support the removal of the Minimum Wage Exemption process
Identifying a preferred approach for Ministers, which may include packaging of options
Identifying what will be required to implement the preferred approach, including costs/savings.

The scope excludes:

An evaluation of the current Minimum Wage Exemption system
Changes to Support Funds (managed through a separate project)
Changes to the settings for Supported Living Payment
Making legislative changes and implementing or evaluating any changes agreed to by Ministers and Cabinet (if agreed, this would become a separate project).

Timeframes for implementation:

Drafting options for better alternatives – March 2016
Testing draft options with the disability sector – Late March/April 2016
Developing preferred options/package and identifying what it will take to implement – May 2016
Report to Ministers seeking agreement to consult on preferred approach – June 2016
Consultation with the wider sector – July-September 2016
Decision by Ministers (and/or Cabinet) – December 2016.

What resources will the lead and partners contribute?

DPOs and provider umbrella groups will nominate representatives to sit on a reference group to provide advice to officials to assist with the development of options
MSD will cover costs for the reference group meetings, including reasonable accommodations for accessibility, venue hire and travel as needed
Once draft options are developed, DPOs and provider umbrella groups will assist with disseminating the options amongst their groups for testing and feedback to support the identification of a preferred approach.

What governance arrangements are in place for this project?

A reference group comprising representatives from Disabled Persons’ Organisations and the provider umbrella groups will provide advice to officials
Existing governance structures in MSD and MBIE will be used, and decisions directed to the Disability Action Plan governance: DPOs and Senior Officials Group, and the DPOs and Chief Executives’ Group on Disability Issues.

4 Contributors/partners with lead – who is involved in this action?

A reference group has been established comprising representatives from:

People First NZ
Blind Citizens NZ
Inclusive NZ
NZ Disability Support Network.

People First NZ has assisted in the development of this scoping document.

DPOs and providers likely to be impacted by any proposed changes will be consulted on the draft options during the testing phase.

5 Reporting – key milestones/deliverables

The lead agency is responsible for reporting every 3 months to the Office for Disability Issues.

Milestones include:

Decision by Ministers (and/or Cabinet) – December 2016]
Drafting options for better alternatives – March 2016
Testing draft options with the disability sector – Late March/April 2016
Developing preferred options/package and identifying what it will take to implement – May 2016
Report to Ministers seeking agreement to consult on preferred approach – August 2016
Consultation with the wider sector – September 2016
Decision by Ministers (and/or Cabinet) – December 2016

6 Risks

Risk: Delays in approving the project scope might delay the progress of the project. Mitigation: Seek approval of this scope at the March meeting rather than the May meeting.

Risk: Development of options may exceed the desired timeframe. Mitigation: Ensure everyone involved is aware of the timeframes in advance, and when they will be expected to contribute

7 Impact – what are we trying to achieve?

The outcome of this action is the development of advice for ministers on better alternatives to Minimum Wage Exemptions to enable the process to be removed.

This will be measured through feedback from Ministers on the advice received.

8 Evidence base

A reference paper is being developed which will act as a background document for the reference group. It will be updated throughout the project if further relevant information is identified.

9 Related work

This project has links with:

Better Public Services target areas, particularly area 1 around reducing long term welfare dependence
The support funds project
NZ's obligations and reporting under the United Nations Convention on the Rights of Persons with Disabilities.

Footnotes

[1] which were in place under the DPEP Act and which provided for all disabled people to be paid under the minimum wage as a blanket rule

[2] The starting-out wage is lower than the adult minimum wage, but this is not based on individual productivty or any assessment., and is considerably higher than the MWE permits in place for disabled people.

Page last updated: 2.03.2019