Employer Update: Starting Out Wages & Dismissal Expenses

Starting-Out Wage introduction

starting out wagesThe government’s latest initiative to encourage employers to take on school leavers and younger kiwis up to age 19 is called the starting-out wage.  As is implied by the name the main push of this interim wage is to actually create employment for the younger age group and provide them with a work ethic and experience when full time jobs are, on the whole, still scarce.  The incentive for the employer being the lower wage to be paid while the employee has their own incentive of earning money.

Qualification criteria

1.  First six months working for the new employer and aged 16 or 17

2.  Ages 18 and 19 taking up employment after being on a benefit for six months

3.  Workers aged between 16 and 19 attending a recognised industry training course on which a minimum of 40 credits a year is involved

This initiative is expected to commence on 1st April 2013 and at least 80% of the current minimum wage has to be paid for the first six months of employment.  The full minimum wage must be paid to the employee after this period.

If a worker has a training or supervisory roll they must be paid at least the minimum wage even if they are aged between 16 and 19.


Expense can be high for dismissal of employees

employee dismissal processFollow processes to the letter to avoid high costs when dismissing an employee.  Although in a recent employment case the original fault was the employee’s the employer ended up paying.  Consortium Construction Ltd had employed Mr. O as a full time builder for 4 years until he was found to be using drugs at work in violation of the rules and he was dismissed without notice.  Mr. O claimed no investigation was undertaken and he denied the charge.

Scenario:  Colleagues working with Mr. O on scaffolding high up on a demolition site smelt cannabis which they traced as coming from Mr. O.  After being told to put it out he did so.  Later a manager was informed of this breach of safety rules and confronted Mr. O who grinned and said it was a left-over from the previous night.  The manager then told Mr. O that his employment was terminated immediately as he had knowingly broken the rules.

As no investigation had been made and Mr. O had no opportunity to defend himself  (i.e. the act had been accidental and to cite his previous employment history) the Employment Relations Authority ruled that the employers had not acted in good faith and should have gone through an investigation.  That information should have been made available to the employee giving him the opportunity to comment before deciding whether  dismissal was warranted.

Even though Mr. O had been smoking marijuana in breach of safety rules and possibly putting himself and co-workers in danger his former employers were ordered to pay an amount of over $12,000 in compensation. This amount covered distress, lost income and a penalty for a deduction made on the final wage paid which was deemed illegal.

What does this case tell us?  Even though the initial action of the employer seems quite reasonable in the circumstances it is better to contact an employment specialist immediately for advice on the correct processes to be followed and documented.