Home > Employment Relations > Pay > Starting-out wage > questions and answers

Starting-out wage, questions and answers

What is the aim of the starting-out wage?

The starting-out wage is about helping more young New Zealanders get a foothold on the employment ladder.

The starting-out wage is designed to provide an incentive to employers to take a chance on a young person, enabling them to earn money, gain skills, and get the work experience they need.

Who is eligible for the starting-out wage?

Three groups are eligible for the starting-out wage:

How much is the starting-out wage worth?

The starting-out wage is set at 80 per cent of the adult minimum wage. This includes the ‘training rate’ element of the starting-out wage for 16- to 19-year-olds which is set at the same rate as the previous new entrants’ and training minimum wages.

How long can someone be paid the starting-out wage?

Sixteen and 17 years olds may be paid the starting-out wage for their first six months of employment with any employer. After six months that employer must pay the young person at least the adult minimum wage.

Eighteen and 19 year old who have been on a benefit for six months or more may be paid the starting-out wage for the first six months of employment with the same employer.

After six months the employer and any future employers must pay the young person at least the adult minimum wage even if they should return to further time on benefit.

Sixteen to 19 year olds undertaking recognised industry training of at least 40 credits a year that relates to their occupation, may be paid the starting-out wage. Once the young person stops doing at least 40 credits a year they must be paid at least the adult minimum wage, provided they do not meet other criteria for a starting-out wage.

Can someone be paid the starting-out wage if they’re involved in training or supervising other staff?

If a young person is involved in supervising or training other workers they’re not eligible for the starting-out wage and must be paid at least the adult minimum wage.

What types of benefits can people be on to be eligible for the starting-out wage?

A young person on any one or more of the following benefits may be eligible for the starting-out wage:

From 15 July 2013 most current benefits will be replaced by three new benefits – Jobseeker Support, Sole Parent Support and Supported Living Payment. More information can be found on the Work and Income website. However, someone’s time on one of the benefits that will cease to exist from 15 July 2013 will still count towards their eligibility for a starting-out wage.

Is the starting-out wage compulsory?

No. 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 as part of their employment agreement.

What if an employee who is on a starting-out wage starts a new job with a different employer?

Sixteen and 17-year-olds remain eligible for the starting-out wage with every new employer until they complete six months with that same employer. This is regardless of whether they have worked for six months in a different job already. Eligible 18- and 19-year-olds who had been on a benefit and have completed six months of work with the same employer must be paid at least the full adult minimum wage even if they later change employers.

Eligible 18 and 19 year olds who had been on a benefit and have not yet completed six months continuous work with the same employer are eligible for the starting-out wage. They will remain eligible until they have completed six months continuous work with an employer.

How is ‘six months’ continuous employment’ defined?

It is from the first day of work, until six calendar months are up – regardless of how many hours are worked per week. This is to keep the system simple and easy to administer for employers and workers.

What protections are there for employees on a starting-out wage?

All the normal employment relations protections will apply to anyone who has been employed on the starting-out wage, including for dismissals.

How does the starting-out wage affect the training minimum wage and new entrants wage?

The starting out wage replaces the training minimum wage for under-20s and new entrants wage.

Those on the new entrants wage can continue to be paid at this rate until they no longer meet the criteria, and then they must be paid at least the adult minimum wage.

16- to 19-year-olds undertaking training will no longer be eligible for the training minimum wage. Instead they will be eligible for the starting-out wage as long as they have a workload of at least 40 credits a year in a recognised course relating to their occupation. The starting-out wage, like the training wage, is set at 80 per cent of the adult minimum wage.

Those aged over 20 will continue to be eligible for the training minimum wage as long as they have a workload of at least 60 credits a year in a recognised course relating to their occupation. The training minimum wage will remain set at 80 per cent of the adult minimum wage.

What happens if I’m currently on or using the new entrants wage and training minimum wage?

From 1 May 2013 the new entrants wage will no longer be an option for employers, however those paying their employees on this rate can continue to do so until their employees have completed the lesser of 200 hours or 3 months continuous employment. After this time their employees will be eligible for at least the adult minimum wage.

Sixteen to 19-year-old trainees who were on the training minimum wage before 1 May 2013 continue on the same wage rate.

Where can I get more information on the starting-out wage?

You can get more information on the Starting-out Wage on the Ministry of Business, Innovation and Employment’s website.