The New Government Regulations on Wages

Introduction

1. A number of Regulations governing wages (including the new National Minimum Wage) have just been published in the Gazette and were stated to come into effect, on 1 July 2015. We have some doubt about their validity. The uncertainty arising from these issues has the potential to be bad for everybody – employers, workers and the Government.

The Regulations

2. The Regulations are:

National Minimum Wage Regulations

  • LN 51 of 2015 – Employment Relations (National Minimum Wage) Regulations 2015.

Wages Regulations

A series of separate Wages Regulations for certain sectors as follows:

  • LN 52 of 2015 – Wages (Building and Civil and Electrical Engineering Trades) Regulations 2015.
  • LN 53 of 2015 – Wages (Hotel and Catering Trades) Regulations 2015.
  • LN 54 of 2015 – Wages (Manufacturing Industry) Regulations 2015.
  • LN 55 of 2015 – Wages (Mining and Quarrying) Regulations 2015.
  • LN 56 of 2015 – Wages (Printing Trades) Regulations 2015.
  • LN 57 of 2015 – Wages (Sawmilling and Logging Industry) Regulations 2015.
  • LN 58 of 2015 – Wages (Security Services) Regulations 2015.
  • LN 59 of 2015 – Wages (Wholesale and Retail Trades) Regulations 2015.
  • LN 60 of 2015 – Wages (Garment Industry) Regulations 2015.
  • LN 61 of 2015 – Wages (Road Transport) Regulations 2015.

3. The Regulations seem to be ultra vires (literally, “outside the law”), meaning that they appear not to have been validly made under the Employment Relations Promulgation (ERP).

The legal issues

National Minimum Wage Regulations

4. The National Minimum Wage Regulations are expressed to be made under s 264 of the ERP. That section gives the Minister the power to make regulations over wages and salary criteria and guidelines for workplaces. However, in our view, it does not give him the power:

(a) to prescribe a national minimum wage, or

(b) to provide that contracts are deemed to be amended to conform with the Regulations.

Wages Regulations

5. The Wages Regulations purport to repeal and replace existing Wages Regulation Orders (WROs) and are expressed to be made by the Minister under s. 264(w) of the ERP. That section does not provide for the fixing of remuneration; nor does it allow the Minister to revoke the existing WROs. The power to regulate the matters covered by these new Regulations (other than possibly hours of work) lies exclusively in ss 50 to 56 of the ERP which require WROs to be made after following the procedure set out in those sections.

6. Under ss 50 to 56, the Minister may only make a WRO if it is submitted to him by a Wages Council – after the Council has advertised its proposal for public feedback and it has considered that feedback. This process has not been carried out.

Further legal issue – all the Regulations

7. Section 264 of the ERP also requires the Minister to act on the advice of the Employment Relations Advisory Board (ERAB) when making any regulations. We understand that ERAB was not consulted about either the National Minimum Wage Regulations or any of the other Wages Regulations, and has not advised the Minister to make any of them.

Constitutional issues

8. It further appears that all of the new Regulations might have been made in breach of the new Constitution. Section 50 of the Constitution requires that a person making regulations must so far as practicable provide a reasonable opportunity for public participation in the making of the regulations. No such opportunity was given before the making of any of the Regulations.

Conclusion

9. The uncertainty raised by these issues is bad for everybody – employers, workers and the Government. It means a host of possible future litigation with uncertain outcomes. Certainly for employers, it makes it difficult to plan for future employment costs.

10. We are trying to clarify the situation with the office of the Attorney-General. We suggest that in the meantime any affected party should address its concerns to the Ministry of Labour. Once we have further information we will provide an update. In the meantime, employers are advised to comply with the Regulations.

Contact

Contact Munro Leys personnel Jon Apted (Partner) or Nicholas Barnes (Partner) for further information on this Alert.

Disclaimer

The information and opinions in this Legal Alert are for general information purposes only. They are not intended as specific legal or other professional advice and should not be relied upon or treated as a substitute for specific advice. Munro Leys can accept no responsibility for any loss arising from reliance on the general information contained in this Legal Alert.