Minimum Wage 2012: Law Drafting Instructions

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A decision made on 21 October 2011:

Decision Reference: MD-S-2011-0082
Decision Summary Title :	Minimum Wage 2012 Law Drafting		Date of Decision Summary:	20 October 2011
Decision Summary Author:	Policy Principal		Decision Summary: Public or Exempt?	Public
Type of Report: Oral or Written?	Written		Person Giving Oral Report:	NA
Written Report Title :	Minimum Wage 2012 Law Drafting		Date of Written Report:	20 October 2011
Written Report Author:	Policy Principal		Written Report : Public or Exempt?	Public
Subject: Minimum Wage 2012 - Law drafting
Decision(s): The Minister decided to request that the Employment (Minimum Wage) (Jersey) Regulations and the Employment (Minimum Wage) (Jersey) Order be amended in accordance with the Employment Forum’s minimum wage recommendations for 1 April 2012.
Reason(s) for Decision: The Forum publicised its minimum wage recommendation on 27 September 2011 recommending that the minimum wage and associated rates are increased from 1 April 2012, as follows; 2011 2012 Minimum Wage (per hour) £6.32 £6.48 Trainee Rate (per hour) £4.74 £4.86 Maximum weekly offset against minimum wage for accommodation £69.21 £70.94 Maximum weekly offset against minimum wage for accommodation and food £92.27 £94.58 Maximum weekly offset against trainee rate for accommodation £69.21 £53.21 Maximum weekly offset against trainee rate for accommodation and food £92.27 £70.94 On 20 October 2011, the Minister approved the Forum’s recommendation to increase the minimum wage rate, trainee rate and revise the maximum levels of offset. This includes approval of a change to the offset against the trainee rate so that, from 1 April 2012, an employer is permitted to deduct a maximum of 75 percent of the maximum weekly offsets against trainee rate pay. The Minister intends to present the amended Regulations to the States as soon as possible.
Resource Implications: There are no financial or manpower implications.
Action required: Policy Principal to submit drafting instructions to the Law Draftsman’s Office.
Signature:		Position: Minister
Date Signed:		Date of Decision (If different from Date Signed):

Minimum Wage 2012: Law drafting instructions

Response to the Employment Forum’s Minimum Wage Recommendation and Law drafting instructions

Issued by the Social Security Minister on 20 October 2011

Background

The Employment Forum was established in August 1999 and its role and responsibilities were formalised in the Employment (Jersey) Law 2003, which came into force on 1 July 2005. The Forum has a statutory duty to review the Minimum Wage and to make recommendations to the Social Security Minister regarding any future increases. If the Minister decides not to accept the Forum’s minimum wage recommendations, he or she must provide a statement to the States giving reasons for that decision.

In accordance with a States decision in April 2010, the Forum must have regard to the States objective that the minimum wage should be set at 45 percent of average earnings within a period of 5 to 15 years, as well as having regard to competitiveness, jobs and the economy, in making its recommendations to the Social Security Minister.

The Forum consulted with the public on the minimum wage during the period 17 June to 12 August 2011 and publicised its recommendations on 27 September 2011.

Recommendations

The Minister accepts the following recommendations of the Employment Forum;

	2011	2012
Minimum Wage (per hour)	£6.32	£6.48
Trainee Rate (per hour)	£4.74	£4.86
Maximum weekly offset against minimum wage for accommodation	£69.21	£70.94
Maximum weekly offset against minimum wage for accommodation & food	£92.27	£94.58
Maximum weekly offset against trainee rate for accommodation	£69.21	£53.21
Maximum weekly offset against trainee rate for accommodation & food	£92.27	£70.94

The Minister considers that the proposed 2.5 percent increase provides a fair balance in view of the economic and statistical evidence, and the consultation responses presented to the Forum during consultation.

Law Drafting

The Minister requests that the Law Draftsman prepares the legislation to give effect to the increases in the minimum wage, trainee rate and the maximum amounts that may be offset against the minimum wage where accommodation, or accommodation with three meals per day, are provided to an employee.

Offset against trainee rate

The Minister also requests that the Draftsman prepare an amendment to reflect the recommendation that, from 1 April 2012, an employer should be permitted to deduct a maximum of 75 percent of the maximum offsets against trainee rate pay, which gives a maximum accommodation offset of £53.21 per week and a maximum offset for meals and accommodation of £70.94 per week.

The minimum wage legislation currently permits an employer to deduct the maximum sum for accommodation (with or without meals) against the trainee rate. The Forum is concerned that this is too low a wage to be subject to the full deduction in respect of benefits in kind.