Earlier in the year, Smiths City was noted as underpaying staff for attending mandatory morning meetings which resulted in a million-dollar payout. Sarah Dunn spoke to Roy Campbell on the retailers turn around, aligning all pay rates with the living wage and providing extra days off, all as the company also celebrates its centenary.
Smiths City was required to work out how much it owed its staff after being discovered about the 15-minute unpaid meetings. The case came before the Employment Relations Authority, which ruled in favor of the retailer on account of the difficulty of the situation.
The ruling was then over-ruled by presiding Judge Christina Inglis at the employment court, which was decided in favor of the employees which Smiths City accepted. Judge Inglis said at the time of the ruling the unpaid meetings took their total remuneration below the minimum wage threshold.
Smiths City employs about 540 people, and now months after the ruling has announced plans to align pay rates with the living wage, which currently sits at $20.55. The minimum wage is $16.50. Around half of its staff will benefit from the move, presumably with the other half already over the living wage standard.
The announcement was made on July 24 by CEO of Smiths City, Roy Campbell, which was tied into the celebration of its 100th year in business. The new move for staff also includes an extra day of holiday to be taken in the current calendar year and the introduction of a ‘well-being’ day.
This announcement comes a few months after Smiths City was ordered to cease requiring staff to attend a daily 15-minute unpaid meeting and reimburse the affected employees with back-pay. This must have come as a shock to Smiths City – from my perspective, it looks as if that promoted the roll-out of Smiths City’s new living wage programme indirectly by inspiring a re-think of the way staff are treated. Is that accurate?
“The employment court highlighted that we were falling short of our values in a key area and it made us take stock; that is for certain. However, Smiths City has for some time been looking at how we could become a better employer.
“Smiths City’s culture is guided by the values of a focus on customers, integrity, professionalism, and open communication. A focus on customers also demands a focus on the people serving them. We are clear that a staff member that is worried about whether they have enough to put food on the table, pay the rent and the power bill and meet their basic needs will not be focussed on customers.
“More importantly they are unlikely to believe Smiths City is truly committed to its mission. Doing this is not only good business it is also the right thing to do. “
How do you feel about staff wages in the wider New Zealand retail industry – are staff getting a fair deal?
“It is not my place to comment on the broader industry, what I know is that a team member that is worried about whether they have enough to put food on the table, pay the rent and the power bill and meet their basic needs will not be focussed on customers and that is why we moved to align our pay rates to the living wage.”
Your release indicated that the move to align pay rates with the living wage will not have a material impact on Smiths City’s financial result. Can you explain how that works? What was stopping Smiths City implementing this programme earlier?
“We are making a number of changes across our business, but beyond that I am not prepared to comment.”
Is there anything you’d like to tell the wider retail community of New Zealand about this move?
Smiths City argued against the initial ruling that the meetings did not constitute as work, saying the meetings were informal.
The court of employment acknowledged that Smiths City was not the only business using the practice, and in the process redefining what it meant to be ‘at work’.
Court of Appeal outlined three factors when assessing whether someone is at work:
- The constraints placed on the freedom of the employee.
- The nature and extent of responsibilities placed on the employee.
- The benefit to the employer of having the employee perform the role.
The court rejected Smith City’s claim that the employees were not required to stay, when the expectation to attend and the importance placed on staff was direct. The pay-out is tracked back from six years, not the whole 15 years this practise had been in place.
The meetings were solely beneficial to the retailer, who could prepare its staff for the working day at no expense. The retailer also argued informality as staff could relax, be on their phones or take calls during these meetings. Which, apart from adding a slight redundancy to the meetings, was also over-ruled by the court.
The retailer also averaged these payments over a fortnightly period, rather than paying the staff the minimum hourly rate for each hour worked.
Speaking hypothetically, if a full-time employee on the previous minimum wage standard of $15.75 worked 15 minutes at no cost every morning, that would come to $19.65 per week (BT) that is unpaid.
Although a smaller number, times that one week by the 50 average paid working weeks ($982.50 BT) and then again by the six years Smiths City are having to pay back until for some staff.
$5,895 becomes the grand total of unpaid work. Now although this is hypothetical, it may be the case for some employees who have been required to do any unpaid hours over several years.
Now, for an average minimum wage employee, this number can represent a sixth of a $30,000 salary. Where as those in a high position with the same company may only take a few weeks to make that number.
The court drew attention to the power imbalances of employees vs employers, saying an expectation of staff to work in any unpaid circumstance exercises power in a relationship that will always be unbalanced.
Smiths City has now taken the proper steps towards a more progressive future. By providing a living wage standard, it is supporting its staff to work and live comfortably, taking off some of the financial pressure that is becoming more apparent in our growing ‘working poor’.