Rule change one: Public holidays and when a day would ‘otherwise be a working day’
Flexibility is important in the retail sector, so variable rosters are popular. But when it comes to determining whether employees are entitled to an alternative day’s holiday for working on a public holiday, they can be problematic.
Employees are entitled to an alternative day’s holiday (day in lieu) for working on a public holiday if the public holiday falls on a day that would ‘otherwise have been a working day’ for that employee. But with variable rosters, it can be difficult to judge what would ‘otherwise be a working day’.
Lots of retailers have operated an unofficial rule of using the three weeks leading up to the public holiday as the assessment period for whether a day would otherwise be a working day. That is, if the public holiday falls on a Monday and the employee hasn’t worked in the last three Mondays, that day would not ‘otherwise be a working day’ for that employee.
This rule was successfully challenged in the case of Wendco (NZ) Limited v Labour Inspector of MBIE . Wendco (which operates the Wendy’s fast food chain) had explicitly included the three week rule in its employment agreements so it was clear to employees. However, the Employment Relations Authority (Authority) in rejecting the validity of this rule, found that the rule restricted or reduced some employees’ entitlements to alternative holiday days and created a risk of targeted rostering.
Rather than a three week period, the Authority held that employers had to undertake an individual assessment over a three to six month period, to determine whether the public holiday in question would ‘otherwise be a working day’ for an employee. If the employee worked that day of the week for a majority of weeks during that period, then they would be entitled to an alternative day’s holiday for working a public holiday falling on that day.
This case makes it clear that an individualised approach is the price an employer pays for the benefit of the convenience it gains by using variable rosters. Retailers may benefit from taking a more standardised approach to rostering, particularly in relation to days on which public holidays regularly fall, such as Mondays.
Since Wendco, we have seen media headlines claiming that employees are missing out on their alternative holiday entitlements based on the three week rule, referring to this as “outright wage theft”. Most recently, Unite has asked other major fast food retailers to accept the Authority’s Wendco judgment and voluntarily remedy the impact of its three week assessment period. This is not a simple compliance issue that has a quick fix, there is a large degree of analysis involved and each employee’s entitlements will need to be calculated individually.
Rule change two: Working time before and after work is paid time
Many retailers require employees to be present before their store opens for a quick overview of the day ahead and some are often required to stay after hours at the end of the day for cashing up, or while the last customers make their way out of the store. Employees are often not paid for the extra 10 – 15 minutes at either end of the day.
A recent Employment Court case against a national furniture store held that where employees were expected to attend morning meetings before work each day, they were entitled to be paid for this time. The retailer unsuccessfully argued that this time was not considered “work” for this purpose of the Minimum Wage Act 1983 and that they had no obligation to pay employees for these meetings.
The Employment Court made clear that this, along with cashing up, handing over, or waiting until the last minute customers leave a store, will be considered “work”. Therefore, not paying employees for this time will be considered a failure to meet minimum wage obligations. This decision gives rise to an obligation to make back payments to hundreds of affected employees for the last six years.
Recent headlines suggest that this practice has been widespread and the Labour Inspectorate has been overwhelmed with complaints of a similar nature.