Employment law: What's fair vs what's fact

  • News
  • May 22, 2017
  • Courtney Devereux
Employment law: What's fair vs what's fact

Employees are having their pay checks docked following a significant rise in shoplifting. But what are the rules and regulations surrounding breaches of employment law in New Zealand? 

A Northland petrol station has been forced to pay out $28,500 for breaches against employment law, including docking workers’ pay for ‘drive-away’ gas stealing.

The company had been paying workers on these shifts less than half of what they were entitled too, with management telling workers that as it happened on their shift they were responsible for the damages.

The Northland gas station was forced to pay a total of $28,500 following a labour inspectorate Investigation.

Close to $1.3 billion dollars a year is taken from New Zealand's economy by shoplifters, a number which has steadily been growing according to Statistics New Zealand.

Labour inspectorate regional manager, Loua Ward, says that employees were paid less than minimum wage and weren't given holiday pay, among other employment law breaches.

“Another employee reported being charged for customer drive offs and the employer seeking a premium in exchange for supporting their visa – both of which are illegal in New Zealand.”

The petroleum business in New Zealand, according to Stats NZ, has a total net profit of $11.4 billion.

This is far from the first instance of a New Zealand company breaching employment law.

Early this year courier company, DK Transport Limited, was required to pay out $63,620 after a labour inspectorate investigation found it had breached the rights of 15 migrant workers.

The Employment Relations Authority (ERA) ordered DK Transport Limited to pay a $40,000 penalty, on top of the $23,621.02 already paid in arrears to workers, after the inspectorate uncovered 58 breaches of minimum employment standards.

These breaches include failing to pay minimum wage, provide written employment agreements, deducting wages without written consent, withholding wages for public holidays, and failing to keep accurate employee wage, time and holiday records.

After a scheduled random visit of 10 independent contractors last July, Marlborough Vineyard was fined $3,000 for breaching minimum employment code.

New Zealand’s wine industry, according to Stats NZ, annually makes $5.3 billion.

Labour Inspectorate regional manager, Kevin Finnegan, says it’s disappointing to see so many industries miss the mark when it comes to meeting their obligations.

“it’s simply not acceptable for employers to fail to keep written records, supply written employment contracts, calculate holiday pay correctly, or pay at least minimum wage.”

Employers who breach employment law are subjected to enforcement action which could include penalties of up to $50,000 for individuals, and 100,000 for companies.

All employees, full-time, part-time, permanent, fixed-term or casual, are entitled to a copy of their employment agreement in writing.

The employment agreement must have terms and conditions which are at least as good as the minimum rights in the law.

Retail NZ offers a wages survey, which a business can use to determine if they are meeting the standard employment law requirements. According to Greg Harford for Retail NZ, they also offer an 'employment audit' service, which is an added value service.

"We can go through and do a comprehensive audit of contracts to make sure they meet employment standards, payroll to check against contracts, and even immigration, to make sure that retailers are employing people who have the right."

"Some of the basic employment law stuff sounds easy but can get pretty complicated pretty quickly!" says Harford. 

Harford also says that there are cases of various small retailers where the owners of the business don't make much more than minimum wage themselves. So making sure employees are well-remunerated, does need to be in the context of each business.

In New Zealand, if you are under 16 there is no minimum wage. According to HRM, this year only 58 corporations were credited for paying a living wage, rather than minimum or just slightly over. 

The following table by Employment New Zealand has some of the minimum entitlements, and lists some examples of where employers and employees have negotiated better terms and conditions in their employment agreements.

Per Employment New Zealand, employees have to be paid at least the minimum hourly wage rate for every working hour.

The minimum wage rate for an adult is $15.75. Equalling out at around $33,390 a year before tax. As the minimum wage is already so far behind the updated 2017 living wage of $20.20 ($42,016 annually) it is hard to justify billion dollar companies paying workers any less than minimum.

There are rules and consequences set out by the Ministry of Business, Innovation and Employment for those who fail to comply with employment law.

These rules involve fines up to $100,000, public naming of the company breached, employees responsible can be banned from management positions and persons other than the employer (such as directors and senior managers) will now also be held accountable for breaches of employment standards.

So how else can you make sure you’re paying your employees fairly?

There are a few bench marks which should be meet when it comes to a business paying its employees fairly. 

If you’re trying to get away with paying as little as possible without legal ramifications, chances are you’re approaching this the wrong way.

1) Try to run a regular check-up on what the average rates are for similar roles in companies of a similar size. If employees feel that you are paying them significantly less than other companies are paying comparative roles, they are likely to feel unfairly compensated, and are likely to seek employment elsewhere.

2) Try to keep salaries on or around the going rate, and try to review this at least once a year.

3) Ensure equal opportunities: In this context, what I mean by ‘equal opportunities’ is giving all of your staff an equal chance to progress and succeed with your company.

4) Create role-specific pay ladders: The best way to create a fair and transparent reward system, is to develop a set pay ladder for each main role within your company. The pay ladder should detail specific pay levels that correspond to objective metrics such as productivity levels, new skills learned, and length of time with the company.

The saying ‘pay peanuts, get monkeys’ can apply to what to expect when you pay under minimum wage. It is unrealistic for a company to expect highly-enthusiastic, well trained, motivated employees rather than someone who just shows up to do their job if they pay minimum or under.

If you pay the minimum, in most cases you will receive the minimum; pay your employees what they’re worth.

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