All employees must be paid at least the minimum wage for every hour that they work.
Minimum wage requirements apply equally to salaried employees. Problems can arise where salaried employees are employed in circumstances which require them to be available, or on call all day 6-7 days a week, and sometimes in to the evening or throughout the night.
Problems may also arise with the process of averaging, a process commonly adopted in the dairy industry. Averaging does not preclude the obligation to pay the minimum wage for each hour worked.
The consequences of getting it wrong can be costly. In a 2014 Employment Relations Authority case (Hill v Shand, [2014] NZERA Christchurch 66), the manager of a motor camp was awarded some $69,000.00 in unpaid wages.
The question is what an employer requires of an employee, and whether that constitutes work. Factors considered include:
- what constraints were placed on the employee’s freedom, i.e. would he/she have otherwise been able to do what he/she pleases;
- the nature and the extent of an employee’s responsibilities;
- what benefit there is to an employer by the employee performing that role.
The Employment Relations Authority’s determination is made on the individual facts of the particular case. If what an employer requires constitutes work, an employee must receive the minimum wage for that work.
If accommodation is provided, the value of the accommodation (for minimum wage purposes) should be agreed and recorded in the employee’s Individual Employment Agreement. If it is not, the default provisions of the Minimum Wage Act will apply.
A wage and time record is required for each employee, recording:
- the name of the employee;
- the employee’s age, if under 20 years of age;
- the employee’s postal address;
- the kind of work on which the employee is usually employed;
- whether the employee is employed under an individual employment agreement or a collective agreement;
- in the case of an employee employed under a collective agreement, the title and expiry date of the agreement, and the employee’s classification under it;
- the number of hours worked each day in a pay period and the pay for those hours;
- the wages paid to the employee each pay period and the method of calculation;
- details of any employment relations education leave taken;
- such other particulars as may be required.
A wage and time record must be in written form, or in a form easily converted to written form. Records must be kept for six years and must be provided to a person authorised to request them.
This article is only a general overview of the law in this area. If you require specific advice or assistance, please contact one of the lawyers in the Employment Team at Holland Beckett on 07 578 2199.
This article does not constitute legal advice. Readers should obtain specific legal advice before making any decisions or taking any action based upon information contained in this article.
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Restructuring in the workplace – What employers need to know
With the economy continuing on its downward slide, you will not be alone in giving thought to potential cost cutting measures, including reducing your labour costs.
Restructuring is usually a last resort for employers and is only a step that tends to be taken when there seem to be no other viable options for reducing costs quickly. While the impact on employees is immense, it is clear that a restructure process can be just as stressful and fraught for an employer. That is why, sometimes, employers can get things wrong and may find themselves at the centre of a personal grievance, which can result in greater stress, cost and uncertainty.
A restructuring needs to be substantively justified, and procedurally correct. If you do not meet both of these requirements, there is a risk that if an employee were to make a claim against you, it could be upheld.
What is Substantive Justification?
It is likely that during recessionary times, such as we are in now, the substantive reasons for a restructure will be fairly obvious to your employees. However, you will still need to justify this by providing evidence in support. This may include pointing to reduced sales figures or forecasts, showing increased costs (i.e. materials, rent, insurance), or any other information that you are willing to share that goes toward justifying the proposal to restructure.
What is the Correct Procedure?
The procedure for restructuring is usually where an employer can get tripped up. To start, you need to remember that you should not pre-determine that a restructure is inevitable. You have a good faith obligation to your employees to consult with them before any decisions that may affect their employment are made. It may be that during consultation, you are able to see a way forward that means a restructure is not required, or at least not to the extent that you had originally envisaged.
Once you have substantive justification, you need to advise your employees that you are proposing a restructure and give them adequate information including what the restructure would entail, how it would impact them, and how you wish to consult with them about it.
You will then move to the consultation stage and be ready to provide further information or answer any questions the employees may have. Once you have finished consultation, you will need to advise the employees of your proposed decision. Your employees should then be given an opportunity to comment on or ask further questions about the proposed decision. It is not until they have been given this opportunity that you should procced to confirm your decision.
The exact process you follow will depend on factors such as the size of your workforce, the number of roles that may be impacted, the typical method of communication with employees, the specific terms of your employment agreements, and the location of your employees.
Having guided employers through numerous restructures, the one point we want you to keep in mind is that getting your restructure right is by far more preferable than having to deal with the consequences (and potential costs) of getting it wrong. We can provide specific advice and guidance on restructuring and all other employment related issues, so please contact our employment law team at any time for further information.
Holidays Act – could change finally be on the horizon?
Earlier this week the Workplace Relations and Safety Minister Brooke Van Velden gave a speech to the Auckland Business Chamber, reiterating her priorities following the conclusion of the Government’s 100-day plan in which Fair Pay Agreements were abolished, and the availability of 90 day trial periods extended to all new employees. The Minister has confirmed that delivering changes to the Holidays Act (“Act”) is one of her top priorities, which is likely to be welcome news to both employers and employees.
Compliance with the Act has been difficult and costly for employers and payroll providers. The Labour Government put together a taskforce in 2018 to address the many issues being experienced by employers when calculating leave and holiday entitlements. The taskforce made a number of recommendations, all of which were accepted (for further details on these changes see our previous article here). A draft Leave Entitlements Bill was prepared, however was not introduced prior to last year’s election.
The overarching issue with the Act is that there are multiple ways to calculate an employee’s holiday pay, and the Act has struggled to keep up with working arrangements outside of a normal five day a week salaried employee. Payments such as bonuses, commission, or if an employee works variable hours mean that the calculations are not straight forward and are often done incorrectly. The changes proposed were an attempt to simplify these calculations.
The Minister has now confirmed that the changes recommended by the taskforce and the draft Bill will not be “simply rubberstamped” and will be subject to scrutiny as well as consultation with key stakeholders. She went on to say “if the policy is difficult to draft, chances are businesses would have a tough time implementing it too”. This indicates a major reset of the Act, and the changes which we had expected, could be on the way.
Other indicated changes to employment law include a change to the rules surrounding contractors (with the Court of Appeal due to hear the Uber case this month (see here for our previous advice regarding this), we are likely to also have further developments in this area from the Courts later in the year) and changes to personal grievances. The Minister has asked for advice on whether an income threshold for raising a personal grievance can be set and removing eligibility for any remedies when an employee is at fault.
The Minister has been very clear that she would like to receive feedback from the stakeholders who will eventually have to work with the Act and it is important that businesses use this opportunity to have a say on the Act. The majority of employers have struggled to achieve strict compliance with the Act due to its many complexities. Putting forward issues which regularly impact your business will ensure these can be given consideration. Our team will be closely monitoring this and will provide specific information on how feedback can be given when this information is available.
If you require assistance with your current obligations under the Act, or would like to discuss providing feedback then please feel free to get in touch with a member of our specialist employment law team.
Using Chat GPT in the workplace – what you need to know
The use of Artificial Intelligence (“AI”) in the workplace is likely to become increasingly common as technologies advance and benefits become proven and trusted.
One AI development that looks set to be eagerly embraced by business is the generative pre-trained transformer model designed by developer OpenAI and used in its Chat GPT product (as well as in competing products, such as Google’s Bard and Microsoft’s Bing Chat).
In a nutshell, Chat GPT is a large language model chatbot that is able to generate content based on requirements set by the user. It essentially searches the internet to find information that matches your query and can then produce written content including articles, emails and even social media posts, as well as images and graphics.
While the use of this technology may create huge benefits for your workplace, there are a few key points that you should be aware of before you start:
If you plan to use Chat GPT in the workplace, you should open a Chat GPT Enterprise account (or its equivalent). The Enterprise account will provide greater speed, data security and privacy than a standard individual account. Yes, it will cost more, but if your employees use Chat GPT from their own account there is a risk that sensitive/confidential information may be leaked and could become available to anyone. If you use the Enterprise level service, any information you input or work product received will remain private to you and will not be used by the model to provide work output for third parties.
Furthermore, if an employee uses their own Chat GPT account to generate work product, it is the employee who will be the copyright owner of the work product – not the employer. This may create the issue of having to assign or license the right to use the content, or the employee having the ability to share the work product with third parties without requiring your consent to do so. It may be simpler to have copyright clearly belonging to you from the start.
Another important point is that the content that you receive may not always be correct or suitable! Chat GPT looks for any available information to help it formulate its work product. That means it will not always retrieve accurate information, and in some cases could be basing its work product on false information. Furthermore, the style of the response may not be suited to you or your customers. Chat GPT is not yet able to distinguish between what might be a great communication to an American consumer from one that would work better in a New Zealand context.
If you are thinking about using AI in the workplace, it really is a good idea to put policies in place so that you and your employees understand the parameters and effects. It is an ever-evolving world of technology so you will need to ensure that policies (and employment agreements) are regularly reviewed and updated to meet your needs.
If you require any assistance with your policy drafting and implementation, our employment law team is here to help (and will provide you with a much better-tailored service than Chat GPT!)