22 January 2021
A matter involving the wage subsidy that is of importance to employers was recently decided by the Employment Court. Due to the significance of the case, the Court allowed Business New Zealand to support and make submissions on behalf of the employer and it is great to see our membership backed in this way.
The issue was whether the employer breached the Minimum Wage Act 1983 when it paid employees less than the minimum wage for periods over the COVID lockdown they did not perform work. The good news, in the eyes of the Court, is that the Minimum Wage Act does not apply to employees who were not able to work during lockdown. The bad news is that the case may be appealed to a higher court. In other words, watch this space.
In the meantime, and as a result of the Employment Court’s decision this is what we know; Gate Gourmet is a Zurich-based company which operates in Auckland, providing in-flight catering to airlines. Although Gate Gourmet was deemed an essential service during the pandemic lockdown, it still needed to instigate a partial closedown due to the dramatic decrease in flights.
As a result, the company presented their employees a couple of options. The employees (through their Union) accepted an option of receiving 80% of their pay, which they could choose to top up to 100% with annual leave. Employees for whom there was no work stayed at home. It should be noted that under their collective employment agreements, the employees had agreed to work 40 hours per week.
The employees lodged a claim with the Employment Relations Authority, stating that Gate Gourmet had breached the Minimum Wage Act by paying the employees $604.80 a week, which is 80% of the minimum for 40 hours, $756.
The Employment Relations Authority initially agreed and upheld the employees’ claim.
However, the Employers appealed to the Employment Court. The appeal was limited to the finding that entitlements under the Minimum Wage Act applied to the employees, despite the employees, at the relevant times, performing no work for the employer.
In a split Court decision, the majority found there was no breach of the Minimum Wage Act. The majority judges stated that “the Minimum Wage Act does not provide for a guaranteed minimum income” and although the employees were “ready, willing and able to work” the lockdown did not constitute “work” because: there weren’t any constraints placed on their freedom (this was the Government not the employer); the employees had no responsibilities or duties; and there was no benefit to the employer. In other words, the Minimum Wage Act specifically relates to hours actually worked.
Any employer facing a similar problem will be glad to hear the Employment Court’s view on this. If you are then please don’t hesitate to contact our legal team to discuss.
David Browne | Legal Team Manager
David Browne | Senior Solicitor/Legal Team Manager | 03 456 1812 | 021 225 6938 | firstname.lastname@example.org
Persia Templeton | Senior Solicitor | 0508 656 757 | email@example.com
Adam Siwerski | Solicitor | 03 456 1809 | 021 756 809 | firstname.lastname@example.org
Kathryn McAuley | Solicitor | 03 456 1813 | 021 197 4603 | email@example.com