14 July 2020
There are two concerning Employment Relations Authority (ERA) decisions which could mean many businesses are liable for wage arrears. Catering company Gate Gourmet claimed wage subsidies and gained staff agreement to receiving 80% of normal wages during lockdown, as required by Government, but this equated to less than the minimum wage and therefore breached the Minimum Wage Act. The ERA has now ordered Gate Gourmet to pay arrears for the difference between the subsidy and the minimum wage. Potentially thousands of businesses paid only the wage subsidy or paid less than the minimum wage during lockdown and may now be liable for significant arrears. No decision on an appeal has yet been taken.
During the Level 4 lockdown, Dove claimed the wage subsidy
and paid it to their employees at the same time as reducing employees’ wages to 80% of normal earnings. It then gave workers notice of redundancy and, during the notice period, reduced wages still further to the level of the wage subsidy.
The ERA found that, as Dove did not have evidence of having received specific permission from employees to reduce their wages, the employees were entitled to arrears of the difference between normal wages and what they received during the lockdown.
This has significant implications for all employers who reduced employees’ wages while paying them the subsidy. It particularly impacts those that cannot prove that employees agreed to the lower rate. This case is being appealed to the Employment Court.
If you have any concerns about the payment of your staff during covid-19, please talk with our legal team.
David Browne | Senior Solicitor/Legal Team Manager | 03 456 1812 | 021 225 6938 | email@example.com
Adam Siwerski | Solicitor | 03 456 1809 | 021 756 809 | firstname.lastname@example.org
Stu Adamson | Solicitor | 021 197 4603 | email@example.com