Category: Employment New Zealand

Source: Employment New Zealand

This follows an agreement between the Labour Inspectorate and Airways Corporation of New Zealand (Airways NZ) which means that Air Traffic Controller (ATC) trainees will in future be treated as employees for the practical second part of their training programme and paid accordingly.

Prior to the agreement, ATC trainees were not regarded as employees. During part 2 of their training, they were paid an allowance but not paid as employees. This will now change and the trainees will be paid as employees of Airways NZ during this part of their training.

The Labour Inspectorate became involved when they reviewed the recruitment process and training programme at Airways NZ.

Part 1 of Air Traffic Controller training takes place in Christchurch over about 8 months and is theory-based. Part 2 is on-the-job training at various air control towers throughout New Zealand and takes 9 months with the trainees working full-time hours.

The agreement also has implications for former ATC trainees. Airways NZ will now go back 6 years to calculate minimum wage, annual leave pay, public holiday and alternative holiday pay owed to participants, for part 2 of the ATC training.

Brendon Strieker, the Labour Inspectorate’s Regional Manager, Southern, said that when an inspector started investigating the relationship between the trainees and Airways NZ, they believed the relationship was one of employment, and that the trainees should be considered employees.

The Labour Inspectorate then applied to the Employment Court seeking a declaration that 2 trainees who were part of a group initially interviewed by a Labour Inspector, were in fact employees. They also applied to the Employment Relations Authority (ERA) seeking minimum wage, annual leave pay, public holiday and alternative holiday arrears for the 2 trainees.

After the agreement between the Labour Inspectorate and Airways NZ, the Employment Court issued a consent Judgement stating that the 2 trainees were in fact employees during the second part of their training, while the ERA issued a determination by consent that the agreement between the parties was an order of the Authority.

“The agreement between the parties is welcome because it applies to all new trainees going forward. Also the employers have agreed to do the calculations for other participants in part 2 of the training going back 6 years,” said Mr Strieker.

Source: Employment New Zealand

Parental leave payments will increase by 6% from Monday 1 July 2024 to reflect the rise in average weekly earnings.

Source: Employment New Zealand

Accommodation for employees

Depending on the weather and snow conditions, work for temporary workers may last for several months, and people planning to stay for the full winter season may prefer fixed-term rental accommodation rather than staying short term in hostels or backpackers.

Brett Wilson, National Manager, Tenancy Compliance and Investigations Team says, “it is important that employees understand their rights, and the landlord’s obligations when they look for accommodation, even just for a few weeks or months.”

This will avoid potentially vulnerable employees being short changed or staying in accommodation that does not meet the required standards.

“In some cases, the employer provides accommodation for the employee while they are working there. This is called a service tenancy and certain requirements must be met to comply with tenancy law,” says Mr Wilson.

All new tenancies must comply with Healthy Homes Standards, which include specific minimum standards for heating, insulation, ventilation, moisture and drainage, and draught stopping in rental properties.

Smoke alarms or detectors are compulsory in all rental properties and landlords must ensure they are working at the start of each new tenancy and remain in working order throughout.

If people want to learn about renting a spare room or setting up a house as a rental property have a look at the videos and checklists on the Tenancy Services website:

Tenancy Services (external link)

Beginner’s Guide to renting (external link)

Top tips for boarding house tenants and landlords (external link)

Source: Employment New Zealand

In September 2022 Darren Angus, who with his wife Lyndal owns Caisteal An Ime Ltd (CAIL), trading as Akaroa Village Inn, was ordered by the Employment Relations Authority (ERA) to pay $7,500 in penalties for refusing to provide a Labour Inspector with wages and time records; holiday and leave records; and employment agreements.

Authority member Philip Cheyne also ordered that the business comply with the Labour Inspector’s initial request that the employment records they required be provided.

Mr Cheyne found CAIL failed, “without reasonable cause to comply with the Labour Inspector’s requirement.”

He said the Labour Inspector’s request was reasonable, did not violate the company’s rights, and was neither an abuse of power nor harassment.

Unhappy with that decision, CAIL turned to the Employment Court asking:

• to have the ERA determination set aside
• for a stay of the ERA’s orders
• that a penalty be imposed on the Labour Inspector
• for compensation for “hurt and humiliation” allegedly caused by the inspector’s actions.

However, Employment Court Judge K G Smith found there was no basis for CAIL to refuse to comply with the Inspector’s records request and that the penalty ordered by the ERA was “appropriate” and dismissed the company’s application.

Still not satisfied, CAIL applied to the Court of Appeal for leave to appeal Judge Smith’s decision.

This application has now been declined.

The lengthy legal battle began in 2020 when the Labour Inspectorate received complaints related to public holidays payments at CAIL and started an investigation.

In October 2020, following the investigation, CAIL was found to have breached minimum employment standards, and the business agreed to rectify the breaches and provide evidence it had done so by 1 March 2021.

However, the Labour Inspector working on the case was not satisfied the evidence supplied was accurate or complete and suggested CAIL either conduct another audit or supply its employment records to her for analysis.

Darren Angus, on behalf of CAIL, was not prepared to do this saying the business was satisfied it had rectified the breaches as agreed with the Inspector.

This led to the inspector making a formal request for copies of wages and time records, holiday and leave records and employment agreements for all employees from its first day of business to 28 March 2021.

When Angus and CAIL refused to provide the records, the Inspector took the case to the ERA.

Labour Inspectorate Head, Simon Humphries had said the business and its owners simply supplied the Labour Inspector with the requested documents when initially asked this drawn-out legal process would never have been necessary.

“By law, businesses and their owners are required to supply employment records when requested to do so by a Labour Inspector.

“Labour Inspectors are tasked with making sure workplaces provide for minimum employment standards and laws. In this case the Labour Inspector tried her best to help the business rectify the breaches in compliance standards.”

He said where breaches are minimal and unintentional, the Inspectorate prefers to work with employers and employees to educate them on their rights and responsibilities or help resolve a complaint.

Source: Employment New Zealand

Shen Yuan, the sole director of BDIT Limited, trading as Hua Restaurant, was recently ordered by the Employment Relations Authority (ERA) to pay a former chef:

• $43,943.42 in wages arrears
• $21,000 as repayment for a premium demanded from him
• $20,000 in penalties.

Yuan’s wife Linlin Sun, who worked as a manager in his restaurant business, is jointly and severally liable for payment of the wage arrears and was ordered to pay $10,000 in penalties for her role in the breaches which occurred between September 2019 and September 2020.

Yuan and Sun must pay interest on the arrears. Yuan must also pay interest on the premium repayment.

The total amount the couple must pay in wages arrears, the premium repayment and penalties is $94,943.

Authority member Robin Arthur ordered that the former chef, a Chinese national, must receive $9,000 of the penalties due by Yuan and his wife.

BDIT Ltd formerly operated 2 restaurants in Auckland – one in Newmarket and the other in Albany. The Newmarket restaurant stopped trading in October 2019 and the Albany restaurant in September 2020.

This is the second time Yuan and his former restaurant business have been sanctioned by the ERA.

In 2020 Yuan and BDIT Ltd, trading as Hua’s restaurant, were ordered to pay their head chef $11,999.98 for outstanding wages.

The repayment order was made after Yuan failed to keep up the payments, as agreed in a record of settlement, following mediation in November 2019. Yuan had undertaken to repay the former employee $16,000 in weekly instalments of $666,67. However, he only paid $4000.02, leaving $11,999.98 outstanding.

Source: Employment New Zealand

Of this amount, Rural Practice Ltd was ordered to pay $145,000, and business owner Reza Abdul-Jabbar must pay $70,000. 2 of the 3 workers will each receive $10,000 of the penalties amount.

Both the business and Abdul-Jabbar were found to have breached numerous minimum employment standards by:

• not paying workers the minimum wage
• not paying for holiday and leave pay
• unlawfully deducting money from their wages
• forcing the workers to pay premiums
• not keeping accurate wage or time records.

In an earlier determination released in February 2024, the ERA ordered Rural Practice and Abdul-Jabbar to pay the workers $52,056 in arrears in holiday pay, plus interest. They also voluntarily paid $64,387 to the workers for holiday pay and unlawful deductions during the hearing process.

Abdul-Jabber, who is a shareholder in companies owning property in Queenstown and Southland, is the Imam of the Invercargill Mosque for the local Muslim community. He was also the religious advisor and mentor for at least one of the workers.

Silvia Abdul-Jabber, who was a co-owner of Rural Practice Ltd, passed away in September 2022 while the case was being heard and the Labour Inspectorate withdrew their claim for penalties against her.

The 3 workers came from Indonesia to work for Rural Practice Ltd on its Invercargill dairy farm between December 2017 and February 2022.

In December 2020, one of the workers contacted the Ministry of Business, Innovation and Employment’s Contact Centre to complain he had not been paid the salary recorded in his employment agreement or given the number of days off he was owed each fortnight.

He also complained that his employer had taken possession of his passport and ID and kept them even though he asked for them back.

A Labour Inspectorate investigation found that each employee had been given 2 versions of their individual employment agreements – one stating a higher salary which the employer provided to Immigration New Zealand (INZ) during work visa applications, and the other, provided to the Labour Inspector, stating a lower amount. None of the employees were paid the correct wages due to them.

It was also found amounts had been deducted from one of the worker’s wages, purportedly to pay for the services of a recruitment company in Indonesia.

During the Labour Inspector’s investigation it was found that payslips for the workers had been manipulated. In one case there were 2 sets of payslips for the same period – one set with the hourly rate of pay inflated to satisfy INZ visa requirements and the other set with a lower rate of pay and correspondingly more hours worked, provided to the Labour Inspector.

Simon Humphries, Head, Compliance and Enforcement, Labour Inspectorate, said it was unforgiveable that business owners would knowingly and deliberately exploit vulnerable workers they had brought to New Zealand.

“These workers came to this country in search of a better life but they were taken advantage of by those they trusted.

“This was deliberate and systemic exploitation. The penalties imposed demonstrates the serious nature of the breaches and sends a clear message to business owners who choose to exploit their workers for financial gain. There will be consequences.”

Humphries said the Labour Inspectorate would continue to vigorously monitor potential migrant worker exploitation and enforce compliance when necessary. “We are pleased, that through our intervention in this case, we were able to help these vulnerable workers.”

In his determination, Authority member Alastair Dumbleton noted that the manipulation of the workers’ payslips was an indication that Rural Practice Ltd through its directors had actively contrived to mislead statutory officials of INZ and the Labour Inspector.

He said the breaches happened because of “an attitude held by Mr Abdul-Jabbar of disrespect for employment and immigration statutory rules and regulations – ‘officialdom and bureaucracy’ – and also an attitude of indifference to the sanctity of contract.

“In short, as a director and owner of the employer Rural Practice Ltd, when it suited him, Mr Abdul-Jabbar knowingly disregarded the law governing employment. He took advantage of [the migrant employees] because they were not from New Zealand and were from Indonesia, where he too was from.”

Source: Employment New Zealand

Employees’ rights

Employees don’t have to agree to work on Good Friday, Easter Monday, or Anzac Day unless:

• these are days that the employee would have normally worked
• their employment contract says they have to work on public holidays.

Public holidays and the rights of employees

Types of employee

If an employee would normally work on Thursdays and/or Fridays and/or Mondays, and works on Good Friday 29 March and/or Easter Monday 1 April or Anzac Day Thursday 25 April, they must also be given a paid day off (‘alternative holiday’) for each of the days worked.

Alternative holidays

However, if the employee does not work on Good Friday and/or Easter Monday and/or Anzac Day, they still have to be paid for the public holidays if they normally work on Fridays, Mondays or Thursdays.

Shop employees have the right to refuse to work on Easter Sunday (not a public holiday). This acknowledges that Easter Sunday is a day of special significance across New Zealand. Shops include retail stores, cafes, bars, and restaurants that sell goods, including food.

Source: Employment New Zealand

The details of the increase are:

• Adult minimum wage will go up from $22.70 to $23.15 per hour.
• Starting-out and training minimum wage will go up from $18.16 to $18.52 per hour.
• All rates are before tax and any lawful deductions, for example, PAYE tax, student loan repayment, child support.

If you have not yet talked to your accountant, payroll provider or your finance/HR teams now is the time. It is also an opportunity to check your employment records, processes and systems are current.

Read about types of wage rates, exemptions and more here:

Minimum wage

How to prepare for the increases

1. Advise the team

If you have employees on the minimum wage, let them know about the increase they will be getting. You should send them a letter or email (variation of employment contract) advising them of the new wage.

2. Check your payroll systems and processes

Make sure your payroll provider, accountant, lawyer, HR, or finance people are ready to implement the change.

If your system is manual or computer-based, you should check and confirm the settings will be adjusted for the new rates.

If any of your employees are on starting-out or training wages, now is a good time to check when they will be eligible to move onto the adult rate.

If any employment agreements (contracts) are not current or you did not give one to your employees, now is an ideal time to discuss with them in good faith. Update the contract with any terms and conditions that were agreed to by both parties before the contracts were last reviewed. Make sure they include all the mandatory clauses a contract should have by law. Another useful tool is the employment agreement builder if your employees do not have one.

Employment agreement builder

Things an employment agreement must contain

3. Employee pay relativity

You may also wish to consider potential impacts on your business due to internal wage relativity and external benchmarking. For example, how employees are paid compared to each other, and how your pay rates compare to others in your industry or sector. Employees on higher wages may want to negotiate a pay increase to keep the relative difference.

4. Update your business budget

You should add any expected increased costs to your short and medium-term budget forecasts. This will help you plan for and manage the effect of higher wage and holiday pay liabilities.

To work out the updated cost of your employees, use the employee cost calculator:

Employee cost calculator – Business.govt.nz (external link)

5. Upskill on minimum wage obligations

Now is also an ideal time to ensure you know the details around the minimum wage, including that:

• it applies to all hours worked, unless both parties agree to a higher rate in the employment agreement
• it applies to employees paid with a salary or piece rates or commission.

Note the minimum wage does not apply in some situations including:

• employees under 16 years of age
• where a Labour Inspector has issued a minimum wage exemption permit to an employee who has a disability that limits them carrying out their work.

Minimum wage exemption for people with disability

Source: Employment New Zealand

“I have never seen a jail, but I felt I was a prisoner. I was sorry I had ever come to New Zealand. It was a very emotional time and I just wanted to leave,” the now former employee said.

Now living in the North Island, the woman who did not want to be named, said she had worked for 50 to 60 hours a week as Assistant Manager at the Criterion Club in Alexandra between June 2019 and February 2020, but was only paid for 30 hours a week.

She usually worked six days a week. She said she felt trapped as she and her husband were living at the club as part of her employment agreement and had she resigned they would have had nowhere to live.

“My work situation had a negative effect on my family and social life. I just didn’t want to talk to anyone. I felt very sad.”

After nine months working for the business, the woman decided to resign. When she asked for her final holiday pay her employers kept making excuses about why they couldn’t pay. It was at that point that she approached the Labour Inspectorate for help.

The Inspectorate found 4S Hospitality Limited had kept falsified records that under-recorded the hours the complainant worked. The labour inspector investigating the case used external records from the EFTPOS provider, the electronic gaming machines and data from the TAB terminal at the venue to identify the true hours the complainant worked. As these breaches were serious the Labour Inspectorate took the complainant’s case to the Employment Relations Authority (ERA).

The ERA accepted that the business had failed to keep accurate records for the time the woman worked there and that this resulted in her not being paid for every hour she worked and for some of her holiday entitlements. The Authority awarded the woman $14,770 in arrears for money she had earned but was not paid.

Penalties

The ERA ordered penalties of $24,000 against the company and $12,000 against Kuljinder Singh Sidhu who helped run the business and had hired the woman. The ERA found that even though Singh Sidhu did not own the business he knew the company was not recording all the time the complainant worked and was not complying with the relevant holiday pay requirements.

Half of the penalties are to be paid to the complainant. In total, together with wages arrears and interest, the amount due to the complainant is $34,270.

Simon Humphries, Head of Compliance and Enforcement, Labour Inspectorate, said exploitation of workers and causing their health and wellbeing to suffer was unacceptable and remained a concern. He hoped employers tempted to take unfair advantage of their employees would take note that worker exploitation would not be tolerated.

“It’s disheartening to see that this employee felt helpless and suffered the deliberate and systemic offending that her employer caused. As happened in this case, exploitative employers can expect to be heavily penalised for their wrongdoing.”

“Fortunately, the complainant in this case did the right thing by reporting the abuse and our team was able to help.”

The employee who is now more aware of her rights says “the support and advice I received from the Labour Inspectorate was wonderful. They helped me understand my rights. I would recommend that anyone who feels they are not being treated fairly at work to reach out to the Labour Inspectorate for help.”

“Doing so changed my life and I now love this country because they looked after me,” said the woman.

The Labour Inspectorate encourages anyone concerned about their employment situation or the situation of someone they know to phone MBIE’s service centre on 0800 20 90 20 where all concerns are handled in a safe environment.

Source: Employment New Zealand

Previously, 90-day trial periods only applied to employers with fewer than 20 employees. This provision has been extended and is available to all employers.

Any employer can provide a new employee with an offer of employment which includes a trial period. A trial period must be agreed to by the employer and employee in writing, and in good faith, before the employee starts work, as part of an employment agreement.

There are a number of ‘must-dos’ in any employment relationship. The extension of 90-day trials will not affect other aspects of employment relations, such as the requirement to act in good faith, or worker protections regarding pay, conditions, leave, and health and safety.

Employer and employee must-dos

If employers are hiring people on certain work visas, they will also need to consider any immigration requirements relating to the use of trial periods.

For more information, see Trial periods.