Posted on: May 15, 2014
Hill v Shand (Christchurch)  NZERA 266
The employee in this case was hired as the manager of the Murchison camping ground. There was no written employment agreement between the parties but a verbal arrangement was made whereby the employee would be paid a salary of $30,000 per year and would also be entitled to free accommodation in the house on site.
On the 3rd of February 2013 the employee was summarily dismissed for serious misconduct, allegedly dishonesty, because the employer considered that money was missing from the camp accounts and believed that the employee had taken it.
Often, the employee was not paid his salary in full because there was insufficient income from the business. The employee submitted that not only was he not paid all of the $30,000 per annum salary that he should have, but further the long hours he worked meant that even if he was paid $30,000 per annum then he would have received less than the minimum wage for the hours worked.
The employee raised a personal grievance for unjustified dismissal, as well as a substantial wage arrears claim – which alleged a breach of the Minimum Wage Act, predominantly for work undertaken during what is defined as a ‘sleepover’ ie, work undertaken during the course of the night when the man was usually sleeping.
Wage and time records
Section 131 of the Employment Relations Act gives the Authority power to order payment of wages or other money owed to an employee if an employer is in default of payment. Further, it is an employer’s obligation to ensure accurate wages and time records are kept for employees.
In the absence of wages and time records section 132 of the Act provides that an employee may give evidence that the employer’s failure to keep adequate wages and time records prejudiced the employee’s ability to bring an accurate claim under section 131. The employer may give evidence to the contrary to prove the employee’s claims are incorrect. However, section 132 empowers the Authority to accept as proved all claims made by the employee of wages actually paid and of the hours, days and time worked by the employee.
As there were no wages and time records kept by the employer in this case, and further the employer gave no evidence proving that the employee’s claims of wages paid or of time worked were incorrect, the Authority accepted the employee’s claim for unpaid wages. The Authority, however, still needed to determine on what basis it was reasonable to calculate the amount of wages still owing to him.
What hours was the man ‘working’?
In answering this question, the Authority needed to consider the application of the Idea Services Limited v Dickson case, and to what extent the three principles of this decision applied:
- What constraints are placed on an employee’s freedom he would otherwise have to do what he pleases?
- The nature and extent of an employee’s responsibilities.
- What benefit there is to an employer by the employee performing the role?
Constraints on the employee’s freedom
There were considerable constraints on the employee’s freedom during the evenings. However, unlike Mr Dickson in the Idea Services Limited v Dickson case, the employee was free to have guests to visit and/or to stay in his home, and he could to a large degree carry on normal family life. Also, for example, there were no constraints on what he could watch on television in the evenings. He could socialise with his friends if he wished to invite them to his home. Whilst he had to be relatively sober and quiet he did not have to be so to the same extent as in Mr Dickson’s case. His privacy was not greatly compromised because he had a separate dwelling, and he had separate kitchen and bathroom facilities away from the campers.
The employee’s responsibilities after his last security check at around 11pm were occasional but important. After 11pm he had to react when necessary and the Authority accepted that his constant vigilance even while asleep was necessary to care adequately for the camp itself and the campers.
The benefit to the employer of the employee’s presence overnight
According to the Employment Court the greater the benefit to the employer of having the employee present and available for work overnight and the more critical the role is, the more likely the period in question should be regarded as ‘work’.
The Authority considered there was some benefit to the employer in having the employee on site after 11pm and before 7am. If he was not there the camp would no doubt have missed out on some business, being those campers that arrived after 11pm and left prior to 7am. However, his overnight presence and readiness to work as necessary through the night was a bonus rather than a necessity of operating the camp. He could have been absent from the camp for some hours during the evening and the night some of the time if he had wished to. The business would have been able to continue to operate in his occasional absence.
The Authority was satisfied that the employee had constraints on his evenings and nights during the peak season almost every night and had to remain alert, even when asleep, to any work that needed to be done. In considering all three elements above the Authority found that the employee was engaged in work during the peak season for 15-16 hours a day, 7 days a week, but cannot be said to have been engaged in work every night from 11pm until 7 am.
The Authority concluded that even had the employee been paid the full $30,000 per annum payable under his employment agreement he would not have been paid the applicable minimum wage rate for each hour worked in any of the three tax years he was employed.
It was calculated that the employer owed the employee a total of $69,561.25 gross in unpaid wages for his wage arrears claim.
Was the man unjustifiably dismissed?
During the course of the investigation, the Authority determined that the complete lack of procedural fairness rendered the employer’s decision to dismiss unjustifiable. There was not one shred of evidence of any substantive justification for dismissing the employee for dishonesty. It was also found that the employee in no way contributed to the situation that gave rise to his personal grievance.
He was therefore awarded $15,120 gross in lost wages for the three months after his dismissal; and $7,000 in compensation under section 123(c)(i) of the Employment Relations Act 2000. This brought his total claim to amount to over $90,000.
What can we learn from this case?
There are many things going on in this case that can be taken as lessons to others. Simply put:
- Always have a written employment agreement between the parties.
- If a potential disciplinary issue arises, investigate the allegations and if substantiated, follow a fair disciplinary process.
- Employers need to ensure they keep accurate wage and time records.
- Employers need to pay their employees at least the current adult minimum wage for every hour worked.
- Employers need to be mindful of the implications of ‘sleepovers’, and understand whether or not in the particular circumstances, the employee is actually undertaking work.
A ‘sleepover’, as defined by the Sleepover Wages Settlement Act, means a period of time spent by an employee overnight during which the employee, under the terms of his or her contract of service, is—
required to be at the employee’s workplace; and
(b) allowed to sleep at the workplace while on duty; and
(c) required to be available to attend to his or her duties during the course of the night as necessary.
As we have seen in this case, sleepover’s can create a huge liability for employer’s who have not been meeting the requirements of the Minimum Wage Act. It is important for employers to be aware that employee’s can make a wage arrears claim backdating six years. We recommend that if your business operates with employees sleeping over that you seek advice specific to your circumstances, as every situation needs to be reviewed on a case-by-case basis. Be pro-active, don’t risk having to learn the hard way!
This article, and any information contained on our website is necessarily brief and general in nature, and should not be substituted for professional advice. You should always seek professional advice before taking any action in relation to the matters addressed.