Posted on: May 21, 2018

Unions representing retail workers are receiving numerous complaints from employees around the country after a recent Employment Court case has ensured that employers can no longer plead ignorance to avoid paying employees for participating in work related activities outside of work hours [1].

 

Smiths City Group Ltd has been ordered to comply with an Improvement Notice issued by a Labour Inspector in January 2016 and backpay employees dating back six years for attending unpaid ‘optional pre-work meetings.’ Smiths City has also been ordered to conduct an audit to identify where wages have been paid below the statutory minimum wage, calculate arrears of pay below the minimum wage, and reimburse affected employees.

 

This decision is a wake-up call to retail outlets and employers around the country who have adopted a similar practice, requiring them to rectify their business practices immediately.

 

Smiths City like many other New Zealand retailers had for the last 15 years held unpaid meetings for fifteen minutes prior to the store opening, to prepare employees for the day ahead. These meetings were to give information to sales staff to allow them to be more effective in making sales.

 

The general content of the meetings included sales targets, monthly promotions, upcoming late nights, customer feedback, announcements and achievements, as would be expected by a sales company. It was custom and practice that employees were “expected” to attend these meetings although there was no contractual obligation to do so.

 

Needless to say, Smiths City initially objected to the Improvement Notice in 2016 by claiming that attendance for these meetings were not considered to be work and therefore employees did not need to be paid for this time and the minimum wage did not apply. The initial determination in the Employment Relations Authority ruled in favour of Smiths City but on appeal, the Court ruled on the side of the Labour Inspector and deemed that the meetings were work, according to s6 of the Minimum Wage Act, and employees should be paid accordingly for attending.

 

Smiths City and the Labour Inspector relied on the landmark Idea Services v Dickson case which discussed three main factors to determine whether a certain type of activity constituted work. These included whether there were constraints placed on the employee, responsibilities of the employee and a benefit to the employer.

 

Smiths City attempted to distinguish their morning meetings from the type of activity expected of employees in Idea Servicesby stating that there was “no significant degree of constraint” placed on employees and they were not compelled to attend the meetings.

 

The Court disagreed with this and found that there was pressure placed on staff to attend, which was direct and forceful to such an extent, that non-attendance was treated as poor performance.

 

Smiths City also claimed that these meetings didn’t place an active responsibility on employees and they are only obliged to “sit and listen and absorb the information”that was being shared with them. However, the Court disagreed and found ‘remaining attentive and being requested to make a presentation from time to time’ amounted to employees having responsibility.

 

The Court also found that the benefits of the meetings were exclusively enjoyed by Smiths City because it was a cost-free opportunity to prepare its staff for the working day. There was no reasonable compensation offered towards staff for their attendance, such as longer breaks or the ability to leave work during business hours.

 

The decision of this case has led to Smiths City moving meetings into employees’ normal working hours.

 

What does this mean for your business?

 

Tougher sanctions of up to $20,000 for each breach are being imposed on business owners for not meeting their minimum statutory entitlements.

 

To meet your obligations as an employer and to avoid any sanctions that may be imposed for non-compliance, book a Warrant of Fitness (WOF) with Three60 Consult. We will review your agreements and ensure you are maintaining accurate wage, time and holiday records and are paying your employees no less than the minimum wage.

 

For more information or to book your WOF, contact us on 09 273 8590 or email Lynn Booker on lynn@three60consult.co.nz

 

To read the full judgement click here.

 

[1] A Labour Inspector v Smiths City Group Limited[[2018] NZEmpC 43; 8/05/2018; Judge Inglis]

 



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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.