Posted on: Oct 03, 2013

The Court of Appeal has dismissed an appeal from an aged care provider that sought to deduct KiwiSaver compulsory employer contributions from the minimum wages it paid its caregivers.

The Employment Court had found that it could not do so (Faitala v TerraNova Homes & Care Ltd (2012) 10 NZELC; [2012] NZEmpC 199) and its reasoning has now been endorsed by the Court of Appeal.

The Court of Appeal agreed that the opening words of section 6 of the Minimum Wage Act 1983 — “[n]otwithstanding anything to the contrary in any enactment…” — gave that section priority over anything to the contrary in the KiwiSaver Act’s provision permitting “total remuneration” approaches to the payment of KiwiSaver contributions, this view according with the purpose of the minimum wage legislation to ensure that workers received a base wage for their work to enable them to meet their daily living expenses.

Compulsory employer contributions were not “payment for … work” even if the obligation to make them arose as a consequence of an employee performing work. Moreover, ownership of the contributions belonged to the scheme, not the employee.

Parties can still agree to use a total remuneration approach so long as their agreements do not result in payment of wages below the statutory minimum.


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