Holiday pay mistake leads to penalties

The Employment Relations Authority (ERA) has ordered Viewbank Dairy Ltd near Rakaia to rectify employment law breaches discovered by Ministry of Business, Innovation and Employment's Labour Inspectorate and pay $7500 in penalties.

The Ministry of Business, Innovation and Employment's Labour Inspectorate visited the farm as part of an audit to check for compliance with minimum employment standards on dairy farms. A number of breaches were identified and an improvement notice was issued. The Inspector brought the case before the ERA when the employer failed to comply with parts of the notice.

Labour Inspectorate southern regional manager Stuart Lumsden says the investigation found that several workers had been treated as casual employees when in fact they were permanent.

"As a result, employees were provided with incorrect holiday entitlements. They were getting paid eight per cent on top of their usual pay, when in fact they were entitled to four weeks' holiday pay, pro-rated, under the Holidays Act 2003," he says.

"This is not an uncommon mistake and employers need to remember that the eight per cent arrangement is only lawful for employees who are on a fixed term contract or who work irregularly or intermittently – for instance on-call workers. In all other cases the four weeks' pro-rated rule applies."

The employer also failed to keep accurate employment records as required by the law and made deductions for accommodation from the workers' pay without written evidence that the deductions were specified and agreed to by the employees.

"Without accurate documentation the employer has no way of demonstrating that correct entitlements are provided to employees," says Lumsden.

The ERA determined $7500 is to be paid as a penalty for the breaches and ordered the employer to repay money owed to workers.