Dairy sector profit still on the table, but margin gap tightens
DairyNZ’s latest Econ Tracker update shows most farms will still finish the season in a positive position, although the gap has narrowed compared with early season expectations.
These are good reminders for employers to view their employment practices through the eyes of a labour inspector, to see if they would stack up.
The dairy sector is not immune. Landcorp, which owns about 140 farms, were recently shown to owe 1400 employees a total of $2.4million. The company had to pay this to former staff, having breached the Minimum Wages Act 1986 and the Holidays Act 2003.
One Landcorp breach was mis-payment of the minimum wage to salaried employees for long hours of work. In recent years it has become clear that the practice of averaging pay over a season or year is not acceptable. Instead, it’s important to ensure that an employee is paid the minimum wage for every hour worked.
If an employee is expected to work extra hours during busy times and their weekly pay falls below the minimum wage, the easiest solution is to make a top-up payment that week. Needless to say, timesheets are crucial to understand the hours employees are working.
The other issue highlighted was the exclusion of accommodation allowances from employees’ gross earnings when calculating entitlements to leave for illness, bereavement and annual leave, and public holidays.
Gross earnings should include all payments the employer is required to make to the employee under their employment agreement for the period during which the earnings are being assessed. Then decide what’s the most appropriate calculation to reimburse the employee. This will depend on the type of leave or public holiday, their work patterns and their past earnings. The table above shows what calculation could be used when.
You can find more information on calculations at the Ministry of Business, Innovation and Employment’s (MBIE) website www.mbie.govt.nz
Various tools are available to help employers keep track of hours and calculate pay; if in doubt check the rules on MBIE’s website.
The Landcorp case study presents good lessons. As we start a new year it’s a timely reminder for employers to check they know the employment rules.
• Veronica Briggs is a DairyNZ people management specialist
