Averaging wage ‘not lawful’

The case follows Labour Inspectorate action in the dairy sector focussing on employer maintenance of accurate time and wage records.
The Labour Inspectorate found the worker's pay was averaged across seasons and didn't meet the minimum wage rate.

The worker was employed as a farm assistant between 2 November 2010 and 19 October 2012 and towards the end of his employment lodged a complaint with the ministry regarding his rate of pay.

He was paid a salary of $30,000 per annum, which rose to $32,000 per annum in April 2012, and was required to work 49-60 hours a week. His hours would drop to 38-44 hours a week in the dry season.

After an investigation by the Labour Inspectorate identified breaches of the Minimum Wage Act, a demand notice to repay $6473.77 in arrears was issued to the farmer.

The farmer then filed an objection with the Employment Relations Authority (ERA) on the basis weekly wages paid under the minimum wage should be offset against wages paid during the dry season.

In a determination released this week the ERA found that payment by way of salary cannot be used as a mechanism to avoid paying minimum wage and the arrears are to be repaid.

Labour Inspectorate general manager George Mason says any practice of seasonal averaging in the agriculture sector is not lawful.
"Averaging out pay across a season, especially for those earning low salaries, is likely to breach the minimum wage rates set in legislation," says Mr Mason.

"It will also likely breach requirements for paid holidays, including public holidays and special leave.
"Employees should be receiving at least the minimum wage for the hours, days and weeks actually worked and employers must maintain accurate time and wage records to ensure that this occurs"

The Labour Inspectorate takes any breaches of minimum employment rights seriously, with non-compliance attracting fines of up to $10,000 for an individual and $20,000 for a company.