When the Inspector calls
An increase to the minimum wage takes effect 1 April 2010. How does this effect Farmer Freddy?
You may recall awhile back, Farmer Freddy encountered some employment problems with his farm workers Bill and Judy.
After dealing with those, Farmer Freddy decided to employ a farm boy, Johnny.
Freddy remembered the trouble he had with Judy because there was no written employment agreement. So, he made sure he put in place a written employment agreement with Johnny. Because Johnny was 16 when he started, Farmer Freddy has been paying him at youth rates (80 per cent of the adult rate or $10 gross per hour).
Johnny has now been working for Farmer Freddy for four months and he has heard the minimum wage is increasing, on 1 April 2010, from $12.50 gross per hour to $12.75. He looks up the Department of Labour website to see what his youth rate will increase to, only to discover that he should have been paid the full rate of $12.50 gross for at least the last month.
His blood boiling, he calls the Department of Labour and speaks to a labour inspector (called Laura) who offers to call in and see Farmer Freddy as she is in the area the next day. The next day, Laura comes to find Freddy on the farm.
"Hello, are you Farmer Freddy? My name's Laura, I'm a labour inspector from the Department of Labour."
Freddy, in a bit of a lather at a Labour Inspector turning up, asks her to wait while he rushes to phone his lawyer.
"I need some help" he explains, "a labour inspector has just turned up unannounced. What should I do?"
Freddy's lawyer explains that Labour inspectors have rights of entry onto work sites and they have the ability to obtain information about wages. Since Freddy could be prosecuted for obstruction, it's best that he at least speaks to the inspector.
Laura gives Freddy a fact sheet setting out that youth rates can only be paid for either the first 200 hours of work (any kind of paid work counts towards the 200 hours: It does not need to be work for just one employer) or the first three months of work, whichever comes first. Once the time or number of hours has been reached then the basic adult rate of $12.50 gross per hour applies, regardless of age. So Farmer Freddy owes Johnny $2.50 gross per hour for the past month in back-pay.
What's more, from 1 April 2010, Farmer Freddy will need to pay Johnny at the increase minimum wage of $12.75 gross per hour.
"And what happens if I don't want to pay?" asks Freddy.
"Well," says Laura, "I can issue you with a demand notice, demanding that you pay, or I can prosecute you. As well as being fined, you can be ordered to pay the amount you have underpaid Johnny plus interest."
Freddy, since his last brush with employment law, has become somewhat wiser and he tells Laura that he will speak to his lawyer and accountant and organise the back-pay, as well as the pay rise from 1 April 2010.
So he tells Johnny what he will do, and Johnny is happy with the outcome. Farmer Freddy, while fuming about the pay increase, is also a lot happier with himself for dealing with the matter without losing his cool.