Lawyer calls for simpler employment standards

Struggling with getting your holiday pay right for your staff?  You are not alone. Recently, the Employment Standards Legislation Bill was passed to make sweeping changes to our existing employment laws.  These changes came into effect from 1 April 2016, following concern about poor compliance, including in the agricultural sector.

Employers are now required to keep records in sufficient detail to demonstrate that they are complying with the minimum employment provisions, including meeting minimum wage and holiday obligations.  There are also hefty penalties for serious failures to comply: up to $50,000 for an individual employer, or for a body corporate employer, the greater of $100,000 or three times the amount of the financial gain arising from the breach. 

These changes seek to address unfair employment practices and strengthen enforcement of employment standards, and apply equally to employers in the agricultural sector, which has recently attracted criticism for failing to ensure compliance with minimum employment standards. 

Is it really fair to blame the employer, or is non-compliance the result of employers being required to apply a complicated set of rules that are difficult to apply to non-standard employment scenarios, such as on farms? 

Many employers in the farming sector will sympathise with the argument that New Zealand’s employment rules are complicated to apply and have been designed for standard working relationships which do not fit well with farming arrangements. 

For example, the Minimum Wage Act requires employers to ensure that minimum wages are paid at all times.  It is illegal to average out an employee’s wages or salary over the season.  However, in typical farming employment relationships (where working hours can vary depending on the season), it may make practical sense for a farmer employer to do so. 

There is the same problem with the Holidays Act (which provides set rules for how and when employees are to be paid for annual leave, sick or bereavement leave, and public holidays).  One criticism is that the Holidays Act only works well for fixed and regular working arrangements where it is less complicated keeping track of hours worked.  The rules are difficult to apply to variable working scenarios where the hours are irregular or vary from season to season, and farmers run the risk of underpaying holiday pay and being liable to penalties. 

Recently, there were revelations in the media that a number of businesses including the Ministry of Business Innovation and Employment had being underpaying holiday pay. It is telling that the very organisation that is tasked with monitoring and enforcing minimum employment standards is unable to correctly apply them to its own organisation.  How can farmers be expected to apply the legislation if the organisation responsible for it cannot get it right?

What is needed is an overhaul and simplification of the legislation that sets New Zealand’s minimum employment standards.

The content of this document is necessarily general and readers should seek specific advice on particular matters and not rely solely on this document. 

If you would like more information on any of the topics in this document, please contact your usual Auld Brewer Mazengarb & McEwen adviser. 

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Philip McCarthy