Our German Desk
The Employment Relations Authority found that the company breached the Minimum Wage Act 1983 (the Act), which led to the ban by the Ministry of Business, Innovation and Employment (MBIE), wearing its Immigration New Zealand (INZ) hat.
The Facts
Drew Desai worked for almost two years, initially as a crew member, at the Burger King in New Lynn. When Ms Desai was promoted to a trainee manager, she received a higher salary of $39,500 per annum. Her agreement also stated that it was expected, given the nature of the industry, that Ms Desai may need to work outside of, or additional hours for which payment would not be made.
Ms Desai was required to work forty five hours per week over a five day period between Monday and Sunday.
Burger King did not require its managers to clock in and out, and did not appear to have adequate records of Ms Desai’s hours of work.
Ms Desai successfully argued that because her salary was already close to the minimum wage for the number of hours she was regularly working, on three separate fortnights when she worked overtime she was paid below the minimum wage. Essentially, when you divided her weekly salary by the number of hours worked in those particular weeks, the minimum wage was not being met. Burger King admitted to breaches on three occasions.
The Junior Whopper
When determining the appropriate penalty, the Authority considered:
- the nature and number of breaches;
- whether a global penalty should apply;
- the severity of the breaches (including mitigating factors);
- Burger King’s means and ability to pay the penalty; and
- the proportionality of the outcome.
It found that Burger King had breached the Act on three occasions and that the global penalty starting point was $20,000. The small monetary amounts involved and Burger King’s eventual offer to rectify the situation reduced the penalty to $8,000. The penalty was further reduced to $3,500 after the Authority considered the proportionality of the outcome.
The Double Whopper
Rule 5.110 of the immigration instructions, which are set out in INZ’s Operational Manual, state that employers that have received a penalty for a breach will be viewed as non-compliant with the law and will face a set stand-down period from the ability to support a visa application. This means (essentially) that Burger King will not be able to hire migrant workers if doing so would also mean that Burger King needs to support their visa applications.
While the $3,500 penalty imposed on Burger King may seem minor, especially when there are over 80 Burger King restaurants in New Zealand alone, the stand-down period may have a significant impact on the business. There is also a question as to how this ban may affect current Burger King employees who need to renew their visas in the next 12 months.
How does this impact you?
As Burger King has learned, employers who hire employees on salaries at or close to minimum wage should have adequate clocking in and clocking out processes to ensure their employees are remunerated in compliance with the Act. Just a few hours overtime could mean that employees dip below the minimum wage. Employers also need to be aware of the ways the immigration instructions may affect them, especially if they are found to be in breach of employment law.
These stand-down periods appear to apply automatically to employers who have breached the employment standards. The employment standards include: keeping a copy of an employment agreement; breast feeding facilities; Holidays Act 2003; Minimum Wage Act 1983; and Wages Protection Act 1983 compliance. The compulsory stand-down appears to be a fairly blunt instrument and akin to the banning orders the Employment Court may impose under the Employment Relations Act 2000. While the stand-down period appears automatic, banning orders are an exercise of the Employment Court’s discretion and have, to date, required serious or persistent offending.
The message is that if your business relies on immigrant workers, you must ensure that you are complying with all of the employment standards.
Holidays Act Revamp Submissions Open
The MBIE task force, which is reviewing the Holidays Act 2003, is seeking submissions on an Issues Paper it has released. In particular, it asks whether the issues in the paper are described accurately, and other issues or proposals can be added. Submissions are due 12 October 2018.
