Rural Update: Employing Staff

Geoff Bevan

May 2014... Recent media reports and MBIE (Ministry of Business, Innovation and Employment) investigations highlight the need for farmers to make sure they comply with employment law.   Although farmers face some unique challenges, the clear message coming from all corners is that many need to pick up their game.

Checklist: employing staff

Farmers need to be on top of:

Wage, time and holiday records

Most of the breaches identified by MBIE related to insufficient record keeping.

All employers must have accurate and up to date records.  Key points that need to be covered include:

If farmers don’t have these records they are vulnerable to improvement notices, significant penalties (up to $20,000 for companies and $10,000 for individuals) and expensive claims from disgruntled employees (farmers without records can end up having to pay out more wages and leave than they should).

Seasonal averaging 

Problems can arise where farmers use “seasonal averaging”.  Under these arrangements workers are paid a set annual salary but their actual weekly hours of work vary considerably, depending on the season.

The law allows seasonal averaging, so long as farmers can prove that in each week the worker received an amount equivalent to the minimum wage, taking into account the hours they worked and the pay they received for that week.

If the worker’s effective hourly rate for a week falls below the minimum wage, they must receive a “top up” payment.  It doesn’t matter that the same worker might get paid for 40 hours in a quiet season but only work 15.  “Swings and roundabout” defences are not allowed where the minimum wage rules are breached

The Government is looking to change the minimum wage laws so farmers can average hours out over a two (instead of one) week period. We think this is sensible, but at the moment that proposal is still in in its early stages.

Employment Agreements

By law, employers must hold a signed employment agreement for every employee.

If farmers want to use a trial period, they must make sure that those employment agreements are signed by both parties before the employee starts working. If they don’t, the trial clause will almost certainly be ineffective.

Casual employment

Employing staff on a casual basis is more difficult than many farmers realise.

Farmers must have employment agreements for casuals.  As well, those workers must actually work variable and erratic hours.  If they don’t, then they are probably permanent employees, entitled to protection from dismissal and paid holidays, regardless of what the employment agreement says.

Warnings / Dismissals

Farm owners/managers need to make sure they understand how employees can (and can not) be given formal warnings or dismissed. It is worthwhile knowing the basics of how to fairly and legally treat staff before things go wrong, so that costly mistakes can be avoided.

For more information

Please call one of Gallaway Cook Allan’s employment lawyers if you want more information about the topics discussed in this article:

Geoff Bevan, Consultant – (03) 474 6720

Diccon Sim, Partner – (03) 474 9769

David Robinson, Partner – (03) 474 9767

We can provide:

We can also point you in the right direction if you need to get your record keeping and payroll systems in order.

Disclaimer: This article is necessarily brief and general.   It is not a substitute for specific legal advice.