Minimum wage breach leads to 12 month ban on hiring migrant workers

Gerrad Brimble, Geoff Bevan

The consequences of breaching minimum employment standards go beyond simply having to repay the worker or workers involved.

As well as financial penalties and interest employers who breach can also be stood down by Immigration New Zealand from hiring migrant workers for a period of time. That ban includes being unable to support visa renewals for existing migrant employees during the stand-down period.

Bans last between six months and two years. They are essentially applied automatically where the employer receives an infringement notice or ERA / Court ordered penalty for a breach of employment standards. Minor breaches (which result in “improvement notices”) do not lead to a ban.

For some employers (and their migrant employees) that ban could create significant problems.

Don’t forget salaried employees

The minimum wage is currently $16.50 per hour but will rise to $17.70 per hour on 1 April 2019.

It’s important to remember the minimum wage doesn’t just apply to waged employees – it also applies to salaried staff.

A well-known fast food retailer learned this lesson the hard way after promoting one of its staff to a trainee manager position. The position came with an annual salary instead of an hourly rate. The salary was marginally more than the minimum wage. Like many salaried staff the employee was expected to work additional unpaid hours to meet the requirements of the role.

On three separate occasions the employee’s additional unpaid hours (and her low salary) meant she was paid below the minimum wage for the relevant pay period.

The company admitted the breaches of minimum wage obligations and eventually offered to rectify the situation. It received a penalty for the breaches but perhaps more significantly was also subject to a 12 month ban on employing migrant workers.

Remember:

Make sure both waged and salaried staff receive pay equivalent to the minimum wage for every hour they work. If they don’t they need to receive a top up payment. For salaried staff you can average their hours over each fortnight (or week, if they are paid weekly). It’s easy to overlook salaried staff, as employers often don’t keep track of exactly how many hours they work each day. It will not be good enough to say that the employee’s salary compensates them for all hours worked, if the employee didn’t receive (or you can’t prove they received) the minimum wage.

Make sure you are keeping time and pay records that show exactly how many hours the employee works and how much they get paid, for each period. Those records should be easily accessible so you can show that minimum wage obligations are met. For salaried staff who work regular hours then it’s sufficient to have those regular hours recorded in an employment agreement or roster, or other document (ie you don’t need to keep a weekly timesheet recording exactly the same hours, each week). However if your salaried staff work hours over and above their regular hours then you must have a record of those additional hours.

For advice or to discuss, please contact our employment law team.

Minimum wage breach leads to 12 month ban on hiring migrant workers

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