Are dairy farmers breaking the law?
In November 2013 the Ministry of Business, Innovation and Employment (MBIE) warned that farms were about to be visited to check their compliance with minimum employment rights.
At that point the labour inspectors had already begun visiting dairy farms in Southland but in 2014 are now set to inspect Waikato, Hawke’s Bay and Taranaki.
The news will be likely to force a sweat from even the most efficient employer.
What are the inspectors looking for? Their primary focus is to check on a practice called seasonal averaging, the averaging of pay across a season; a relatively common practice on many farms.
The argument for it is that it smooths out income for farm employees so they have a dependable pay when work is low.
Although it sounds like a good deal for employer and employee, it becomes problematic when an employee is on a low salary as they can end up being paid less than the minimum wage.
In September 2013 a Stratford farmer was ordered by the Employment Relations Authority to pay his worker more than $6000 in back pay, after the MBIE Labour Inspectorate identified breaches of minimum employment rights.
The employer was found to have been paying below the minimum wage when the employee’s pay was averaged across seasons.
The employee had been a farm assistant from November 2, 2010 to October 19, 2012 and towards the end of his employment had lodged a complaint with the MBIE concerning his rate of pay.
He had initially been paid an annual salary of $30,000, which rose to $32,000 in April 2012. He worked 49-60 hours a week dropping to 38-44 hours a week in the dry season.
The inspectorate found this breached the Minimum Wage Act and a demand notice was issued to the farmer for $6473.77.
The farmer tried to raise the averaging out argument, filing an objection on the basis that the weekly wages paid under the minimum wage should be offset against wages paid during the dry season.
The authority determined that payment by way of salary cannot be used as a mechanism to avoid paying a minimum wage and any arrears will need to be paid.
The authority said that salary payments ‘‘cannot be used as a mechanism to avoid the rates set out in a Minimum Wage Order’’.
If you want to ensure you are complying with employer obligations the best way is to keep accurate wage records.
The general thought is if employers do not keep accurate time and wage records it is difficult to see how they can be meeting their obligations for the payment of public and other holidays so further delving will likely be the next step.
Accurate detailed wage records are paramount.
This understandably applies to employees on hourly rates but also to those on salaries as they can be vulnerable if they are working long hours that do not equate to each hour, day or week paid, therefore not always meeting the minimum wage.
It may have come as a