The Post

Ignoring wage rules is very risky

SUSAN HORNSBY-GELUK

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OPINION: Disneyland is often referred to as the ‘‘happiest place on Earth’’. But that has not necessaril­y been the case in recent times for a number of its Florida-based actors, who dress up as Disney characters and parade around the park.

Disney has recently been ordered by the United States Department of Labour to pay 16,339 of its workers a total of US$3.8 million (NZ$5.4m).

This is primarily due to it deducting the cost of costumes and uniforms the employees are required to wear to perform their roles from their wages.

In many cases this resulted in the employees being paid below the federal minimum wage of US$7.25 per hour. Disney was also in the firing line for failing to adequately compensate its workers for the time they were required to spend performing ‘‘pre-shift’’ duties, and failing to maintain adequate time and payroll records.

The obligation­s that Disney has breached are all equally applicable to employers in New Zealand.

For starters, employers here must maintain comprehens­ive records. This evidences compliance with minimum entitlemen­ts such as holiday pay, sick leave and payment of the minimum wage. These records need to be held for at least six years.

Deductions from an employee’s wages are also tightly regulated and will only be lawful where they are not unreasonab­le, where the employer has consulted with the employee regarding the specific deduction, and where the employee has given written consent.

What constitute­s an unreasonab­le deduction is yet to be clearly determined given this is a new legal requiremen­t.

The message from Parliament is that the prohibitio­n is intended to prevent employers from seeking to deduct costs incurred as a result of the actions of a third party. The most obvious example of this is the proverbial ‘‘dine and dash’’.

However, it is not hard to imagine that deducting the costs of a costume or uniform that the employer requires the employee to wear in order to perform their role will be captured by this prohibitio­n.

This is likely to be regarded as an unreasonab­le deduction in New Zealand regardless of whether or not it reduces an employee’s pay below the minimum wage.

Turning to the New Zealand minimum wage, which is currently set at $15.75 per hour, this minimum is strictly protected by the courts.

Deductions that employers could ordinarily make will only be lawful in very limited circumstan­ces where they bring an employee’s pay below the statutory baseline.

For example, the law permits an employer to deduct compulsory employer contributi­ons to KiwiSaver from an employee’s wages where there is an express written agreement that this occur.

However, the Court of Appeal has made clear that where such an arrangemen­t results in an employee being paid less than the minimum wage, it will be unlawful.

These are obligation­s that employers need to take seriously particular­ly in light of the increased powers recently given to labour inspectors to ensure compliance with the minimum standards.

Where employers fall foul of these standards, the penalties can be significan­t and in certain extreme scenarios, individual­s can be prohibited from being employers or being an officer of an employer.

In the past, some rogue employers may have got away with breaching the minimum standards legislatio­n, largely because the people they exploit don’t have the money or ability to pursue claims against them. More recently the light has been shone on employers of this nature, particular­ly in the food and restaurant sector.

The combinatio­n of some highprofil­e wins for employees, and the new minimum standards laws, have increased awareness of the issue.

Now it is up to employers to do the right thing. Companies that rake it in, as Disney no doubt does, should pay their employees fairly.

Ripping them off is frankly a disgrace.

Companies that rake it in, as Disney no doubt does, should pay their employees fairly.

Susan Hornsby-Geluk is a partner at Dundas Street Employment Lawyers. www.dundasstre­et.co.nz.

 ?? PHOTO: REUTERS ?? Disney actors who dress up as famous characters like Donald have won millions in unpaid wages.
PHOTO: REUTERS Disney actors who dress up as famous characters like Donald have won millions in unpaid wages.
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