Landcorp’s $2.4m payroll slip-up
Landcorp has to foot the bill for about 1400 fixed-term or permanent workers who were underpaid an estimated $2.4 million between November 2010 and August 2017.
But the underpayments may be only the tip of the iceberg, with many other workers in other sectors possibly owed money.
Landcorp said the Labour Inspectorate of the Ministry of Business, Innovation and Employment (MBIE) had investigated many businesses for compliance with the Minimum Wages Act and the Holidays Act and found that many payroll systems were not calculating entitlements correctly.
The inspectorate said that, as at the end of June, 140 cases had been categorised as ‘‘payroll audits/ investigations’’.
Of these, 118 had been completed, resulting in 53 enforceable undertakings being entered into with employers, 29 improvement notices being issued, and two applications being lodged with the Employment Relations Authority.
Council of Trade Unions (CTU) economist Bill Rosenberg said he was aware the Labour Inspectorate was carrying out a ‘‘huge’’ amount of work on the issue.
He said the Landcorp underpayments represented an average of $1700 per worker, a significant sum for people who did not receive high wages, and was greater than the average uncovered by the Labour Inspectorate.
Last year the CTU discovered that at least $35m had been paid in outstanding holiday pay to Kiwis in 25 organisations.
In the Landcorp case, following two workers’ complaints, the Labour Inspectorate launched an investigation and Landcorp had entered into an ‘‘enforceable undertaking’’ to address the issue.
The state-owned enterprise is now trying to contact former staff to ensure they were paid correctly.
Labour Inspectorate regional manager Natalie Gardiner said there were two main breaches.
One was the exclusion of an accommodation allowance from employees’ gross earnings when calculating entitlements for sick, annual and bereavement leave as well as public holidays; the other was a breach of the minimum wage due to long hours of work for salaried employees.
The inspectorate had caught a number of other dairy industry employers not paying workers for their long hours of over the peak of the season, and employers needed to top up wages to ensure workers received the minimum wage.
‘‘No matter the size of the business, every person working [in] the dairy sector must be provided with all their minimum employment entitlements such as minimum wage, holiday pay and a written employment agreement,’’ Gardiner said.
Landcorp communications manager Simon King said the SOE prided itself on being a good employer, including through competitive remuneration packages.
‘‘However, Landcorp does acknowledge that we have an issue with historical Minimum Wage Act compliance for some current and former farm-based employees.
‘‘This is due to Landcorp following the common agri-industry practice of paying salaries despite the seasonal and varied nature of employment for on-farm workers … We now accept that the practice is not compliant with the Minimum Wage Act and that all employees must be remunerated in each fortnightly pay period on their actual hours of work and calculated at an hourly rate which is equal to or greater than the prevailing minimum wage.’’
Rosenberg said the revelations should be a wake-up call.
‘‘The dairy industry is built on some of the lowest wages and longest hours, and has a record of non-compliance with the most basic employer practices such as recording hours, paying the minimum wage and holiday pay.
‘‘Workers would be well advised to join a union because this is not an isolated incident.’’