Employers in the agriculture sector are being urged to make
sure they have a good understanding of the requirements of
the Minimum Wage Act. Photo by Ruth Grundy.
The government department charged with policing
employment law has put out a statement to clarify where it
stands on minimum wage calculations for farm workers.
A spokeswoman for the Ministry of Business, Innovation and
Employment (MBIE) told Courier Country its stance had not
changed but the statement was issued to make clear how wages
and benefits should be calculated to meet legal requirements.
She said, despite there being no significant changes to its
position, it had become aware through its Labour
Inspectorate's contact with farmers and recent exchanges with
DairyNZ and Federated Farmers that there was ''confusion'' as
to whether accommodation and other benefits counted towards
minimum wage calculations.
Industry advocates have welcomed the statement and DairyNZ
and Federated Farmers have worked together to put out set of
guidelines to help farmers work through what they say is a
complex set of rules.
The statement sets out how deductions from wages for
accommodation and other goods or services provided by the
employer can be taken into account and comply with the
Minimum Wage Act 1983.
Between December 2013 and early April 2014 MBIE's Labour
Inspectorate visited 44 dairy farms throughout New Zealand
and found 31 of them to be in breach of employment laws and
penalties had been imposed in some cases.
Most of these employers breached the Act by not keeping
adequate records to show they were meeting their obligations
for minimum wage and holiday payments.
Penalties for not complying of up to $10,000 for individuals
and $20,000 for companies can be imposed.
Federated Farmers employment spokeswoman Katie Milne welcomed
and endorsed MBIE's clarification and ''common sense''
statement of its position.
It addressed her ''biggest concern'', that of ''widespread
failure'' to properly record time and holidays, which opened
employers and farm businesses up to legal action.
It reminded them of their obligations under the Minimum Wage
Act and also that ''seasonal averaging had gone the same way
as 245-T'', she said.
Seasonal averaging is the practice of averaging out pay
across busy and quite times through a season instead of
paying the legal minimum rate for each hour worked.
While many farm employers paid above the minimum wage for
entry level roles, the law stipulated every employee must be
paid at least the minimum wage, for every hour they worked,
In the case of benefits received an ''overwhelming number''
of cases farm employees received accommodation as part of
their employment package.
If employer and worker agreed this could be treated as wages
under the Act and be deducted before payment, she said.
But accommodation costs must be ''clearly detailed and
reasonable'' and records kept separate or able to be
separated out from the employment agreement ''Record keeping
MBIE had made it clear benefits ''from food to firewood'' did
not form part of wages but, if the employee agreed it could
be deducted from wages at an agreed cost.
DairyNZ people and business strategy and investment leader
Mark Paine said with employment conditions on-farm under
tight scrutiny, MBIE's clarification of its position would
improve understanding of what was ''a complex and at times
confusing area of legislation.''
The joint industry guidance note for farmers (published by
DairyNZ and Federated Farmers) complemented this, ensuring
dairy farmers were clear on what they needed to do to comply,
DairyNZ's aim was that dairying was ''neither perceived nor
experienced'' as a minimum wage industry because it needed to
attract skilled people to all roles.
''Skilled people are a big part of our competitive advantage.
''New Zealand dairy farming success is often attributed to
our pasture but that is only part of the story and it would
never have happened without skilled people,'' Mr Paine said.
DairyNZ encouraged farmers to see the present focus on
employment conditions as an opportunity to review their
people management processes and working conditions, he said.
The joint Industry Best Practice Guidance Note can be found
on DairyNZ and Federated Farmers' websites.