Minimum wage issues clarified

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.
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, she said.

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 is vital.''

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, he said.

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.