Article: Partly paying employees and minimum changes
General / 25 October 2015
By Lucia Vincent
Some say that the only certainty in life is change. It seems that employment law too is subject to change each year and 2013 promises change in the areas of public holidays, minimum wage and collective bargaining. In this article we summarise some of they key changes forecast to impact on employers and their payrolls.
Part Payments for Partial Strikes
Although we are yet to see a draft of the proposed Bill, most are aware of the recommendations made by the Labour Minister to change the collective bargaining environment by amending the Employment Relations Act 2000 (Act).1 One change would alter the nature and process of striking, suspending and paying employees.2
Currently the Act does not differentiate between partial and total strikes. The definition of strike includes the act of a number of employees in discontinuing their work, “whether wholly or partially, or in reducing the normal performance of it,”3 with a common purpose (often in support of claims made on their behalf during collective bargaining).
We can easily identify when an employee stops work altogether (a total strike), but it becomes more difficult to determine when and whether an employee has stopped doing only some things, or has deliberately reduced their output (commonly called “working to rule”) – a partial strike.
In Postal Workers Association v New Zealand Post Ltd (2007) 8 NZELC 98, 918 (Postie case) the Employment Relations Authority dealt with a case where the Posties reposted mail that they ought to have delivered. When New Zealand Post (NZP) discovered the reposting, they suspended and refused to pay the Posties for the day’s work, even though they had delivered some mail and attended work. The parties accepted that the Posties had performed a partial strike. But the Union argued that NZP could not backdate the suspension notice to include the period prior to the notice being issued. When it came to partial strikes, unless NZP had suspended the Posties, the Posties ought to have been paid. The Authority agreed. An employer surprised by a partial strike can either suspend and refuse to pay moving forward or put up with it and pay up in full. An employer cannot attempt to retrospectively suspend, or partially pay employees on a partial strike. So NZP had to pay for the full period of the partial strike up until it issued valid suspension notices.
In Thompson v Norske Skog Tasman Ltd  NZERA Auckland 291 the Authority referred to the Postie case and determined that although a partial strike had occurred, Norske Skog Tasman Ltd could not lawfully deduct what it considered the proportionate amount of wages.
In the Postie case the Authority described partial strikes as being permitted by the Act even if it made an employer “…vulnerable to a sudden strike amounting to surprise or ‘guerrilla’ tactics” (46). Perhaps in response to this the Minster recommended among other things:
Introducing a requirement for unions to be required to give employers advance notice of any strike action and not just in relation to essential services. The notice would need to include the nature, location, start date and a list of employees’ party to the proposed strike. This would enable an employer to accurately assess what work is (or is not) being undertaken. An inadequate strike notice would make any subsequent strike unlawful.
Allowing an employer to calculate and deduct proportionate pay for employees involved in partial strikes. An employer would need to outline in writing the deduction intended based on a fair assessment of the work, time and pay apportioned to non performance. An employer could then recover any overpayments within a set timeframe and after following a specific notification process.
If parties cannot agree on the amount of the pay reduction proportionate to the strike action taken, then parties can request mediation assistance or if that is unsuccessful, a determination from the Authority.
Although we are yet to see the proposed law, we anticipate that after an initial settling in period, the changes would bring more clarity to this area of law. Payroll practitioners will need to communicate with clients closely to ensure that the employer is complying with the process for part payments in partial strike situations.
April and May Minimum Wage Changes
Each April employers are faced with changes to the minimum wage. This year the adult minimum wage increases to $13.75 and training and new entrant wage to $11 (80% of the adult minimum wage).
Employers ought to also check that they have increased, where applicable, their compulsory employer contributions (CEC) towards eligible employee’s KiwiSaver schemes from 2% to 3% from 1 April 2013. Don’t forget that unless you have previously agreed in writing and in good faith with an employee that their total remuneration package includes any increase in the CEC, the base salary or wage of an employee cannot be reduced to account for the increase. Any CEC cannot be taken out of a wage sitting at the level of the minimum wage either.
Labour Minister Simon Bridges welcomed the positive recommendation from the Transport and Industrial Relations Committee to pass the Minimum Wage (Starting Out Wage) Amendment Bill (Bill). The Bill would amend the Minimum Wage Act 1983 to replace the current new-entrant scheme with a starting out from 1 May 2013.
Currently someone aged 16 or 17 can be paid 80% of the adult minimum wage until they have completed 200 hours or 3 months with one or more employers and/or supervises or trains other workers.
The Bill would allow someone aged between 16 and 19 and who is not involved in supervising or training other workers, to be paid not less than 80% of the adult minimum wage (starting out wage). But an employer can only pay the starting out wage for the period that the employee meets one or more of the following criteria – that the employee:
Received a social security benefit for at least 6 months (such as the unemployment benefit);
Worked continuously for 6 months or less with one employer; and/or
Undergone training, instruction or examination with a view to becoming qualified in the role.
The training rate (80% of the adult minimum wage) would continue to apply if the employee is aged 20 or over, does not supervise or train others, and is undergoing training such as an apprenticeship that met the criteria.
Many reports on the Holidays (Full Recognition of Waitangi Day and ANZAC Day) Amendment Bill (Holidays Bill) reflect the view that ensuring more Kiwis enjoy every public holiday is a good thing for employees and their families. But we can’t forget the added cost for employers.
The Holidays Bill, brought by the Honourable Dr David Clark, would amend the Holidays Act 2003 from 1 January 2014 so that both Waitangi Day and ANZAC Day would be observed on the following Monday if they fell during a weekend that the employee would not normally work.
Currently, if either Waitangi Day or ANZAC Day falls during a weekend, we observe the public holiday on the calendar day that it falls. No “Mondayisation” occurs whereby we observe and transfer all entitlements for the public holiday on the following Monday. This really only matters for those who work from Monday to Friday and feel like they miss out on the benefit of a public holiday or two when these days fall during a weekend.
If the Holidays Bill passes into law as it is expected to (it passed its second reading narrowly in March), the full impact will only be felt as often as these public holidays fall on a weekend. It will become even more important to keep an eye on when public holidays fall for each employee and their entitlements to average or relevant daily pay, time and a half and alterative holidays.
As with all employment law changes, it pays to prepare. Ensuring that employees are aware of and paid correctly when changes come into force not only keeps you on the right side of the law, but will enhance workplace relationships. If you are unsure, seek advice.
1 “Employment Relations Amendment Bill 2012: Paper One – Collective Bargaining and Flexible Working Arrangements,” Office of the Minister of Labour, Cabinet Economic Growth and Infrastructure Committee, 3 May 2012
2 The paper recommends “allowing proportionate pay reductions as a response to partial strikes” (4(d)) by creating “a notification requirement for all strikes and provides a method for employers to calculate a proportionate pay reduction for partial strikes” (22).
3 Section 81(1)(a)(i), Employment Relations Act 2000
We remind you that while this article provides commentary on employment law topics, it should not be used as a substitute for legal or professional advice for specific situations. Please seek guidance from your employment lawyer for any questions specific to your workplace.
First published in Pay And You (PAY) – Issue 3, April 2013