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All employees are entitled to paid rest breaks.  This is set out in the Employment Relations Act 2000 (“the Act”) and seems a relatively clear entitlement.   But what rate are employees to be paid over their rest breaks? And what happens if the employee is on a variable pay rate when they take their rest break?  The Court of Appeal (CoA) recently answered this question in the case Lean Meats Oamaru Limited v New Zealand Meat Workers And Related Trades Union Incorporated [2016] NZCA 495.

Case Summary
Some employees of Lean Meats Oamaru Limited are paid at an hourly rate while others are paid at piece rate and/or bonus rates (variable rates).  The relevant collective agreement provided for daily payment of $7.00 to cover employees’ rest breaks.  The Union claimed this did not comply with the Act, and that the employees should have been paid as usual for taking rest breaks.

The CoA considered the collective agreement in light of the Act, and determined “paid” means to be paid at the same rate as if the employee was still working,.  The Court interpreted the wording in the Act with the purpose of these minimum standards for rest breaks, expressed as being “to benefit employees by providing for a better work-life balance”.  It held that it would be contrary to the purpose of the Act for employees to take a paid break, as entitled, but be financially disadvantaged because of it.

The Court determined that employees must be paid for the breaks at the same rate as if they had worked through, regardless of how they are paid (ie, if their pay rate is variable, the applicable variable rate must be calculated in order to determine what is to be paid for any particular break).

What does this mean for you?
The key point from the decision is that employees should be paid for any “paid rest breaks” at the same rate they were paid immediately prior to taking the break.  This is likely to require adjustments to payroll systems to ensure the appropriate calculation can be made.

The Act provides, in summary, that rest and meal breaks must be reasonable, leaving real flexibility for employers to determine when and how these occur during the working day.  Meal breaks may also be unpaid, and where breaks cannot be provided, compensatory measures may be provided instead.  If you’re unclear about what break arrangements to provide for your employees, or how this should be recorded in your employment agreements, talk to one of our team.

Disclaimer: We remind you that while this article provides commentary on employment law and health and safety topics, it should not be used as a substitute for legal or professional advice for specific situations. Please seek legal advice from your lawyer for any questions specific to your workplace.