The topic of immigration – and particularly migrant labour – has recently been broadly canvassed in the media with all the election coverage. In the employment law context, the situation of migrant workers is unfortunately most typically relevant to employer breaches of minimum employment standards.
In New Zealand, all employees (full-time, part-time, fixed term, casual, migrant, resident, citizen) are entitled to at the very least:
- A written employment agreement
- Minimum pay
- Meal and rest breaks
- Payment for annual and public holidays
- Sick, parental and bereavement leave (if eligible)
- A safe workplace
- Accurate pay and holiday records
On 1 April 2016 the Employment Standards Legislation Bill passed into law. A principal purpose of the legislation is to toughen the penalties on employers who breach minimum employment standards.
Employers who fail to meet their obligations now face fines of up to $50,000 for an individual (previously $10,000), and for a company – the greater of $100,000 or three times the financial gain made from the breach (previously $20,000).
This legislated increase in penalties is a clear signal that the prior provisions were not adequately deterring non-compliance, and that breaches of minimum employment standards are significant – and warrant high penalties. Employment Relations Authority members have followed the legislature's lead. Over the past year we have seen the issuing of increasingly higher penalties – reflecting that breaches will not be tolerated:
- The Page Corner Café – on 21 September, the Authority ordered the popular Kingsland café to pay $20,000 in penalties and $10,405 in arrears after it was found to have breached two migrant workers' basic employment rights – in failing to provide minimum wage, holiday pay, employment agreements and retain time and wage records. The employees concerned thought the employer believed the exploitation would not be reported in order to protect the employees' visas.
- 2 Cheap Cars – on 14 September, the Authority ordered second hand car dealers 2 Cheap Cars to pay a $70,000 penalty in respect of serious breaches of minimum wage, holiday pay and record keeping obligations. The company is estimated to be liable for upwards of $250,000 in arrears to its 83 current workers and former staff. It has been prohibited from recruiting migrant workers for two years as a consequence of not having complied with employment standards.
- Direct Auto Importers (NZ) and Cheap Deals on Wheels Ltd – In July 2017, the Authority ordered two car companies to pay $65,000 in penalties for their failure to pay minimum wage, correct holiday pay, provide employment agreements or keep records of employment. The claim that the employees were in fact contractors – and were therefore not owed minimum entitlements – was thoroughly refuted. Simply labelling employees "contractors" does not make them so, the Authority or Court will always look at the relationship in substance.
- BBS Horticulture – In June 2017, BBS (a labour hire company working on asparagus farms) was ordered by the Authority to pay a $57,000 penalty for failing to keep accurate employment agreements, wage records, time sheets and leave records, and a further $1,818 in arrears to former employees. On being questioned by the Labour Inspector the employer could not name any of the 11 Chinese workers he had employed. This was the second time BBS had been held liable for failing to keep any employment records. As a consequence of the breach, BBS has been restricted from accessing migrant labour for two years.
In addition to increased pecuniary orders, the new legislation has also broadened the arsenal of the Employment Court and the Authority. The Court has the ability to impose "banning orders", under which those in breach of minimum standards may be prohibited from becoming employers. Further, cases that involve more serious, systemic and intentional breaches of minimum standards will be resolved (publicly) at the Authority or Employment Court – rather than being automatically directed to Mediation Services in the first instance.
As an additional measure to curb non-compliant employers' access to the migrant workforce, Immigration New Zealand introduced "stand down" periods, effective from 1 April 2017, whereby employers found guilty of breaching minimum standards may be banned from recruiting migrant labour for a period ranging from 6 to 24 months.
As more cases subject to the higher and broader range of penalties now available come under the scrutiny of the Authority and Employment Court, this trend of growing penalties will likely continue. The onus to correctly provide employees with all minimum entitlements rests with the employer – ignorance will not be accepted as an excuse, and it will cost.
Now more than ever employers need to ensure that they comply with employment standards legislation, and if in doubt seek advice.
If you have any questions, please contact one of our experts below.