Posted by Tony Sung on March 3 2021 in News

The recent lockdowns imposed in Auckland are a timely reminder that employers need to be clear on their rights and responsibilities during Covid-19.

You may recall Sandhu v Gate Gourmet New Zealand Ltd [2020] NZERA 259 decision of the Employment Relations Authority in June last year where the Authority found that if the employees were ready, willing and able to carry out their work, the employer was required to pay them at least the minimum wage, even if the employees agreed to be paid only 80% of their wage during the Covid lockdown.

The Authority’s decision was appealed to the Employment Court on a limited ground. The issue before the Employment Court was whether the employer was correct in claiming that, where no work is performed, there is no obligation under the Minimum Wage Act 1983 to pay the minimum wage.

The majority of the Employment Court noted that the purpose of the Minimum Wage Act 1983 is to ensure that employees receive a base wage for their work to enable them to meet their daily living expenses for themselves and their family. However, the majority further noted that the Minimum Wage Act 1983 does not provide for a guaranteed minimum income.

As the Minimum Wage Act 1983 does not define ‘work’, the majority of the Employment Court’s view was that the meaning of ‘work’ needed to be ascertained from the Act’s text and purpose. The majority emphasised that the core concept of the Act is the exchange of payment for work. In terms of determining what constitutes ‘work’ the majority noted that there is a principle well established in ‘sleepover’ case, Idea Services v Dickson [2011] NZCA 14 which identified factors to be considered to determine whether an activity is ‘work’.

The Majority concluded that three factors: 1. There were no constraints placed on the employees’ activities, 2. The employees had no responsibilities to the employer, 3. There was no benefit to the employer) showed that the employees of Gate Gourmet New Zealand Ltd were not ‘working’ for the purposes of the Act and no statutory minimum wage entitlements arose.

It is worth noting that, although the Employment Court’s decision in Gate Gourmet New Zealand Ltd clarified that the Minimum Wage Act 1983 does not apply to situations where employers cannot offer work due to the restrictions of Covid, this does not mean that employers are no longer required to consult their employees to discuss options for dealing with the restrictions.

If you would like more information regarding the above, or have any questions, please contact us.

Kalev Crossland | Partner |

Tony Sung | Associate |

Dew James | Solicitor |

This paper gives a general overview of the topics covered and is not intended to be relied upon as legal advice.