Out-of-hours meetings must be paid, rules court

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A national retail chain which expected staff to attend out-of-hours meetings without pay has now been ordered to reimburse its employees for their time.

Smiths City Group, which has 34 stores across New Zealand, held daily sales meetings for many years but always insisted pre-work gatherings were optional.

However, the Employment Court recently ruled otherwise.

“As the Employment Court’s decision today reiterates, if the activity is integral to the employees’ role, and there is expectation to attend – this is work, and employees should be paid for it,” said Labour Inspectorate regional manager Loua Ward.

“Employers should not pass the cost of doing business onto their employees,” she continued. “Employees must be paid for all the work they do, and this includes handover times, briefings, and in some situations, the travel time to and from a work site.”

The Labour Inspectorate first issued an improvement notice to Smiths City in January 2016, as the failure to pay employees during these meetings meant they were not providing at least the minimum wage for all hours worked.

However, Smiths City lodged an objection to the notice in the Employment Relations Authority and argued that the meetings were not work so the minimum wage did not apply.

While the initial determination ruled in their favour, a subsequent appeal found that the meetings were in face work and employees should be paid accordingly for it.

“Too often we encounter employers attempting to avoid paying their employees by dressing up activities outside of businesses hours as something that is for the benefit of the employee or something that’s not work,” said Ward. “However we will look beyond that at the real nature of the activity.”

The Employment Court also ruled that Smiths City could not use the payment of commissions and incentives to satisfy their non-compliance with the Minimum Wage Act, as this was additional income earned outside the contractual hourly rate, and not a substitution for it.

“We encourage any other employers who currently are failing to pay their employees for such activities – and we know there are some out there – to fix these practices, as following this decision, they cannot continue to plead ignorance,” said Ward.

Smiths City must now comply with the Improvement Notice, fix their practices to meet their obligations as an employer, and pay any arrears owed to employees.

HRD New Zealand contacted Smiths City for comment but a response was not received by the time of publication.

 

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