Patience running out on employer wage mistakes

Experts are warning small business owners and farmers to toe the line with wage rule changes, or face the consequences.

Sharp Tudhope Lawyers associate Shima Grice said labour inspectors seemed to "have new energy to start looking at all aspects of employment agreements and employment compliance".

"Where previously they were prepared to take a more educative role about working with employers, particularly smaller employers that don't have a HR [Human Resources] function . . . that patience seems to have run out."

She said two of her clients had been caught out this year by holiday pay rules. "Where the labour inspector decides ‘actually, this person isn't casual, they're permanent,' they are telling employers ‘pay them the holiday pay'."

"The employer is saying ‘but I already paid them the 8 per cent'. If you don't like that you can go to the Employment Relations Authority and argue your case and $15,000 or $20,000 you'll get an answer which you may or may not like," she said.

That meant small business owners and farmers needed to assess month-by-month whether casual staff might be working on a permanent basis.

"What happens is you like them, and you keep them on, and you find more work for them here and there," Grice said.

"Then the labour inspector says, ‘well actually this person's not casual at all.' They were permanent from day one and therefore they're entitled to all of their holidays as if they'd never received that holiday pay."

Grice said labour inspectors were now saying that "the information is out there, there's no excuse, people need to be aware."

Hamilton Deloitte partner Hilton Joll said farmers in particular were being caught out by another change in the rules - that pay could not be averaged out over busy and quiet seasons.

He said a recent survey of 44 farmers by the Ministry for Business, Innovation and Employment found that 70 per cent were not following the minimum standard for employment rules.

Joll said those who simply paid a wage because hours averaged out over time were no longer operating within the law.

"If an inspector comes and finds you non-compliant there's fines for an individual up to $10,000 and for companies up to $20,000," he said.

"If you've got a situation where an employee complains, then you've got a situation where, if you've got no records, the court normally believes the employee."

He said the courts could go back six years in demanding pay.

"The kicker with that is they can charge interest as well," he said.

Joll said changes coming up for sharemilkers and farm employment on June 1 were a good time check contracts.

"The first thing is to make sure every employee has an employment contract that's up to date, and a job description," he said.

"They need to make sure that they're keeping track of employee hours."

However, the Government is considering a two-week average for farm workers. Pay averaged for an employee who works a 60-hour week, followed by a 20-hour week might, if the change is agreed, be legal.

Federated Farmers spokesman Ciaran Tully said the organisation recommended farmers learn to do the paperwork. "A book of time sheets costs about the price of a milk solid, so it's nothing to be compliant really."

Waikato Times