Just before Christmas, last year, the Auckland District Court sentenced an Auckland employer for breaches of the Immigration Act. The employer was personally fined $10,000. She also had to pay a fine of $5,000 to her employees. Her company was fined separately.
This prosecution is part of Immigration New Zealand’s and the Labour Inspectorate’s renewed focus on pursuing employers who breach immigration and employment laws. We are sure there are other prosecutions in the pipeline.
What does this mean for employers?
The employer, in the case above, had failed to properly pay her employees. The employees were not paid what they had been promised before coming to New Zealand. Also, the employees were working more than 60-hours a week and not being paid for all those hours.
Immigration New Zealand and the Labour Inspectorate are actively encouraging employees to come forward to tell them of breaches in immigration and employment law. Therefore, it is sensible for employers to double check that they are compliant.
What are common errors?
1. Having a zero-hours clause in an employment agreement
It is illegal to have clauses in an employment agreement that require an employee to be available for work, without providing any guaranteed hours.
Where an employer and employee agree on the hours of work, these must be recorded in the employment agreement.
Where an employee is required to be available to accept any work that the employer makes available on top of their guaranteed hours of work, the agreement must provide reasonable compensation for the employee making themselves available. There must also be genuine reasons, based on reasonable grounds, for including such an availability provision.
2. Failing to pay the employee in accordance with his or her agreement or work visa
Employers often want to change salary packages. For example, lowering an hourly rate but providing accommodation instead. However, this may lead to breaches of employment law and also of immigration law if the employee has a work visa. The employer could be fined and also barred from being an employer in the future.
3. Failing to keep track of an employee’s work visa and allowing him or her to keep working after the visa has expired.
This can happen very easily, unless an employer has a good system for tracking and recording visa expiries. The potential fines run from $10,000 to $50,000.
If your business does not have a system for checking all employees’ right to lawfully work, even the ones who “look or sound” like a New Zealand citizen, then now is the time to put one in place.
4. Unlawful deductions from employees’ pay
This is more common than you might think! An employer must have written consent to make deductions from wages payable to a worker, and those deductions must not be unreasonable. It’s important to know that this consent can be withdrawn at any time.
Employers must be particularly careful when deducting the costs of recruiting an employee from his or her salary/wages, especially when these costs are non-employee specific. The Employment Relations Authority could decide that this is a premium, which is unlawful.
We strongly recommend seeking advice on the content and wording of any clauses that are intended to allow the employer to deduct recruitment costs.
5. Failing to pay minimum wage or holiday pay
This is also more common than you might expect. Employees must be paid at least the minimum wage for each hour worked and must be remunerated for statutory holidays and annual leave in accordance with the Holidays Act 2003. It is surprisingly easy for an employer to breach this, for example if an employee is on a salary and works long hours, or comes in to work on holidays.
If an employer makes a serious failure to pay the minimum wage or statutory holiday pay, it and its managers could face significant penalties. If it is in relation to a migrant worker, the managers could face jail time.
If you have any questions about ensuring your business is compliant with immigration and employment laws, please contact Nicola Tiffen or AJ Lodge.