Can an Employer’s KiwiSaver contribution be included in the "total remuneration package" calculation of an Employee's minimum wage?This issue was raised in the Faitala and another v Terranova Homes Care Ltd case which was heard by the Employment Relations Authority in September 2012.
The Employees are care givers working for a rest home. Their employment agreements state that the Employer's KiwiSaver contribution is included in the calculation of total remuneration. The Employees claimed that their remuneration package, using the Employer's calculation (with the KiwiSaver contribution included) is below the minimum wage and therefore is in breach of the Minimum Wage Act (1983).
The Employer however says that the KiwiSaver Act (2006) permits the “total remuneration” approach. The Employer says that the KiwiSaver Act, whereby parties to an employment relationship can agree that the employer’s compulsory contribution to KiwiSaver will not be paid in addition to the employee’s gross salary or wages, provided that specific subsections are complied with. The Employer says it has complied with those subsections. The Employer says there is nothing in the KiwiSaver Act which provides that a total remuneration approach is unlawful where the Employee’s gross wage is the statutory minimum wage. It also says there is no provision in the Minimum Wage Act which prohibits the arrangement provided in the KiwiSaver Act.
The Employment Relations Authority Ruling: “I regard the question of law as being of both general and public importance on the basis that is relevant to all employment relationships ….” Case referred to the Employment Court.
Comment:We await the Court's determination with interest. The Employers Assistance Help line have received several calls from clients regarding this issue and we will advise you of the decision, in a news flash on our home page (
www.employers.co.nz), as soon as it becomes available.