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Unpaid meetings and Smiths City

Published 10 Jun 2018

Commentary on the recent decision of the Employment Court (NZEmpC 43 EMPC 313/2016 [2018]) involving Smiths City Group Limited and employees attending unpaid meetings has flooded the media and provided Unions with fertile soil on which to grow their memberships.

Several organisations have declared that the sector they are involved in will be facing large claims for payment of arrears of wages as a result of this decision. Sectors such as aged care, early childhood education, hospitality and others have been referred to in commentary to date.

Before all succumb to this hysteria we should look at what this decision means.  Firstly, to generalise, the Court reinforced the principle that if an employee is engaged in an activity that is integral to their job then the time spent should be paid. Secondly, the requirement to pay not less than the rate specified in the Minimum Wages Act for time worked was reinforced. Thirdly, that commissions and bonus payments cannot be taken into account when determining the actual amount paid to employees paid by the hour.

The decision focused primarily on hourly paid employees who were paid an hourly rate that was at or near the applicable minimum wage. The logic is that if pre-start meetings are included as work then the total hours paid would be at a rate less than the minimum wage, i.e. 8 hours worked at the minimum wage of $16.50 = $132.00 per day.  If a 15-minute unpaid meeting is included the effective hourly rate paid for the day becomes $15.53 ($132.00 divided by 8.25) and so an underpayment occurs.

It should be noted that these sorts of issues are determined by the facts of the situation.  The Smiths City decision is not something that would automatically apply to every situation.  If you do hold unpaid meetings, then it is something to think about and you should seek advice as needed.

The case could be considered more interesting when looking at the situations that are not encompassed by the decision.  What is the situation where employees attend unpaid meetings but the employees are paid above minimum wage? The Labour Inspector in the Smiths City case could only take action for a breach of the Minimum Wages Act.  A similar situation where the employee receives say $18.00 or $20.00 per hour, specified in their employment agreement, could raise some interesting issues.

The circumstances of employees who travel between assignments and who are not paid for this travel time raises questions based on the logic of the Smiths City decision and the travel time agreement reached between the government, employers and unions in the aged care sector. Should such time be included in calculations to ensure that the average hourly rate paid doesn’t drop below the minimum hourly rate?

Employment Law continually evolves through Government action and Court decisions. To ensure you have the best advice please contact us.