Watch This Space!
Since our last edition of Employment News, we have learned of two important cases before the Employment Court regarding KiwiSaver contributions and Equal Pay for women. There are also further developments in the long-running Ports of Auckland saga that caused so much mayhem earlier this year.
Minimum Wage and Kiwisaver
A dispute has arisen regarding whether KiwiSaver contributions can form part of an employee’s wages, and if so, whether this could result in breaches of the Minimum Wage Act 1983.
In Faitala v Terranova Homes & Care Ltd, the plaintiff employees are caregivers at a rest home in Wellington. They are paid the statutory minimum wage of $13.50 an hour. Both employees are members of KiwiSaver. Their individual employment agreements have a remuneration schedule containing a clause which states that all remuneration is “inclusive of any KiwiSaver compulsory employer contributions”.
The plaintiff employees claim that this clause means when they are paid, KiwiSaver contributions are automatically deducted. As a result, the money they are left with after the contributions are taken out is less than the minimum wage. This means that the employer is breaching section 6 of the Minimum Wage Act 1983, which states that every employee “shall be entitled to receive from his employer payment for his work at not less than that minimum rate”.
By contrast, the employer contends that its approach is permitted by the KiwiSaver Act 2006, which says that the 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. In other words, the KiwiSaver Act 2006 allows an employer (if agreed in the employment agreement) to include its compulsory contributions as part of an employee’s weekly pay, and not as a separate payment.
This dispute has been removed straight to the Employment Court without the Employment Relations Authority issuing a determination, indicating that this is an important question of law. The Authority issued its determination to remove the matter on 6 September 2012, so it may be some time before the Employment Court issues a judgment.
Given that approximately two million Kiwis have joined KiwiSaver, the Court’s decision will have a considerable impact on employers. We will keep our eye on what happens, and keep you informed when the Employment Court issues a judgment.
We understand that there is currently a matter before the Employment Court that concerns the application of the Equal Pay Act 1972 in relation to pay in a female-dominated workplace, namely rest-home carers. It appears that the claim is based on a comparator with non-female dominated workplaces, claiming that the wage are generally lower because carers are predominantly women.
The fact that an Equal Pay Act 1972 claim has been brought is significant in itself — only a handful have occurred over the past 40 years.
We are keeping a close eye on any developments and will report once a public decision is issued.
Ports of Auckland Dispute
As you will recall, earlier this year Ports of Auckland Ltd and the Maritime Union of New Zealand were locked in a bitter standoff over the Ports’ move to make the employees more casual so that it could implement flexible working hours.
In no particular order, the dispute involved the following: the Ports locking out employees, the union members going on strike, the Ports leaking personal details of a unionised employee to a blogger, allegations of physical threats, and the Ports threatening to make all union staff redundant and contract the jobs out. As a result, the parties were in the Employment Court more often than they were away from it.
The parties agreed to go to facilitated bargaining (a process where the Employment Relations Authority helps overcome impasses in collective negotiations) in April, in an attempt to resolve the dispute and agree on a collective employment agreement. While the parties have not yet settled their differences and agreed to a new collective employment agreement, we understand that they are still participating in the facilitated bargaining process, and are making some progress.
While the legal bargaining continues, the industrial action has stopped, and the Ports are operating at full capacity.
However, in a recent determination connected with the dispute (although not directly impacting on the facilitated bargaining taking place) the Employment Relations Authority had to consider whether the Maritime Union’s claim that the Ports used contractors to carry out the work of striking union employees should be heard directly by the Employment Court.
The Authority declined to make such an order. As a result, the Maritime Union’s claim for a penalty under the Employment Relations Act 2000 for the use of contractors during the strike will be investigated by the Authority in the near future.
We also note the emergence of a new union at the Ports — PortPro, which, at last count, represented 33 employees. PortPro and the Ports of Auckland initiated bargaining for a new collective agreement on 19 September 2012, and reached agreement by 4 October 2012. It appears that PortPro has agreed to everything that the Ports of Auckland wanted — flexible shifts and rosters — which are, coincidentally, the very things that the Maritime Union went on strike to prevent. As a result, the Maritime Union is less than amused.
Once again, we will keep you posted on any developments that come to hand.