How to Gauge the Minimum Wage: Sandhu v Gate Gourmet

Court of Appeal Overturns Employment Court’s Decision in Sandhu v Gate Gourmet

In Sandhu v Gate Gourmet New Zealand Limited the Court of Appeal considered whether the protection to certain employees provided by the Minimum Wage Act 1983 (MWA) applies only in respect of time actually worked by those employees, or also in respect of hours that those employees have agreed to work, and are available to work, but do not work at the direction of their employer. 


Gate Gourmet New Zealand Limited (Gate Gourmet) is an airline catering service provider.   During the 2020 level 4 lockdown, Gate Gourmet decided to partially shut down due to the limited work available.  It offered employees different options for pay, one of which was that employees would be paid 80% of their normal pay during this time, conditional on the wage subsidy application being approved.  

Some of Gate Gourmet’s employees were paid the minimum wage and had 40 hours of guaranteed work per week under their employment agreements.  Accordingly, paying only 80% of their normal pay resulted in these employees being paid less than the minimum wage.  The employees’ union brought claims on behalf of its members.

Litigation History

The Employment Relations Authority (Authority) held that Gate Gourmet had breached the MWA as employees were ready, willing and able to perform the work but were only not working at the direction of Gate Gourmet.  The parties were prevented by law from agreeing to an arrangement whereby less than the minimum wage was paid for hours of work that were guaranteed.

The Employment Court overturned this decision on the basis that the MWA guarantees the minimum wage in exchange for work performed. As the employees were not working, the MWA did not apply.  However, Chief Judge Inglis disagreed with the majority as she considered that their finding ignored the common law rule that, where there are agreed hours of work cancelled by the employer, wages remain “payable” provided that the employee was ready and willing to work those hours.

Further information on these previous rulings can be found in our article: The impact of the lockdown on the Minimum Wage Act: the Employment Court judgment in Gate Gourmet.

The Employment Court’s decision was appealed to the Court of Appeal. 

Court of Appeal Decision

The Court of Appeal agreed with the Authority, and the dissenting judgment of Chief Judge Inglis in the Employment Court.  It found that it was it is not lawful to make deductions from wages for lost time not worked as a result of the employer’s direction.  The minimum wage is payable for the hours of work that an employee has agreed to perform, but does not perform because of such a direction.

The Court of Appeal set aside the orders made in the Employment Court and restored the decision of the Authority.  It referred the proceeding back to the Authority to determine any outstanding matters in light of its decision.

In reaching this decision, the Court of Appeal focused on:

  • Section 6 of the MWA, which provides that an employee is entitled to receive payment for his work at not less than the minimum rate, and that parties cannot contract out of this obligation; and
  • Section 7(2) of the MWA, which allows for deductions from the wages payable in certain circumstances.

The Court of Appeal’s reasoning can be summarised as follows:

  • If section 6 of the MWA is read in isolation, the reference to “payment for his work” could plausibly be read either as a reference to work actually performed by the employee, or as a reference to work that the employee has agreed to perform under their contract of employment, whether or not it is actually performed. However, the section of the MWA under consideration must be read in light of the MWA as a whole.
  • Section 7(2) of the MWA only allows for the deduction of wages payable under section 6 for time lost as a result of default by the employee, illness or injury. Outside those prescribed circumstances, deductions for time lost are not permitted: the minimum wage prescribed by section 6 must be paid.
  • The minimum wage prescribed by section 6 must be read coherently with section 7(2). The only consistent reading is that the minimum payment applies to all hours an employee has agreed to work, regardless of whether or not those hours are actually worked, unless one of the exclusions (default, illness, injury) apply.
  • The above interpretation is further supported by the purpose of the MWA, which “sets a floor below which employers and employees cannot go: they cannot contract out of this basic protection”. The MWA is intended to prevent the exploitation of workers and recognises the diminished bargaining power of those in low paid employment.
  • The Court of Appeal accepted that an employee can agree with their employer to take leave without pay, or to reduce the agreed hours to be worked. If agreement is reached to take leave without pay, the MWA does not require any payment during the agreed period of leave.  If an agreement is reached to reduce working hours, the MWA applies only to the reduced hours.  In this case, the Court of Appeal found that there was no evidence of any such agreement between the parties.

What does this mean for employers?

Subject to any further appeal, this decision makes clear that it is unlawful to make deductions from wages where time has been lost as the result of an employer’s direction or an inability of the employer to provide work.  The minimum wage is therefore payable for the hours of work that an employee has agreed to perform regardless of whether the work is actually performed in such circumstances. The situation is different where an employee agrees to take leave without pay or reduce the hours worked; the MWA does not require any payment during the agreed period of leave, and the MWA only applies to the agreed reduced hours. 

If you have any questions about the Minimum Wage Act 1983 or payment obligations during lockdowns, please get in touch with our Employment Team or your usual contact at Hesketh Henry.


Disclaimer:  The information contained in this article is current at the date of publishing and is of a general nature.  It should be used as a guide only and not as a substitute for obtaining legal advice.  Specific legal advice should be sought where required.




Do you need expert legal advice?
Contact the expert team at Hesketh Henry.
Media contact - Kerry Browne
Please contact Kerry with any media enquiries and with any questions related to marketing or sponsorships on +64 9 375 8747 or via email.

Related Articles / Insights & Opinion

Computer Hand Wide
Privacy Commissioner releases draft biometrics privacy code
Biometrics is a trending issue and with the development of technology there are consistently more ways biometric data can be used, from replacing a password to identifying repeat shoplifters in a shop...
03.05.2024 Posted in Business Advice
Building Permit
Build-to-Rent (BTR) Basics
If the term Build-to-Rent is new to you, you are probably not alone.  Unlike countries such as the USA, UK and Australia where BTR is well established, the BTR sector is still emerging in New Zealand...
26.04.2024 Posted in Property
Insurance Contract Law – Parliament finally gets to consider long-awaited reforms
The Government’s Contracts of Insurance Bill was introduced on 30 April 2024.  We are currently reviewing that Bill and a new article is coming soon. In February 2022, the Ministry of Business, Inn...
24.04.2024 Posted in Insurance
Tower Troubles – Body Corporate 366567 (Harbour Oaks) v Auckland Council
Standing 40 storeys tall with 406 units, the Gore Street building in downtown Auckland (formerly known as “Harbour Oaks”) is presently the subject of New Zealand’s largest claim for residential ...
18.04.2024 Posted in Construction & Disputes
Construction Framework Wide BW
OIO Spotlight:  Government issues new directive on foreign investment for build-to-rent housing developments
Earlier this year, the coalition Government announced that it would be introducing a new streamlined consent pathway for build-to-rent developments by way of amendments to the Overseas Investment Act ...
16.04.2024 Posted in Business Advice & Property
Incorporated societies’ reregistration deadline – April 2026 may be closer than you think
The Incorporated Societies Act 2022 (2022 Act) came fully into force on 5 October 2023, meaning incorporated societies can now apply for reregistration under the 2022 Act.  Approximately 24,000 exist...
16.04.2024 Posted in Business Advice
iStock  Construction dpi
Call me? Care is required when calling on a bond
In the recent High Court decision Hawkins Ltd v Elizabeth Properties Ltd, Hawkins was successful in preventing EPL from calling on a $3m bond pending determination of a dispute principally over the ap...
Send us an enquiry

For expert legal advice, please complete the form below or call us on (09) 375 8700.