Minimum wage payments during a Level 4 lockdown – what you need to know

Print Friendly, PDF & Email

ARE EMPLOYEES AT HOME  IN LOCKDOWN ENTITLED TO THE MINIMUM WAGE?

On 22 March 2020, the Government announced that we would enter into a Level 4 lockdown in just 4 days.  Every non-essential worker must stay home.  Amongst all the stress and uncertainty, a question on everyone’s mind was; ‘what are my obligations and rights regarding wages’?

During Level 4, many employees were sent home, but did not work from home.  This was especially the case for trades people and hospitality staff – professions for which the site/location is critical to the business.

Cases are filtering through the Employment Relations Authority and Employment Court and so we are now getting a clearer picture about how the relevant statutes, employment agreements, and the lockdown notice interact.

The Employment Court recently considered a discrete issue about whether employees at home are entitled to receive the minimum wage during the lockdown period. The Court held that, in certain circumstances if the employee is not ‘working’ while they are at home, they are not entitled to receive minimum wage.

What counts as ‘work’?

To determine whether an activity is considered work, the Court looked at the following factors:

  • The constraints placed on the freedom which the employee would otherwise have to do as they please; and
  • The nature and extent of responsibilities place on the employee; and
  • The benefit to the employer of having the employee perform the role.

The employees in this case were catering staff, tasked with preparing, cooking and delivering food.  They were paid an agreed number of hours at home, but when the pay was divided across the hours they would usually work it fell below the relevant minimum wage rate.

The Court did not consider that while the employees were at home, they were working for the purposes of the Minimum Wage Act 1983. This is because they had full freedom to do as they please at home (within the bounds of the lockdown), no responsibilities to their employer and their employer was not benefitting in any way from the employees.

What does this mean for you?

If we do go into another Level 3 or 4 lockdown, an employer’s payment obligations and rights are now a little bit clearer. This is, however, entirely on a case-by-case basis – every individual employment agreement attaches different obligations/rights to each employer and employee respectively.

As with all new law – this and other cases may well be appealed to higher courts and so this may not be the final position.  Watch this space!

How can we help?

This ruling is a bit of an anomaly.  Usually the cases we see about minimum wages involve employers getting tripped up over long hours vs salary payments (or missing a minimum wage update) meaning staff end up under the relevant rate.

WRMK Lawyers has Northland’s largest team of employment law specialists. If you need some help or guidance, please give one of us a call or contact your usual WRMK lawyer for advice.

WRMK Lawyers takes all reasonable care to make sure that the information in this article is up-to-date and accurate at today’s date. It is necessarily general information and not intended as legal advice to be relied upon.

Our thanks to Simon Davies-Colley and Laura Lee for writing this article.


Get in touch with your question now