Salaries and the Minimum Wage – Employment Lawyer – Business Lawyer – Dukesons Business Law

September 2018

This Blog isn't legal advice – if you need legal advice on any employment law or other business law or commercial law issue, please contact me. I'm business lawyer or commercial lawyer who provides advice on a wide range of business law or commercial law issues including on employment law.

Some employers may not know that the requirement to pay the minimum wage under the Minimum Wage Act applies whether an employer pays wages or salary. A recent case involving Burger King in NZ (owned by Antares Restaurant Group Limited) has highlighted this.

The case, which has been well publicised because of Burger King’s reasonably high profile and because it employs some immigrants, involved an employee whose employment agreement required them to work additional hours to get the job done, if that were to be necessary, with no adjustment to their salary - the salary covered everything.

The clause isn’t unusual but the problem was that the salary wasn’t a great salary and was only a little more payment of wages at the minimum wage. When the extra hours put in by the employee were factored in, they were being required to work for less than the minimum wage. That isn’t legal. Employers can’t require employees to work without being remunerated and as a minimum, they must be remunerated at the minimum wage, whether they’re paid by wages or by salary.

Part of the problem in the Burger King case was that the employer didn’t have a system to keep track of the hours that the employee was working, so that the actual number of hours worked couldn't be tracked. (There’s no mystery to this - if the employer didn’t know that the problem existed, the need to keep track of hours worked wouldn’t have occurred to them.)

A lateral thinking employer might consider trying to avoid the requirement by putting an employee on a commission only basis of remuneration. That would also be illegal unless the employee was guaranteed to receive the minimum wage. No matter how an employee is to be paid, they must receive at least the minimum wage.

Many employers with a ‘salary covers all” type clause won’t have anything to fear because the salary paid would be at such a rate as to ensure that the employee receives payment of more than the minimum wage for all hours worked.

Not only was the employee entitled to have their pay topped up to ensure that the hours that they did work were paid on the basis of the minimum wage but Burger King was fined. It was only a small fine in the particular circumstances but the fine would be more substantial if more was involved e.g. a number of employees who were underpaid or the amounts in question were more significant or the employer’s actions were shown to be deliberate or even careless.

Of more significance was the 12 months ban that has been placed on Burger King from supporting visa applications during this time, because the penalty that was imposed rendered Burger King a non-compliant employer. This would prevent Burger King from sponsoring immigrants as prospective employees for the chain.

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