For 15 years in every Smiths City store in New Zealand, sales staff who attended pre-shift 15 minute morning meetings were not paid for this time as it was not considered to be time worked. Once the extra time was accounted for, this resulted in some staff not receiving their minimum wage entitlements. The Labour Inspectorate had previously issued an improvement notice to the company in early 2016, requiring them to calculate arrears of pay over the last six years for all current and former employees earning at or close to minimum wage. The Labour Inspector indicated that the underpayment of staff amounted to approximately $800 per year for a staff member consistently earning no more than the minimum wage. This notice was successfully challenged by the company at the time in the Employment Relations Authority.
In Labour Inspector v Smiths City Group Limited 2018, the Labour Inspector challenged the Employment Relations Authority’s determination. The company argued that they had met their minimum wage obligations on the basis that such meetings were not compulsory, that staff received additional paid commission and incentives and that the company had a flexible attitude which enabled employees to leave early or take longer breaks when the store was quiet.
The Employment Court rejected the company’s arguments and confirmed the improvement notice should apply and be complied with by the company, taking into account the repeal of section 8A of the Minimum Wage Act by replacing reference to that section with section 130 of the Employment Relations Act 2000 by way of variation. It decided the daily morning meetings constituted ‘work’ for the purposes of the Minimum Wage Act and that additional commission and inventive payments should not be taken into account when assessing compliance with minimum wage requirements.