Understanding Minimum Wage Entitlements During a Pandemic
Recently, the Employment Court dealt with its first case relating to an employee’s rights to be paid the minimum wage during the COVID-19 lockdown. In Gate Gourmet New Zealand Limited and Shaun Joils v Suhkjeet Sandhu  NZEmplC 237, the Court was tasked with determining whether Gate Gourmet New Zealand Limited (“Gate Gourmet”) had violated section 6 of the Minimum Wage Act 1983 (“MWA”) by reducing most of its employees’ wages to 80 percent during the lockdown, despite this reduction bringing the employees wages below the applicable minimum wage rate.
Gate Gourmet is a business which provides in-flight catering services to passenger aircrafts. In the wake of the COVID-19 government-imposed lockdown, despite being an essential service Gate Gourmet partially shut down its operations due to having very little work. As a result, Gate Gourmet instructed a number of employees – including the employees that brought the proceedings in this case – that they were not required to attend work, as there was no work for them to complete. These employees were paid 80 percent of their normal wages, which resulted in them being paid less than the minimum wage.
Section 6 of the MWA states that:
Notwithstanding anything to the contrary in any enactment, award, collective agreement, determination, or contract of service, but subject to sections 7 to 9, every worker who belongs to a class of workers in respect of whom a minimum rate of wages has been prescribed under this Act, shall be entitled to receive from his employer payment for his work at not less than that minimum rate.
The Authority Member who presided over the case found that Gate Gourmet breached the MWA, as its employees were ready, willing and able to carry out their functions in an essential industry and thus Gate Gourmet was required to pay them at least the minimum wage.
Issue on appeal to the Employment Court
Gate Gourmet appealed the Authority’s interpretation of section 6 of the MWA and its interpretation of what constituted performing “work” within the meaning of the MWA.
Gate Gourmet argued that the Authority applied the wrong legal test by focusing on whether the employees were ready, willing and able to carry out their normal functions. Instead, Gate Gourmet contended that the MWA only applied to it if the employees were actually performing work, which they were not. In essence, their argument was that where no work was performed, there was no corresponding obligation to pay the minimum wage under the MWA.
Employment Court Decision
The Employment Court held that the case turned on whether or not the employees had actually performed any work. The Court rejected the employees’ broad interpretation of the meaning of the word “work”, explaining that such an interpretation would undermine the core concept of the MWA – the exchange of payment for work.
The Court identified the following factors to be considered in determining whether an activity was “work”:
Although the employees did not advance an argument that they were working in the context of the factors identified above, the Court nevertheless noted that Gate Gourmet did not place any constraints or restrictions on the employees, the employees had no responsibilities during the relevant period, and Gate Gourmet received no benefit from the employees’ employment during the relevant period.
Accordingly, the Court held that when the employees stayed home and were not performing activities for Gate Gourmet during the lockdown, they were not working for the purposes of section 6 of the MWA.
Given that this case was the first case the Employment Court heard relating to employment rights and obligations during a pandemic, it is a welcomed clarification for employers and employees alike, as it is important for employers and employees to understand their rights and obligations to each other in the context of a pandemic.
In summary, whilst employees and employers still have corresponding good faith obligations to each other, if an employer is forced to close its operations and cannot offer work to its employees, section 6 of the MWA does not apply.
If you have any questions or concerns over an employment dispute or issue that has arisen, feel free to come chat with someone from our employment team as they would be happy to help.