The large retailer Smith City recently lost a case in the Employment Court, which has been widely reported in the media.

The issue was whether or not employees had to be paid at least the minimum wage for 15 minute ‘optional’ meetings before the start of their shift.

The Court said that these meetings were ‘work’ because there was an expectation communicated by managers that employees who cared about their jobs attended them. It didn’t matter that employees were not contractually required to attend, that some employees didn’t attend from time to time or that the meetings were informal.

It followed then that all employees need to be paid at least the minimum wage for the time spent attending these meetings.

The Court also said employees must receive at least the minimum wage for time spent attending these meetings regardless of what else they got paid during the pay period.

Previously it had been a fairly standard practice for many employers to make sure they paid at least the minimum wage on average for all hours worked within a pay period (e.g. a fortnight). Interestingly the Labour Inspector who brought the Smith City case to the Courts originally seemed to think this was an OK practice. They only brought the case for those employees being paid ‘at or near’ the minimum wage – presumably because they thought employees whose hourly rate worked out higher than the minimum wage on average for all the hours worked including the 15 minute meetings, were being paid acceptably. The Court disagreed.

In practice this approach almost certainly also means the employees should have been paid at their contractual hourly pay rate for these units of time, where their hourly pay rate was higher than minimum wage. That point wasn’t part of the case the Court was considering.

Smith City has 3 months to comply with the decision and will have to pay backpay to all affected staff who haven’t been paid to attend these meetings for the past 6 years.

This case has significant implications for employers who operate any of the following practices, which until now have been quite common particularly within retail, hospitality and construction:

  • An expectation, contractual or otherwise, that employees attend work earlier than their paid shift start time to ‘prepare’.
  • An expectation that employees cash up, clean up, or continue serving a customer after their paid shift ends.
  • Any form of meeting that employees are expected (or encouraged) to attend outside of their paid working hours.
  • Any form of requirement for employees to rectify work errors in their own time.
  • A requirement to attend unpaid work-based training or potentially any requirement to undertake other activities to meet accreditation requirements for their job.
  • A flexible approach where employees may work more than their paid hours one day and be allowed to leave early or take a longer lunch break on another day without this being specifically recorded in their wage and time records.

As always there are a range of options available to employers to respond to this issue. Whether or not the example situations above are definitely a problem will depend on a range of factors including what is contained in the employment agreement. Contact us for further information or advice.

Alice Porter

ER Resolutions

M: 022 017 0091 T: 04 976 0732