I want to celebrate the important role Unite Union has played in uncovering the widespread wage theft associated with non-compliance with the Holidays Act by nearly all employers. This involves the repayment of $2-$3 billion to working families. Many big employers are still working out what they owe. McDonald’s will have payments for 50-60,000 employees over a decade to repay.
Full-time staff with regular hours were not generally affected so much, but industries that had part-time workers or full-time staff like security guards who might work irregular hours were being cheated massively.
Most employers simply accumulated annual leave in hours and then divided those hours by four to calculate a week’s leave. But the law said that if a worker had increased their average hours during the year then a week’s leave should reflect the higher average at the end of the year. If an employer was unsure, they could use the last 4 weeks, and compare the average for the year with the average for the last four weeks and they should pay the higher number of hours. If a worker got promoted from part time to full time a week before the leave was taken then all four weeks should be calculated at 40-hours a week not the average for the year.
Earning an alternative holiday for working on a public holiday when it was an “otherwise working day” was also being cheated on by major employers. Wendy’s said no worker was entitled to an alternative holiday because no day was an otherwise working day since no day was a guaranteed day of work for anyone. Recently Unite discovered that Wendy’s is still cheating workers of a holiday payment when they don’t work the public holiday even if they have worked 7 or more of the previous same days. In Wendy’s mind work on a public holiday is “voluntary” so if the minimum hours are made up on another day they lose the holiday entitlement. We are in court again on that matter.
McDonald’s said workers had to work three out of four of the same previous days then refused an alternative holiday if the worker took a sick day or an annual leave day on one of the three days.
Wendy’s was taken to court by the Labour Inspector and the December 2017 judgment said the employer should use a simple majority of weeks as being the determination of entitlement (7 out of 13 for example).
The annual leave cheating issue first came to the attention of Unite Union during the Collective Agreement negotiations with Armourguard in March 2014. One of the delegates raised a pay query with her organiser John Crocker. Why did her pay go down when she took a week’s annual leave? The delegate wasn’t particularly familiar with the Holidays Act but it just felt wrong to her.
John engaged with the company but all their complicated explanations didn’t stack up – when he got out the Act, her payslips and a calculator it still looked like she was underpaid. He surmised that Armourguard didn’t seem to be applying s 21 (2)(b) of the Holidays Act – the simple principle that the worker gets the higher of their ordinary pay or their average pay. The debate with Armourguard took months and months, involving the company getting several legal opinions. It took a lot of effort to convince the company that they had a systemic payroll problem that affected most of their employees going back years and years. But the remediation only affected our members at the time.
After this breakthrough Unite began to wonder: have other employers got this wrong? or other aspects of the Holidays Act? Little did we realise at the time but we had uncovered systemic non-compliance of practically every payroll system in the country. Unite began to reach out to all our employers and brought this to the attention of the Council of Trade Unions. It turned out the Police Association had discovered the same thing contemporaneously. It later came to light that MBIE, the government agency responsible, had known about widespread non-compliance since 2012 but had been instructed to sit on it by the government at the time.
Documents released in 2016 by MBIE estimated that a third of New Zealand workers were being underpaid by at least $500 a year.
On 9 December 2014, MBIE told the government that “most employers have made little attempt to comply” with their obligations to pay workers correctly under the Holidays Act.”
The documents show how MBIE initiated discussions where “payroll providers and large employers provided frank feedback on the issues that lead to non-compliance” and these groups were acknowledged on how they “generously gave their time and insights.”
Officials commented that: “The Labour Inspectorate has significant intelligence as to the size and location of many of these breaches. However, it has decided to concentrate on reactive work regarding the Holidays Act while the Ministry gets a handle on these issues.”
Unite wrote to all the employers we dealt with at the beginning of 2015. They all simply went into denial, We then sought wage and time records to prove our case and prepared to take legal action against McDonald’s at the end of 2015.
After we had taken that legal action MBIE publicly acknowledged for the first time in March 2016, that it was a widespread problem and set up a working group to work on the problem.
On April 1, 2016, the Daily Blog had an exclusive by me detailing the systematic wage theft under the headline “EXCLUSIVE: Holiday pay miscalculation more than a “mistake”
It seems that the problem is so massive that only a government-led process can assure all workers in New Zealand are being paid properly.
The government should convene a working party involving unions, employers, payroll providers to devise solutions that can be imposed on all employers.
No employer should be allowed to claim it is all too complicated. That is a lie.
There has been large-scale theft. It appears to be deliberate. Workers must be paid their full entitlement going back as many years as is necessary.
Unfortunately, the government left MBIE in charge of a process and they have allowed many private-sector employers to escape responsibility.
State sector and local body employees have all had a remediation process. The Health Boards alone are having to repay an estimated $1.2 billion to employees.
Instead of forcing the major payroll providers to do something collectively to fix the problem in the private sector, MBIE announced a list of what they determined were the 100 major private sector employers to audit. Their list didn’t include Armourguard, First security, or Burger King which should have been included.
Some employers went back to 2003 to calculate what they owed, but most went the minimum they considered they were legally obliged to – usually six years.
Because each investigation has been an almost forensic examination, MBIE has refused to add any more companies to their existing list. Unite did get BK investigated because we suspect there is an additional wage theft problem with the company allocating annual leave without permission to make up minimum weekly hours. We can only hope that is ongoing since MBIE doesn’t seem to think it should report to us on progress despite us being the complainant. I had to do an Official Information Act request to confirm the investigation was ongoing.
Most private-sector employees won’t get anything. Usually, it is only companies with an active union presence that has ensured compliance if they were not on the list of 100.
To help employees identify which employers are part of the remediation process we created the Stop Wage Theft web page. You can enter your employer’s name to check the stage of the process, This has not been updated for a while but you can see if your employer has been identified as a culprit, If you have other information we are missing from the website then let us know.
Unite wants to celebrate the retrieval of over $2 billion for workers of New Zealand. It should have been more but a win is still a win.