Wage theft at Maccas – $1 million a year in lieu days or public holiday pay

I am getting a bit annoyed with McDonald’s.

Unite Union believes they have been cheating staff of their alternative holiday entitlements for working on a public holiday. But it has been an uphill battle to get them to accept that fact.

At the end of last year, the Employment Relations Authority ruled on a case brought by the Labour Inspector against Wendy’s following a complaint from a Unite member in Christchurch.  In essence, the authority said that so long as a worker had worked a majority of the same day over at least a three-month period then they were entitled to an alternative holiday or lieu day. Working a majority of days over three months made it an “otherwise working day” for them and therefore met the legal test in the Holidays Act. If you had been employed less than three months then a simple majority of weeks worked would make you eligible and a shorter period on a new shift pattern could also create eligibility.

The Authority decision applies to all staff employed by Wendy’s back to 1 July 2012 and requires the company to check if a public holiday worked would be an otherwise working day under the new standards, credit existing workers with a lieu day if so, and pay previous workers the value of the day if they have left.

Wendy’s did not appeal the decision. They have been in discussions with the Labour Inspector over how to calculate the remediation owed to current and previous employees. If the can’t reach an agreed settlement then I assume they will be back in court at some stage for a final determination.

Wendy’s claimed at the authority hearing that for some workers they were operating a “three out of three rule” to test whether a worker got an alternative day. Under this test, the worker had to work each of the three previous Monday’s if the public holiday was on a Monday to be deemed “an otherwise working day”.

The Authority was very clear and specific that the three-week rule was unlawful and would disentitle many staff from getting lieu days.

McDonald’s operated a three out three rule for many years. We hoped that they would look at the authority decision and agree to remedy the situation for their own staff going back as far as they are legally liable for.

However, the simply refused to accept that staff had been disadvantaged and that they needed to pro-actively do something to remedy it.

We also knew that McDonald’s had been in discussions with the Ministry of Business, Innovation and Employment (MBIE) about doing remediation for improperly calculated annual leave entitlements over many years.

It was important to us that the lieu day issue was fixed as part of the overall remediation for annual leave.

It has been over three years since we first wrote to the company questioning how they calculated annual leave and asking them to fix it. At first, they simply ignored or rejected our arguments out of hand. We then applied for an Employment Relations Authority hearing on the issue.

Then in early 2016, we were assured by the company they accepted they had got things wrong and it would be corrected through a payroll audit report. We were still waiting at the end of 2016 for a report but assured again that it was in progress and remediation would happen soon.

But again nothing happened.

Then in 2017, we learnt that McDonald’s was one of the companies being inspected by MBIE over non-compliance with the Holidays Act. We were somewhat reassured that there was no escape by McDonald’s now.

Then late last year the company came to us with a completely stupid “remediation” process they wanted us to agree to that would deny most workers any remediation. It was simply unlawful.

We rejected that proposal and tried to engage more directly with MBIE on what was wrong with McDonald’s pay system and the steps they needed to take to fix it.

Alarm bells again went off a few weeks back when McDonald’s claimed to us that MBIE had not flagged the failure to properly account for lieu days as part of the remediation needed.

That is why we made an urgent wage and time record request to the company to get the information we needed to give to MBIE to prove the company was routinely denying entitlement and that needed to be fixed as part of the overall annual leave remediation. What people are owed for annual leave can’t be calculated correctly if they haven’t got all their lieu days or cash equivalent.

The company supplied us with the information we needed, eventually. At first, they sent us hard copies which are impossible to analyse. Then we got spreadsheets the information came from two separate payroll systems that it was a small nightmare to bring into one database to prove or disprove our suspicions.

What we discovered was that in one calendar year our sample group of 50 employees lost over 100 days in pay or lieu days. Some worked a public holiday and got no lieu day even though they had worked a majority of the relevant days over a three-month period. Alternatively, they missed being paid for the public holiday when they did not work it because that day was an “otherwise working day” for them.

Last year, McDonald’s changed to a three out of five formula. This is fairer but still not legally compliant in our view.

We estimate that the loss of entitlement is worth over $1 million for each year the company has to go back and fix things.

We wrote to MBIE bringing the problem to their attention. We will be seeking their assurance that they will make this part of the remediation work that companies must do. It is actually simpler, and cheaper in the long run, to do this at the same time

When a worker takes something from an employer it is treated as theft. Workers can be sacked and if it is serious enough they can be prosecuted in criminal court.

Wage theft by the bosses seems to be treated much less seriously. Maybe that should change.