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Employment court releases important Covid-19 decision

Here's the latest employment law update was written by Lane Neave...

Were employees who did not perform work during Covid-19 entitled to receive minimum wage paid for their contractually guaranteed hours?

After a few months’ waiting with bated breath, we finally have an answer: the Employment Court has released the Gate Gourmet New Zealand Ltd v Sandhu decision, arriving at the conclusion that employees who could not work due to the Covid-19 Level 4 lockdown were in fact not entitled to the minimum wage for their contractually guaranteed hours.

Background

Before jumping into the law, we briefly re-canvass the background below:

  • Gate Gourmet was classified as an essential business during level 4 lockdown.
  • The employees’ agreements guaranteed 40 hours a week at minimum wage.
  • However, the nature of the business as an in-flight catering service meant that Gate Gourmet had very little work to offer their employees.
  • Gate Gourmet made the decision to implement a partial closedown and pay their employees 80% of their normal wages with assistance from the Government wage subsidy.
  • Employees were offered the choice of using their annual leave to ‘top up’ the remaining 20%.
  • The Union raised a claim against Gate Gourmet for breaching s 6 of the Minimum Wage Act 1983 (MWA), which provides that, subject to ss 7 – 9, a worker covered by the MWA “shall be entitled to receive from [their] employer payment for [their] work at not less than that minimum rate”.

Gate Gourmet countered by arguing that the MWA only applied where the employee actually carries out work. As no work was actually performed by these employees who remained at home, the requirements of the MWA did not apply.

The Union and employees maintained that ‘work’ in the context of the MWA must extend to include situations where the employees are ready, willing and able to work, but the employers have made the decision to not put the employees to work.

Decision

The MWA does not define the term ‘work’ – the meaning of the term is to be ascertained from the text and the purpose of the MWA.

The Employment Court considered that the purpose of the MWA is to ensure employees are provided a base wage for the work they performed, rather than to guarantee a minimum income. In other words, the MWA specifically relates to hours actually worked.

The Court therefore rejected the wider definition of work as advanced by the Union, as to do so would:

  • require reading in words that Parliament had omitted; and
  • undermine the underlying principle of s 6 of the MWA; that being to exchange payment for work.

For completeness, the Court also outlined that, while they were at home, the Gate Gourmet employees had no constraints or responsibilities placed upon them, and Gate Gourmet received no benefit from them.

The employees did not carry out ‘work’ as envisioned by the MWA, and the MWA accordingly does not apply.