It is quite common for employers to have a mixture of employees on salary and wages where they are paid by the hour.
Irrespective of which arrangement you have with an employee you still must ensure that you are not breaching the requirement to pay someone no less than the minimum wage. From 1 April 2021 the minimum wage for adults increased to $20.00 per hour.
If you have employees on a salary and require them to work extended hours on a regular basis then may affect whether or not the salary that you pay them meets the requirements of the minimum wage.
There have been a number of cases that have been before the Employment Relations Authority or the Employment Court where employers have been caught out by this requirement.
One employer that got caught out and came before the Employment Relations Authority was an organic farm in the upper North Island. The company which owned the farm employed a Manager to run the farm as the Director of the company resided overseas. Therefore, the Manager was effectively in a totally autonomous role but was on a salary.
When the Manager was terminated, he requested copies of wage records and then brought a claim on the basis that he had been paid less than a minimum wage because of the hours he was required to work albeit for a salary. The Authority simply calculated the hours that he worked and divided it by his salary and the hourly rate that was calculated as a result was less than the minimum wage. The employer was ordered to pay him the difference plus interest.
The Authority also has the power to impose penalties on an employer in this type of situation and if there are grounds to order that a Director become personally liable for the wage arrears and penalties.
If you employ staff on salary and they work long hours above those specified in their employment contract you need to ensure that you are not in breach of the Minimum Wages Act 1983.
If you are unsure of your position, feel free to contact to contact Eugene Collins at our employment law team for advice.
