Employers: Is Your Record Keeping Up To Scratch?
Many farmers would be aware of the action that has been taking place in the dairy sector focusing on employer maintenance of accurate time and wage records by the Ministry of Business, Innovation and Employment's (MBIE) Labour Inspectorate. Between December 2013 and April 2014 the Labour Inspectorate (previously known as the Department of Labour) visited 44 farms finding that 33 were in breach of employment laws. The Ministry has been taking action against farmers that are not complying with the legal requirements with non-compliance attracting fines of up to $10,000 for an individual and $20,000 for a company. Most of the breaches relate to insufficient record keeping and breaches of the minimum wage. It has become clear that this is an area that many farmers need to improve on and the start of the new season is a good time to make this happen.
Record Keeping Requirements
Employment records can be kept on electronic or in paper form but must be kept for 6 years. Wage records for an employee must include the following:
- A signed copy of the employment agreement.
- Evidence that the employee is entitled to work in New Zealand (Details of citizenship or work permits).
- A tax code declaration (IR330) completed by the employee.
- Details of the job description.
- Bank account details.
- Date that the employee started.
- Details of time worked, payments made and holiday and leave entitlements.
- The hours worked each day including start and finish time and non paid breaks taken.
- Value of board and lodgings provided.
- Dates and payments made where annual leave, sick or bereavement leave has been taken.
- Dates and payments for any public holidays worked and records of public holidays where the employee was entitled to payment but did not work.
- Agreements where an employee requested cashing up of annual holidays (An employee is allowed to cash up one week per year).
- Employees date of termination, plus any other relevant details such as verbal or written warnings or anything else that may be relied upon as evidence at a later date.
It is crucial that time sheets are filled in and time off recorded and signed off by the employee and employer so that if a dispute does occur at a later date then there is evidence available to support both parties. The employer in particular needs to have this safeguard in place.
Minimum Wage Act
An employer must pay its employees at least the relevant minimum wage set annually under the Minimum Wage Act 1983 (currently $14.25 an hour for employees aged 16 or over). The minimum wage must be paid for each hour worked on the farm. Wages cannot be averaged over a season, which in the past has been common practice, particularly in the dairy sector.
Farmers that are coming unstuck are those with employees that are earning low salaries and breach the minimum wage rates over the busy season. Last year a Stratford farmer who filed an objection with the Employment Relations Authority on the basis that weekly wages paid under the minimum wage should be offset against wages paid during the dry season, lost the case and was ordered to pay over $6,000 to the former employee in wage arrears. Staff must be given adequate time off during the busy period (which is properly recorded), and if required casual labour brought in to help share the workload.
Other Areas of Focus
Another area where the Labour Inspectorate is focusing on is whether a staff member is permanent or casual. A staff member employed on a casual basis where holiday pay of 8% is included in the payments made must be just that, a casual worker. If they are kept on a more permanent basis this could lead to trouble - with labour inspectors finding in some cases that holiday pay still needs to be paid even where the farmer thought this was already the case. Labour inspectors are also focusing on the impacts on migrant labour – with more farm visits starting in June - so it is very important that all employees are entitled to work in New Zealand and that evidence of this is retained within the employment records. Where employees are provided accommodation then this must be correctly accounted for, at reasonable market rates.
Advice and Assistance Available
Employment records must be made available to employees, their unions and labour inspectors if they ask for them, so they must be kept accurate and up to date. MBIE, DairyNZ and other organisations have plenty of information available to employers (and employees!), including tips on best practice, templates for time and wage records, as well as holiday and leave records. Federated Farmers are also a great source of advice and their employment agreements cover all aspects required by law. Accountants, lawyers, bankers and farm advisors can also assist on these and other matters.
It is quite clear that there is a greater need for all business owners, including farmers to manage their business better in all areas. If you are uncertain then advice should be sought, earlier rather than later.
I'd like to wish all new farmers to the district a warm welcome and let's hope for a productive season ahead.
Cheyne Waldron is a director of Bailey Ingham Ltd, Chartered Accountants, Otorohanga