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Court: No obligation to pay minimum wage to non-working employees during lockdown

Gate Gourmet is a Zurich-headquartered company providing airline catering services for airlines and lounges worldwide, including Auckland International Airport.

The Employment Relations Authority found that Gate Gourmet had breached the Minimum Wage Act by paying staff less than the minimum wage during the Covid-19 lockdown.

The company appealed the decision in the Employment Court. At the hearing the employer claimed it was a simple question of whether the Minimum Wage Act applied to the payment of employees who were not actually working.

They argued “This is not a case about exploitation of workers,” and “The Minimum Wage Act has no application to these facts and as such the (Authority) determination is incorrect and should be overturned.”

Gate Gourmet was deemed to be an essential service during the alert level 4 lockdown in March, but told its employees it would need to partially shut down operations. The company communicated to employees if they were not rostered on, or been asked to work, they should stay at home. During the partial close-down, employees were being paid 80 per cent of their normal pay (by agreement), and this was conditional on the company receiving the government wage subsidy.

The employees ordinarily were paid weekly at the minimum wage. Prior to March 30, they were paid $17.70 an hour or $708 a week for working a 40-hour week. On April 1, the adult minimum wage increased to $18.90 per hour. Since April 1, the employees who were not working had been paid at 80 per cent of their normal pay, or $604.80 per week.

Gate Gourmet told employees that those who worked would be paid the new minimum wage rate and those employees who were not rostered on, and did not work, would continue to be paid at 80 per cent of their normal pay.

The union disagreed and challenged Gate Gourmet believing they were not entitled to reduce the pay of any full time employee below the minimum wage of $756 per week.

The union said the court needed to examine why the employees were not working stating “The non-work of the employees is of no fault of the employees; it was through a considered approach from the employer”. He cited varying hours, engaging employees in other work and redundancy as alternative options.

In their majority decision, Judges Holden and Beck said the Minimum Wage Act “does not provide for a guaranteed minimum income” – it only relates to payment made in exchange for work done.

“When the defendants stayed home, they were not working for the purposes of s 6 of the [Act], the [Act] was not engaged, and no statutory minimum wage entitlements arose.”

However, Chief Judge Inglis had a differing view, saying in common law, where agreed work hours are cancelled, wages remain “payable” if the employee is willing and ready to work those hours and also said “The reason why they could not work the 40 hours had nothing to do with their default, illness or accident, and so no deduction could be made from the minimum wage they would otherwise be entitled to receive.” She said there had been a breach of the Minimum Wage Act, and she would have dismissed the company’s appeal on that basis.

However, the final ruling was that Gate Gourmet was not legally obligated to pay non-working employees minimum wage during lockdown.

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