Deductions, Minimum Wage, and Maximum Hours of Work

The recent Employment Court decision in Soapi v Pick Hawke’s Bay Incorporated [2025] is a landmark decision and important to all employers, not just those with RSE (Recognised Seasonal Employer) workers. There are many implications, although the widest impact is the ruling that deductions cannot be made from an employee’s pay if it takes that pay below the minimum wage. Importantly, even if the employee consents or requests the deduction, it cannot be made. This excludes statutory deductions such as PAYE, student loans or Court ordered deductions.

Background

The plaintiffs—three seasonal workers from the Solomon Islands—were employed by Pick Hawke’s Bay under the RSE scheme. They alleged that the employer made unlawful deductions from their wages, leaving them with as little as $100 per week to live on. These deductions included costs for accommodation, travel, work gear (including PPE), and other items, some of which were not disclosed or approved through Immigration New Zealand (INZ), which is a requirement for RSE employers.

The Court found that Pick Hawke’s Bay breached multiple provisions of employment law, including:

• Section 4 of the Wages Protection Act: requiring full payment of wages unless lawful deductions are made.
• Section 6 of the Minimum Wage Act: prohibiting deductions that reduce wages below the statutory minimum.
• Section 7 of the Minimum Wage Act: limiting deductions for lodging to 5% of wages unless a cash value is properly fixed.
• Section 11B of the Minimum Wage Act: requiring employment agreements to specify maximum hours of work.

Key Findings

1. Unlawful Deductions: The Court ruled that many deductions made by Pick Hawke’s Bay were unlawful. These included charges for work gear, PPE, accommodation, and other items not approved under the ATR (Authority the Recruit) process[i] or not properly consented to by employees.
2. Minimum Wage Violations: Deductions reduced employees’ take-home pay below the minimum wage, which is not permissible—even with written consent—unless explicitly allowed under section 7 of the Minimum Wage Act.
3. Accommodation Charges: The employer charged seasonal workers for accommodation based on annual costs, despite their employment being seasonal. This meant workers paid for months they did not occupy the accommodation. The Court found this practice unreasonable and exploitative.
4. Retention of Passports: Pick Hawke’s Bay required employees to surrender their passports upon arrival. While claimed to be for safekeeping, the Court noted this practice could contribute to vulnerability and exploitation.
5. Lack of Transparency: Some accommodation providers were linked to Pick Hawke’s Bay, raising concerns about conflicts of interest and inflated charges.

Implications

If you have employees, on or near the minimum wage, check that you are not inadvertently breaching the Minimum Wage Act. This could be apprentices who bought tools through the company account and are paying it back each week through their pay, or small deductions for the work social club or Christmas party.

If you provide accommodation for your employees, the wording in the Employment Agreement is critical, otherwise there are significant limitations to what can be deducted.

Check your Employment Agreements to identify if the ‘Hours of Work’ clause has a maximum number of hours specified. If not, it will need rewording.

If you have any concerns, please call us, and we have a webinar on 7 November to discuss this case. Click here for further details.

[i] This is a process specifically relating to Immigration New Zealand in regards to recruiting RSE workers.