Dairy Farm Employer’s Update
As many of you already know dairy farming employment practices have come under the microscope of MBIE, who were formerly known as the Department of Labour. Farming in the past may have flown under the radar as it was viewed as its own area of employment, this is no longer the case and we all need to be mindful of compliance.
On farm check-ups are now occurring with no notice required to be given to farm owners and managers. MBIE focus can be viewed in three elements.
- Seasonal averaging of wages, accurate pay for hours worked, and a desire to view salary packages on an hourly basis not an annual basis.
- Housing allowances which are part of a salary/remuneration package are considered wages for Minimum Wage calculations, the value of the house is to be agreed to by both parties as part of the entire contract and salary package.
- Working on Public holidays and receiving appropriate pay rates, along with all break times being adhered to.
Seasonal Averaging Update
Seasonal averaging of wages is illegal. The MBIE have clarified that even if an employee requests to have their salary “averaged” it is still not permitted. Each hour of work must be paid at, at least the minimum wage of $14.25. Employers have an obligation to maintain a wage/time record for each employee, as per the Employment Relations Act 2000.
The safest way to do this is via timesheets.
A possible solution is to work out, in advance, a seasonal prediction of the hours which will be worked during each season, this is however often difficult to accurately predict on the farm.
We suggest you use our template for working out the appropriate levels of seasonal pay for your employees. This gives all parties the information they require, and ensures everyone is legally compliant. Contact us if you would like to run your staff working hours through our compliance template.
Often the annual sum paid to the employee will still be around the same amount, for example for a farm employee working a 12 days on 2 days off schedule where:
If this precise schedule were being followed the following weekly wage payments would occur:
During Calving: $867.21 Gross per week
During Milking: $684 Gross per week
During Dry: $610.96 Gross per week
At $14.25 per hour such a work schedule would require the employee be paid at least $37,548.75 annually. This calculation requires that scheduled time off be adhered to, as hours worked are based on 12/14th’s of the available hours in any given week at all times of the year, even during calving, or employees will need to be compensated additionally for working additional hours.
Please bear in mind that your payroll system must reflect these compulsory seasonal alterations to payment of wages.
NOTE: The seasonal prediction is a guideline to base annual salary on only, If using this kind of remuneration structure employees still need to be paid for additional hours worked over and above that of the seasonal prediction in any given pay period, especially during calving.
Housing Allowance Update
Following significant confusion and different opinions, the MBIE issued the following statement:
Which can be summarised as stating: the agreed value of accommodation deducted before payment of wages will be included as “wages” for Minimum Wage Act calculation purposes.
Please note that for employers adopting a separate Residential Tenancies Agreement for the property, filing and notice obligations should be considered:
To end a periodic tenancy a landlord can give a tenant a minimum of 42 days’ written notice if: they wish to use the property to house an employee and the tenancy agreement with the tenant states that they might use the property for this purpose. In all other cases the landlord must give the tenant a minimum of 90 days’ notice to terminate a periodic tenancy. No reason needs to be given to the tenant in a 90 days’ written notice to terminate.
Public Holiday and Break time Update
Exert from Page 7 of our own Contract:
5.1 Public holidays are set out by the Holidays Act 2003 and include Christmas Day, Boxing Day, New Years Day and the 2nd of January, Good Friday, Easter Monday, Anzac Day, Labour Day, Queens Birthday, Waitangi Day and the anniversary of the province in which you live.
5.2 Public holidays shall be taken and paid in accordance with the provisions of the Holidays Act 2003.
5.3 The employee shall work on public holidays when requested to do so by the employer. The employer shall give reasonable notice to the employee whenever possible if the employer requires the employee to work on a public holiday.
5.4 If the employee is required to work for the whole of or any part of a public holiday, then the employer will pay the employee the relevant daily pay or portion of relevant daily pay for hours worked plus half that amount again. Also referred to as “time and a half”.
5.5 If the employee works on any part of the day the public holiday falls and the employee does normally work on that particular day, then the employee is entitled, in addition to 5.4 above, to receive a paid alternative holiday. Also referred to as “a day in lieu”.
Therefore: If an employee’s salary equates to $15 an hour, and days in lieu are paid out following the holiday being worked, employers should budget as follows:
There are 11 public holidays annually (see 5.1) whether or not the employee works they need to be paid for the normal day.
If the employee works an 8 hour day on a public holiday, on top of their normal pay they need to be paid as follows:
8 (hours) * $7.5 (.5 of normal rate) = $60 (pre PAYE)
If the employee is being paid out for the day in lieu rather than having an additional paid holiday to claim at another date, they need to be paid as follows.
8 (hours) * $15 (normal rate of pay) = $120 (pre PAYE)
Under this scenario employers should budget for 11 days of an additional $180 being paid to the employee for working public holidays. This equates to $1,980 annually. (pre PAYE)
Another option is that employee’s work two thirds of a normal day, so if they normally work 9 hours they work six hours and they are paid their full normal days’ work, that equates to paying the time and a half requirement. However the additional day in lieu still needs to be paid/given.
Paid and unpaid rest breaks update:
Employers are required to provide employees with the following paid rest breaks and unpaid meal breaks: one paid 10-minute rest break if their work period is between two and four hours; one paid 10-minute rest break and one unpaid 30-minute meal break if their work period is between four and six hours; two paid 10-minute rest breaks and one unpaid 30-minute meal break if their work period is between six and eight hours.
If more than an eight hour period is worked, these requirements automatically extend to cover the additional hours on the same basis.
Finally, we suggest you all include that it is mandatory the helmets are worn on all motorbikes 2 and 4 wheel in your employment contracts, the current law of being permitted to not wear a helmet if travelling within the farm on a 2 wheel motorbike under 30km per hour is impossible to enforce and the safest way is to ensure all people on the farm wear a helmet at all times when on bikes.
If you need any help ensuring your work schedules, and housing agreements are correct please do not hesitate to contact us, and as I mentioned earlier if you are in need of new staff on your farm, as always we have a number of ready and available candidates for your consideration.
Benjamin De’ Ath