Smiths City caught out not paying employees for pre-work meetings

The Employment Court has ruled Smiths City Group must pay their employees for the pre-work meetings it claimed were optional.

The national retail chain, which operates 34 stores with about 400 store-based employees, had held unpaid 15-minute sales meetings for many years before opening the stores at 9am.

The Labour Inspectorate issued an improvement notice to Smiths City in January 2016, as the failure to pay employees during these meetings meant they were not paying at least minimum wage for all hours worked.

Smiths City lodged an objection to this notice to the Employment Relations Authority, arguing the meetings were not work and the minimum wage did not apply.

The initial determination ruled in their favour, but on appeal, the Employment Court ruled on the side of the Labour Inspectorate – these meetings were work and the employees must be paid accordingly.

The court also ruled Smiths City could not use payment of commissions and incentives to satisfy their non-compliance with the Minimum Wage Act, as this was additional income earned outside the contractual hourly rate, not a substitution.

The group must now comply with the improvement notice, fix their practices to meet employer obligations, and pay any arrears owed to employees.

Smiths City maintains the pre-work meetings were voluntary to attend, but says they were to give staff information for the day ahead. However, it now accepts the court’s decision the meetings constituted work.

“We have now moved the sales meetings into employees’ normal working hours. We are complying with the Employment Court order that we conduct an audit to identify where wages have been paid below the statutory minimum,” chief executive Roy Campbell says.

“The audit is covering all current and previous employees for the last six years. We will calculate the arrears of pay below the minimum wage and reimburse any affected employees accordingly.”

Great expectations
Labour Inspectorate regional manager Loua Ward says if the activity is integral to the employees’ role and there is expectation to attend – then this is work and employees should be paid for it.

“Employers should not pass the cost of doing business onto their employees. Employees must be paid for all the work they do, and this includes handover times, briefings, and in some situations, the travel time to and from a work site.

“Too often we encounter employers attempting to avoid paying their employees by dressing up activities outside of businesses hours as something that is for the benefit of the employee or something that’s not work. However, we will look beyond that at the real nature of the activity.”

She encourages other employers who are failing to pay their employees for such activities to fix these practices, as “following this decision, they cannot continue to plead ignorance.”

Smiths City shares have fallen 4.6%, or 2c, to 42c. It matches the six-year low it fell to earlier this month.