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Are you keeping accurate records?

The Employment Relations Authority (ERA) has made very clear that "ignorance and disregard is no excuse"...

Following on from the Government’s proposal to reinforce national minimum standards in the employment arena, Michael Woodhouse (Workplace Relations & Safety Minister) expressed concern that many employees were missing out on their basic legal entitlements. Well, based on this latest decision, it appears that his concerns were well-founded.

The Zaika Case

An Indian restaurant known as ‘Zaika’ was found liable for non-compliance with the new law over its legal obligation to maintain and keep accurate time-keeping records. The restaurant owner was subsequently:

  • Fined $7,000
  • Ordered to pay the Department of Labour filing fee
  • Directed to disclose to the Labour Inspectorate all records showing time-keeping, wage, holiday and leave payments made to staff (current and previous) dating back to 2014.

After receiving an initial complaint from one of its waiters about his public holiday entitlement, the Department of Labour made a random visit to the restaurant to seek access to the owner’s wage and annual leave records for current staff. Not satisfied with the paperwork supplied, an ‘improvement notice’ was served obligating the owner to establish and maintain records for all current (and future) staff. The restaurant was given one month to comply and required to provide copies to the allocated Labour Inspectorate. Nothing was received.

On a second random visit to the restaurant the Labour Inspectorate went one step further. She requested that the owner immediately provide to her evidence of all records relating to staff (including time-sheets, wage payments, holiday and leave dates). Again, no evidence was presented and no subsequent copies were ever received.

Failing to comply with the ‘improvement notice’ and subsequent requests for information was enough for the Labour Inspectorate to raise a formal complaint with the ERA based on what she claimed were clear breaches of the law. In particular, she argued that accurate record-keeping is a basic requirement of New Zealand employment law and without these records employers are unable to demonstrate that they are providing staff with their minimum entitlements. The ERA agreed. It described the owner’s ignorance and disregard of its legal obligations to staff as being “serious, ongoing and deliberate”. By imposing a penalty the ERA intended to “signify condemnation and to act as a deterrent” to those that do not comply.

Let this decision be a stark warning to employers who fail to honour the law’s fundamental requirements.

What does this mean for me?

Before you panic and start reviewing your current record-keeping practices- I must add a word of caution... The requirement for accurate and comprehensive record-keeping (whilst applicable to all industries) is only really relevant to those on shift work or those who work irregular or uncertain hours.

Although the new law requires employers to be able to produce records for the number of hours worked by employees each day and the requisite pay for those hours, this will not usually apply to those employees on formal contracts. The Ministry of Business Innovation and Employment (MBIE) has stated that for those employees “who work regular hours each day for regular pay, to which they have already agreed with the employer, a statement as to what the regular hours and pay is all that is needed to comply. This could be set out in the Employment Agreement, for example”.

So, fear not – if your employment agreements for permanent staff already set out their hours to be worked / the level of remuneration / any leave entitlement etc. then this will be sufficient to comply with the requirement to keep accurate records. If, however, you have staff that are retained on a casual / ad hoc / shift-work basis, I would strongly encourage you to make sure that you review your record-keeping practices to make sure that everything is in order and up to date. I would hate for the Labour Inspectorate to pay your business a random visit!

If you have any questions about record-keeping get in touch with the Commercial Law Team.


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