First Employment Court Judgment regarding Lockdown Pay

The Employment Court has released its first judgment in response to an employer’s actions during the Government enforced lockdown during COVID-19.

The full bench of the Employment Court has considered whether the Employment Relations Authority correctly determined that the defendant employees were entitled to minimum wage under the Minimum Wage Act 1983 (“MWA”) during the Alert Level 4 COVID-19 Lockdown in New Zealand. 

In summary, the defendant employees were employed by Gate Gourmet New Zealand Limited (“Gate”) to work 40 hours a week at the minimum hourly rate.  Gate was an essential service during the lockdown and therefore entitled to operate its essential activities subject to restrictions. 

Gate implemented a proposal to pay the defendant employees (for not working during the lockdown) 80 per cent of their normal pay (i.e. four days a week at minimum wage), unless they were carrying out duties for Gate, in which case they were paid their contracted rate of minimum wage.  The defendant employees argued that Gate’s conduct in paying less than minimum wage (although not working) during the lockdown amounted to a breach of the MWA.

The majority of the Employment Court held that the defendant employees were not entitled to be paid minimum wage when they were at home and not working.  In reaching this decision, the majority of the Employment Court applied the factors in Idea Services Limited v Dickson [2011] ERNZ 192 (CA), concluding that the employees were not working at the relevant time and therefore not entitled to minimum wage because:

a. there were no constraints placed on the defendant employees’ activities by Gate;
b. the defendant employees had no responsibilities to Gate; and
c. there was no benefit to Gate.

Please see the full decision here.  If you have any questions, please feel free to contact us on 0800 339 002.

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