Employees paid a salary working overtime for free a 'common problem'

Thursday, 17 May 2018

Smiths City was ordered by the Employment Court to back pay workers who were not paid for 15-minute sales meetings for eight years.

Workers paid a salary are more vulnerable to working unpaid overtime, an employment lawyer says.

The Worker's Advocate director Nathan Santesso said it was common for a salary worker officially earning $36,000 a year to actually be paid below the minimum wage.

Based on New Zealanders' median income last year, most full-time salary workers will need to work an extra 35 hours a week to take legal action.

They would only need to work an extra two hours more than a 40-hour week to be working illegally, for free.

Salary workers cannot take legal action unless they work enough overtime to drop their pay below $16.50 an hour before tax, the minimum wage.

The Workers Advocate director Nathan Santesso says workers should be careful when they sign a salary-based employment contract.

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If a salary worker works overtime, but they are still paid more or on than the minimum wage, it is not illegal.

Minimum wage workers could take legal action against their employer if they were not paid for the hours they work.

Some retail workers who complained to First Union alleging they were not paid for minutes spent cleaning or cashing up stores at the end of the day could take their bosses to court.

Smiths City was ordered by the Employment Court to back pay workers who were not paid for 15-minute sales meetings for eight years.

The minimum salary for a full-time worker, working 40 hours a week, is $34,320 before tax.

On that salary, a worker would be paid $660 a week, or $1320 a fortnight.

Santesso said employment contracts with a salary often did not specify how many hours the employee was supposed to work each week.

That was a problem because it required workers to work as much as necessary to get the job done, he said.

'If you're on a $36,000 salary, it's not looking good.'

New Zealanders' median income was $959 a week last year, according to Statistics New Zealand. If that was paid in a salary, the median salary for a full-time worker would have been $49,868 in 2017.

To be working for free, those workers would have had to work a minimum of 75.5 hours a week, every week of the year - 35 hours more than expected from a full-time worker each week.

It seems a lot, but Santesso said he had seen cases of it.

He warned workers to be careful what they agreed to in a full-time salary employment contract.

'A contract should say, 'these are your working hours, if you work over that, you will be compensated'.'