Labour Inspectors have been busy this year conducting spot checks on local farmers measuring compliance with their legal obligations imposed under employment laws as part of their National Dairy Sector Strategy.

These investigations follow earlier media releases from November 2013 warning farmers’ of the likelihood of random visits by Labour Inspectors throughout Taranaki. The purpose for the visits is to ensure dairy farmers are meeting their legal obligations concerning minimum employment rights. These include the provision and retention of written employment agreements, accurate time, daily hours worked and wages records as well as holiday and leave records.

Non-compliance has significant financial implications for farmers’, facing fines of up to $10,000.00 and $20,000.00 for companies. In addition separate claims can be brought for breaches of the Minimum Wage Act, leave and holiday payments.

An area of focus of the Labour Inspectors is the practice of what is known as seasonal averaging; the averaging of an employees pay across the whole of the season by payment of a fixed salary rather than wages paid on the basis of an hourly rate.

In 2013 a Stratford farmer was ordered to pay his employee more than $6,000 for breaches of the Minimum Wage Act. The employer was found to have been paying below the minimum wage when the employees pay was averaged out across the actual hours worked. No allowance or deduction could be claimed for reduced hours during the dry season. Even where an employer and employee agreed that the salary is fair pay for the work to be performed, Labour Inspectors can still step in and take action against the farmer for breaches of the Minimum Wage Act.

The recent investigation identified a high level of non-compliance, with 15 improvement notices and four enforcements having been issued. There will be further investigations and spot checks carried out in Taranaki. Now is the time for dairy farmers to ensure they are meeting their legal obligations under employment laws and avoid the costly consequences of non-compliance by seeking professional assistance. A “Health Check’ of your level of compliance is highly recommended.

This article is written by Crichton Parker, employment and rural lawyer; Partner at Parker and Marriner Lawyers, Stratford and Hawera.