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Sandhu v Gate Gourmet New Zealand Limited [2021] NZCA 591 (11 November 2021)

Last Updated: 16 November 2021

IN THE COURT OF APPEAL OF NEW ZEALAND

I TE KŌTI PĪRA O AOTEAROA
CA8/2021
[2021] NZCA 591



BETWEEN

SUHKJEET SANDHU
First Appellant

HUIPING WU
Second Appellant

SELLIAH NESUM NIRANJALA
Third Appellant

ROSALINA LEANNA
Fourth Appellant

SUTHARSHINI ANTHONY RUPS MIRANDA
Fifth Appellant


AND

GATE GOURMET NEW ZEALAND LIMITED
First Respondent

SHAUN JOILS
Second Respondent

Hearing:

21 October 2021

Court:

French, Gilbert and Goddard JJ

Counsel:

P Cranney for Appellants
E J Butcher for Respondents

Judgment:

11 November 2021 at 11.00 am


JUDGMENT OF THE COURT

  1. The appeal is allowed.
  2. We answer the approved question of law as follows:

It is not lawful to make deductions from wages for lost time not worked at the employer’s direction. The minimum wage is payable for the hours of work that a worker has agreed to perform, but does not perform because of such a direction.

  1. The orders made in the Employment Court are set aside, and the determination of the Employment Relations Authority is restored.
  1. The proceeding is referred back to the Employment Relations Authority to determine any outstanding matters in light of the decision of this Court.
  2. The first respondent must pay the appellants the usual disbursements in respect of the appeal to this Court.
  3. Costs before the Employment Court are to be determined by that Court in light of the outcome before this Court.

____________________________________________________________________

REASONS OF THE COURT

(Given by Goddard J)

The Minimum Wage Act

6 Payment of minimum wages

Notwithstanding anything to the contrary in any enactment, award, collective agreement, determination, or contract of service, but subject to sections 7 to 9, every worker who belongs to a class of workers in respect of whom a minimum rate of wages has been prescribed under this Act, shall be entitled to receive from his employer payment for his work at not less than that minimum rate.

7 Deductions for board or lodging or time lost

(1) In any case where a worker is provided with board or lodging by his employer, the deduction in respect thereof by the employer shall not exceed such amount as will reduce the worker’s wage calculated at the appropriate minimum rate by more than the cash value thereof as fixed by or under any Act, determination, or agreement relating to the worker’s employment, or, if it is not so fixed, the deduction in respect thereof by the employer shall not exceed such amount as will reduce the worker’s wages (as so calculated) by more than 15% for board or by more than 5% for lodging.

(2) No deduction in respect of time lost by any worker shall be made from the wages payable to the worker under this Act except for time lost—

(a) by reason of the default of the worker; or

(b) by reason of the worker’s illness or of any accident suffered by the worker.

2. (1) Notwithstanding anything to the contrary in any enactment, award, industrial agreement, or contract of service, every worker of the age of twenty‑one years and upwards to whom this Act applies shall be entitled to receive from his employer payment for his work at not less than the appropriate minimum rate prescribed under this section.

...

(5) No deduction in respect of time lost by any worker shall be made from the wages payable to him under this section except for time lost by reason of the default of the worker, or by reason of his illness or of any accident suffered by him.

... a statute of fundamental importance in the sphere of employment law in New Zealand. It is a statute that is designed to impose a floor below which employers and employees cannot go. It is directed at preventing the exploitation of workers, and is a statutory recognition of the diminished bargaining power of those in low paid employment.

The background to these proceedings

The parties

The employees’ employment agreements

COVID-19 impact on Gate’s business

Gate responds to the impact of COVID-19

(a) the implementation of a partial close-down;

(b) employees being paid 80 per cent of their normal pay, conditional on Gate receiving the Government wage subsidy; and

(c) employees could choose to use their annual leave entitlement to supplement the 80 per cent of normal pay being offered, meaning that an employee could receive 100 per cent of their pay by using one day of their annual leave per week.

(a) It was an essential service and was able to keep operating.

(b) It was closing down part of its business.

(c) It was presenting a written offer setting out the three options that it was offering employees, namely:

(i) Option one — employees take all entitled annual leave until it is exhausted, at which point the employee could move to option two.

(ii) Option two — conditional on Gate receiving the wage subsidy, it would pay the employee at the rate of at least 80 per cent of their normal pay.

(iii) Option three — conditional on Gate receiving the wage subsidy, it would pay the employee at the rate of at least 80 per cent of their normal pay, and the employee could then use their annual leave entitlement to supplement their income in order that they receive 100 per cent of their normal pay.

The proceedings

Authority’s determination

Employment Court decision

Leave to appeal

Whether, in the absence of sickness, default, or accident, the minimum wage is payable for all of a worker’s agreed contracted hours of work or whether it is lawful to make deductions from wages for lost time not worked at the employer’s direction.

The parties’ submissions on appeal

Discussion

[22] It is necessary to bear in mind that s 5 of the Interpretation Act 1999 makes text and purpose the key drivers of statutory interpretation. The meaning of an enactment must be ascertained from its text and in the light of its purpose. Even if the meaning of the text may appear plain in isolation of purpose, that meaning should always be cross-checked against purpose in order to observe the dual requirements of s 5. In determining purpose the Court must obviously have regard to both the immediate and the general legislative context. Of relevance too may be the social, commercial or other objective of the enactment.

Our answer to the approved question of law

Whether, in the absence of sickness, default, or accident, the minimum wage is payable for all of a worker’s agreed contracted hours of work or whether it is lawful to make deductions from wages for lost time not worked at the employer’s direction.

It is not lawful to make deductions from wages for lost time not worked at the employer’s direction. The minimum wage is payable for the hours of work that a worker has agreed to perform, but does not perform because of such a direction.

Costs

Result

It is not lawful to make deductions from wages for lost time not worked at the employer’s direction. The minimum wage is payable for the hours of work that a worker has agreed to perform, but does not perform because of such a direction.

Solicitors:
Oakley Moran, Wellington for Appellants
BE Employment Law, Auckland for Respondents


[1] Sandhu v Gate Gourmet New Zealand Ltd [2020] NZERA 259 [Authority determination].

[2] Gate Gourmet New Zealand Ltd v Sandhu [2020] NZEmpC 237 [Employment Court decision] at [49]–[71].

[3] Convention Concerning the Creation of Minimum Wage-Fixing Machinery (ILO No 26) 39 UNTS 3 (adopted 16 June 1928, entered into force 14 June 1930). It was ratified by New Zealand on 29 March 1938.

[4] Article 1(1).

[5] Article 3(2)(iii).

[6] Faitala v Terranova Homes & Care Ltd [2012] NZEmpC 199, [2012] ERNZ 614 [Faitala (EC)] at [39].

[7] Terranova Homes and Care Ltd v Faitala [2013] NZCA 435, [2013] ERNZ 347 [Faitala (CA)] at [28].

[8] The appeal does not raise any issues in relation to the position of Mr Joils personally. The claim against him for a penalty before the Authority was dismissed, and there was no appeal from that decision.

[9] There was an initial difference between Gate and its employees about whether the increase in minimum wage applied to employees who were not working at the time. However following correspondence with AWU, Gate agreed to apply the new minimum wage rate of $18.90 per hour to the employees from 1 April 2020, whether they were working or not. See Employment Court decision, above n 2, at [17]–[21].

[10] Authority determination, above n 1, at [35].

[11] At [38].

[12] At [41].

[13] At [41].

[14] At [42].

[15] At [43].

[16] Employment Relations Act 2000, ss 179 and 182(3)(b).

[17] Employment Court decision, above n 2, at [5]–[6].

[18] At [29].

[19] At [45].

[20] At [38]–[39].

[21] At [41].

[22] At [54].

[23] At [69].

[24] At [71].

[25] Employment Relations Act, s 214(1).

[26] Sandhu v Gate Gourmet New Zealand Ltd [2021] NZCA 203 [Court of Appeal leave decision] at [19].

[27] Faitala (EC), above n 6, at [39].

[28] Faitala (CA), above n 7, at [18]; and Karelrybflot v Udovenko [1999] NZCA 331; [2000] 2 NZLR 24 (CA) at [50].

[29] Interpretation Act 1999, s 5(1).

[30] Commerce Commission v Fonterra Co-operative Group Ltd [2007] NZSC 36, [2007] 3 NZLR 767 (footnotes omitted).

[31] At [24].

[32] At [25].

[33] See Ross Carter Burrows and Carter Statute Law in New Zealand (6th ed, LexisNexis, Wellington, 2021) at 335–339.

[34] The origin of these provisions as subsections of the same section in the 1945 Act underscores the need to read them together as part of a single coherent scheme: see [7] above.

[35] See Faitala (EC), above n 6, at [39], quoted at [10] above.

[36] Faitala (CA), above n 7, at [18].

[37] Karelrybflot v Udovenko, above n 28, at [50].

[38] We recognise, of course, that the ability to undertake such activities was severely restricted by the pandemic and the lockdown in 2020.

[39] Court of Appeal leave decision, above n 26, at [19].


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