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CONSEQUENCES FOR NON-COMPLIANT EMPLOYERS OF MIGRANT WORKERS
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Employers that breach minimum employment standards will soon face restrictions in access to the foreign labour market.

Last week, the Immigration Minister Michael Woodhouse announced new measures to prevent employers who breach minimum employment standards from recruiting migrant workers. This comes as the Government moves to clamp down on the exploitation of vulnerable migrant workers and follows a recent study evidencing widespread non-compliance with employment legislation such as the Minimum Wage Act 1983, Holidays Act 2003, and the Employment Relations Act 2000.[1]
 
From 1 April 2017, the Ministry of Business, Innovation and Employment (MBIE) will enforce stand-down periods against employers who incur penalties for breaches of minimum employment standards.

This will include:

  • Formal infringement notices issued by the Labour Inspectorate;
  • Declarations of breaches or banning orders issued by the Employment Court; and
  • Penalties issued by the Employment Relations Authority or Employment Court (either on the initiative of a Labour Inspector or a private action by an employee). 

Employers who are guilty of minor or inadvertent breaches will not meet the threshold for non-compliance, including employers who have entered into enforceable undertakings with the Labour Inspectorate to rectify a breach.
 
Stand-down periods will temporarily restrict employers from recruiting migrant workers. This will affect employers who support work visa applications and approvals in principle, seek accredited employer status, support residence applications based on employment, and those who are part of the Recognised Seasonal Employer Scheme. The length of the restrictions will depend on the severity of the employer’s breach, as follows:

  • Penalty up to and including $1,000 = 6 month stand-down
  • Penalty over $1,000 but less than $20,000 = 12 month stand-down
  • Penalty of $20,000 and over but less than $50,000 = 18 month stand-down
  • Penalty of $50,000 and above = 24 month stand-down 

Immigration New Zealand’s (INZ) operational instructions already require employers to comply with minimum employment standards in order to recruit migrant workers. To assist INZ in assessing employers’ compliance, the Labour Inspectorate will produce a list of non-compliant employers which will be provided to INZ. This list will include penalties that employers may have incurred prior to 1 April 2017, even though stand-down periods will not be enforced until 1 April 2017.
 
Figures released by INZ last week indicate that the introduction of the list of non-compliant employers and the stand-down periods could have a major impact on New Zealand employers whose businesses rely on migrant workers. INZ reported:

  • 47 infringement notices (20 against employers of migrants) issued by the Labour Inspectorate since July 2016.
  • 72 penalties (25 against employers of migrants) issued by the Employment Relations Authority in the 2015/16 financial year in cases filed by the Labour Inspectorate.
  • 16 penalties issued against employers of migrants by the Authority in the 2015/16 financial year in private actions.

In the recent case of Borsboom (Labour Inspector) v Preet PVT Limited,[2] two employers incurred a penalty of $100,000 between them due to multiple breaches of minimum employment rights in respect of five migrant workers. Though MBIE will not be able to enforce a stand-down period against these employers, this case demonstrates that there is a real possibility of penalties meeting the threshold for the maximum 24-month stand-down period.

Further, as the new Part 9A to the Employment Relations Act has increased maximum penalties from $10,000 to $50,000 for individual employers, and from $20,000 to $100,000 for companies,[3] the likelihood of the new measures curbing non-compliant employers’ access to the migrant workforce has clearly increased.

Published guidelines and criteria on stand-down periods, as well as additions to INZ’s operational instructions are expected in the near future. In the meantime, we recommend that you take steps to ensure that your current systems comply with the minimum employment standards. If you have any questions about this topic, or any employment or immigration issues that we can help with, please do not hesitate to contact Greg Cain.

 

[1] C Stringer, Worker Exploitation in New Zealand: A Troubling Landscape (2016).
[2] [2016] NZEmpC 143.
[3] Section 142G specifies that the maximum penalty for a company is $100,000, or 3 times the amount of the financial gain made by the company from the breach.
 

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