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WHAT IS 'WORK'?
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Smiths City has been ordered to back pay staff for attendance at morning meetings the company had said were informal and voluntary. But what does this latest Employment Court decision mean for your organisation?

The Employment Court has recently ordered Smiths City to comply with an Improvement Notice, requiring the company to pay current and former employees on minimum wage for meetings worked in the past six years.

Smiths City held unpaid morning meetings for sales staff 15 minutes before the store opened to the public each day. The daily meetings included discussions about sales figures, sales promotions, sale comparisons, and ‘highlights’ of good news and high achievers. Managers were expected to fill in meeting templates, and these were reviewed by regional managers from time to time. A manager gave evidence that the meetings provided employees with essential information on promotions and product information.

Sometimes staff were required to research and present at the meetings. Some staff gave evidence that they believed attendance was required. By and large, sales staff attended the meetings.

Were the meetings ‘work’?

The Employment Court was asked to consider whether employees who attended daily morning meetings were ‘working’ for the purposes of the Minimum Wage Act.

The leading case on what is considered ‘work’ under the Minimum Wage Act is Idea Services. In that case, it was found that a community service worker was working during ‘sleepover’ hours, where he was able to sleep but had to be available to attend duties during the course of the night if necessary.

The Employment Court set out the test for determining what constitutes ‘work’. It said the three key factors are the constraints on the employee, their responsibilities, and the benefit to the employer.

The Court in the Smiths City decision focused on whether the morning meetings were an integral part of the employees’ principal activities as sales staff. The Court considered the meetings were ‘work’ after taking into account the following factors:

  • The sales staff only attended them because they were employed by Smiths City.
  • They discussed matters pertinent to selling Smiths City merchandise.
  • The meetings were solely for Smiths City’s purposes to enable sales staff to earn revenue for the company. Without them, the company would need to relay the same information during the shift.
  • The information provided in the meetings (such as sales figures and promotions) equipped sales staff to undertake their jobs.

As the meetings constituted ‘work’, those employees on minimum wage were not paid enough in each pay period to meet the minimum wage requirements. The Court further held that commission and incentive payments could not be included in the minimum wage calculations, as those payments did not attach to specified hours.

What does this mean for your business organisation?

For those employees being paid minimum wage (or near it), it is critical they are paid for all work, or you risk being in breach of the Minimum Wage Act. Employers should be reconsidering any unpaid time that employees spend on work-related activities, such as:

  • Attending meetings;
  • Attending product knowledge sessions;
  • Work training;
  • Setting up before shift;
  • Cashing up, cleaning and closing up at end of the day.

If you have any questions regarding this decision and how this might affect your business, please do not hesitate to contact our Employment team

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