CaseBase® Case of the Month

CaseBase provides legal summary and references on this landmark Court of Appeal decision that considers whether deductions from wages for lost time not worked at the employer's direction was unlawful.

CASE: Sandhu v Gate Gourmet New Zealand Ltd [2021] NZCA 591; BC202163856

Gate Gourmet New Zealand Ltd (Gate) provides in-flight catering services to passenger aircraft both domestically and internationally. The applicants were employed at the minimum wage. Due to the effect of the pandemic lockdown Gate partially shut down its operation. The applicants therefore were not working the full 40 hours they were employed for. Gate agreed, provided it received the wage subsidy, to pay employees who were not required to work 80 per cent of their normal wages. On that approach, employees such as the applicants who were normally paid the minimum wage under the Minimum Wage Act 1983 received 80 per cent of that minimum wage.

The Court of Appeal found that the deductions from wages for lost time not worked at employer's direction was unlawful. The Minimum Wage Act is directed at preventing the exploitation of workers. It recognises the diminished bargaining power of those in low-paid employment. It would be inconsistent with the purpose of the Minimum Wage Act, and the protections it seeks to provide for low-paid employees. It follows that an employer cannot reduce the amount that an employee will be paid below the minimum wage payable under s 6 for time that the employee has agreed to work, but has not worked, if the reason the employee did not work is that the employer had no work for them to perform and directed them not to come to work. Nor can an employer and an employee enter into an agreement to that effect.

On the other hand, an employee can agree with their employer to take leave without pay, or to reduce the agreed hours to be worked. If an agreement is reached to take leave without pay, the Minimum Wage Act does not require any payment during the agreed period of leave. If an agreement is reached to reduce working hours, the Act applies only to the reduced hours of work. Where for example an employee agrees with their employer that they will take leave without pay, the employer cannot unilaterally revoke that leave and require the employee to work. The employee can plan on the basis that they are not required for work during the agreed period of leave. They might for example take on alternative work, or undertake study, or travel away from their place of work secure in the knowledge that they are not required to attend work. In this case there was no record of any agreement between parties that justified not paying employees' minimum wage. It was open to Gate to roster employees on during their normal hours of work, and they would then be required to work. The employees were not at liberty to engage in other activities that would prevent them working if called on to do so. As a result, the appeal was allowed.

This case will be of interest to lawyers who work in employment law, and litigation.

ACCESS CASEBASE: Sandhu v Gate Gourmet New Zealand Ltd [2021] NZCA 591; BC202163856

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