Employers Kiwisaver Contributions Deducted Minimum Wage

Posted on: Oct 03, 2013

The Court of Appeal has dismissed an appeal from an aged care provider that sought to deduct KiwiSaver compulsory employer contributions from the minimum wages it paid its caregivers.

The Employment Court had found that it could not do so (Faitala v TerraNova Homes & Care Ltd (2012) 10 NZELC; [2012] NZEmpC 199) and its reasoning has now been endorsed by the Court of Appeal.

The Court of Appeal agreed that the opening words of section 6 of the Minimum Wage Act 1983 — “[n]otwithstanding anything to the contrary in any enactment…” — gave that section priority over anything to the contrary in the KiwiSaver Act’s provision permitting “total remuneration” approaches to the payment of KiwiSaver contributions, this view according with the purpose of the minimum wage legislation to ensure that workers received a base wage for their work to enable them to meet their daily living expenses.

Compulsory employer contributions were not “payment for … work” even if the obligation to make them arose as a consequence of an employee performing work. Moreover, ownership of the contributions belonged to the scheme, not the employee.

Parties can still agree to use a total remuneration approach so long as their agreements do not result in payment of wages below the statutory minimum.

Disclaimer

This article, and any information contained on our website is necessarily brief and general in nature, and should not be substituted for professional advice. You should always seek professional advice before taking any action in relation to the matters addressed.

Disclaimer

This article, and any information contained on our website is necessarily brief and general in nature, and should not be substituted for professional advice. You should always seek professional advice before taking any action in relation to the matters addressed.

Subscribe to Newsletter

Changes

Changes

After recently assisting clients from different industries with different types of changes to their businesses, in both adding and removing roles or simply changing duties for some employees, I reflected on my own work history and the changes I had experienced over the last 40 years, including reference points at different stages of my life and how they impacted decisions I made or how I viewed change…

Read More
4691

4691

As we find ourselves in yet another level 4 lockdown, I have reflected on my mediations post lockdown this time last year.

Read More
4685

4685

Money, money, money. A concept that both employers and employees can probably agree is one of the most important elements of working and business, and also something that can get stuck in your head, either in a good way or a bad way (similar to an ABBA song). 

Read More
PREV NEXT