Employer unlawfully deducts employer KiwiSaver contribution from employee’s hourly wage

An employee had his employer KiwiSaver contribution deducted from his hourly wage after his employer added the term to his already signed employment agreement. The employee raised objections to the wrongful deductions and was later dismissed for serious misconduct.

The Employment Relations Authority held that the employer and employee had not mutually agreed to depart from the default position that an employer’s compulsory contributions to KiwiSaver are to be paid on top of an employee’s wages. The ERA found that the varied agreement had not been bargained for in good faith, and was unlawful.

The ERA upheld the employee’s personal grievance claim for unjustified dismissal as the employer failed to provide the employee with all the relevant information relating to his dismissal or the opportunity to comment on that information before he was dismissed. The ERA noted that the employer failed to act as a fair and reasonable employer could by not undertaking a sufficient investigation into the employee’s alleged misconduct, and by failing to adequately raise its concerns with the employee before dismissing him.

The ERA awarded wage arrears for the employer’s unlawful deductions, and ordered the employer to pay the employee $6,210 for lost wages. The employee was also awarded $3,500 compensation for hurt, humiliation and injury to feelings.

It is important that employer’s ensure that any variations to an employee’s employment agreement are mutually agreed to otherwise the term will not be valid.