An employer of temporary labour has been fined for an inadvertent failure to pay minimum wages to a person who did not even regard themselves as an employee.

The employer has also lost all of its contracts to provide temporary labour due to the Labour Inspector advising its customers of its prosecution.

The circumstances were that the company employed a worker and paid him on a piece rate basis with a top up to ensure it paid at least the minimum wage.

The employee’s partner assisted him so he could work faster and earn more on the piece rate basis.  The employer knew that the partner was assisting but neither it nor the partner considered her to be an employee.

The ERA held that she was an employee, and commented that even though the error, in not paying her the minimum wage was inadvertent, it was still inclined to impose a $10,000 fine for the breach (maximum $20,000).

However, because the company had lost all its customers, due to them being advised of the prosecution for not paying the minimum wage, it could not afford to pay such a fine and one of $1,000 was imposed instead.

Employers need to be very aware of their obligations to pay at least the minimum wage and that an inadvertent breach may still result in a significant fine.

The employer should have paid the partner as an employee, or taken formal steps to have her sign a volunteer agreement to clearly establish her status as a non-employee, or refused to allow her to assist her partner.