Appendix B - Answer to Question 5

Investigation Report

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Employer: Rasy’s Contract Labour Services Limited

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Inspector: Kerri AHOMIRO

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Case number: LS36848

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Executive Summary

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Rasy’s Contract Labour Services Limited is an accredited Recognised Seasonal Employer (RSE) and
applied for a renewal of their status in October 2021. The renewal assessment included a sample of
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both RSE and non-RSE workers wage time and holiday pay records and required a review of the
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employer’s pastoral care practices under the RSE Policy requirements.
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During the assessment the Labour Inspector identified a breach of the Minimum Wage Act 1983 in
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that a non-RSE worker was not paid the full minimum wage following their return to work after a
period of absence. Other occurrences were also identified where workers had been inadvertently
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paid less hours than recorded on the time sheets.

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The Inspector also found that the employer was non-compliant with the Holidays Act 2003 in that
payments made for public holidays were inconsistent with the requirements of the Act and workers
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have been underpaid for unworked public holiday entitlements.

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A breach of the Wages Protection Act 1981 was also identified in that deductions were taken from
workers wages for damages and missing items from one of the properties where workers were
residing. The employer failed to obtain written consent from each individual employee and failed to
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notify Immigration New Zealand in relation to these deductions as per RSE Policy instructions.
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It is the Inspector’s intention to issue the employer with an Improvement Notice to review and
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correct their payroll practices.

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The Inspector is also required to provide a copy of their findings to Immigration New Zealand as part
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of the RSE renewal application.

Background
Rasy’s Contract Labour Services has been registered with the Companies office since 24 December
2001 and has held RSE accreditation since 2008. The organisation does not hold any externally

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audited or independent industry certification and has stated that they are not a member of any
industry group such as The New Zealand Ethical Employers or Horticulture NZ.
The employer provides labour to 17 orchards in the Canterbury region, including three who also hold
RSE status. The company employs four permanent staff and requires up to 20 additional staff during
peak seasons. This is primarily made up of RSE workers.
The employer uses ACE pay roll system. Employees submit their daily hours which are then entered
into an excel spreadsheet. Weekly total hours worked are then entered into the payroll system for

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processing. All workers are paid on an hourly rate.

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The Labour Inspectorate is tasked with assessing RSE employers’ compliance with both minimum
employment standards and ensuring that employers meet policy requirements under Immigration

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New Zealand’s RSE Policy.

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As part of the employer’s application for renewal of their RSE status, the Inspector has assessed
sampled records from both RSE and non-RSE workers who were employed between 2019 and 2021

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and reviewed their pastoral care practices as required by the RSE policy.

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Employment Agreements
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The employment agreement template contains all mandatory clauses as required under sections 65
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and 69OJ of the Employment Relations Act 2000 and section 52 of the Holidays Act 2003.
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The template is designed to capture all types of employment arrangements including permanent,
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part time, fixed term and casual. It is the Inspectors opinion that this could be somewhat confusing
for employees as it needs to be read with great care to determine which clauses relate to the type of
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employment they have been contracted under.

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This issue was also raised with the employer during their previous RSE status renewal application
and the employer had agreed to review the template. This does not appear to have occurred.
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It was also noted that the template included references to the various types of employment
arrangements and how this might affect an employee’s entitlement to public holidays. Specifically,
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section 7.1.5 states that “If you are a casual employee and you work on a public holiday (or the
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transferred day) you should be paid time and a half but will not receive an alternative day.”
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The Holidays Act 2003 does not exclude casual employees from their entitlements to an alternative
day if the employee works on a public holiday but rather states that the day must be an otherwise
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working day. While a genuinely casual employee would not usually have any specific days and hours
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of work, the Act does require the employer to consider their patterns of work and any other relevant
factors when determining an employee’s entitlement to an alternative day.
7.1.5 of the agreement could be somewhat misleading as in some cases a casual employee may be
entitled to the alternative day.
While the records sampled did not identify a failure to provide an alternative day to a casual
employee who may have had entitlement, the Inspector recommends that the public holiday section

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of the agreement be simplified to state that an employee is entitled to time and a half for the hours
worked on the public holiday and will receive an alternative day if that day is an otherwise working
day for the employee.
Similarly, while the agreement template does meet the RSE specific requirements, the Inspector
recommends that the employer draft a standalone RSE employment agreement template so that
workers can more easily understand the terms and conditions that relate directly to their
employment.

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Record Keeping

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The employer uses a combination of manual recording keeping and ACE pay roll system to manage

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the records they are required to keep under section 130 of the Employment Relations Act 2000 and

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section 81 of the Holidays Act 2003.

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Employees submit their daily hours to the employer. This information is entered into an Excel
spreadsheet and the weekly totals are entered into the payroll system. From the records sampled it

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was noted that there were occasions where workers were paid slightly less hours than those

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recorded on the timesheets, resulting in breaches of the Minimum Wage Act 1983.
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The employer made corrective payments once brought to their attention by the Inspector however
they will need to review all employees records to identify any further underpayments.
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At the time of this investigation, the employer had not activated the appropriate functions in their
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payroll system to enable the calculation of average daily pay and was not paying the correct amount
for relevant daily pay. This is discussed in more detail under the Holidays and Leave section of this
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report.
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The Inspector found that the employer has kept sufficient records to comply with section 130 of the
Employment Relations Act and section 81 of the Holidays Act 2003 however the employer is advised
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that more care is needed to ensure that all information entered is accurate.
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Deductions from wages

The Wages Protection Act 1981 allows deductions from wages under certain circumstances. The RSE
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policy also allows for certain deductions from wages provided the deductions are actual, reasonable,
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verifiable, and have been submitted to the Unit for approval before being made.
During the Inspectors analysis of the records a series of deductions were identified as “vehicle
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damage”. When raised with the employer they found that they had incorrectly labelled the
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deductions which were the employees share of airfares.

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The employer provided copies of invoices to verify that the deductions were incorrectly recorded in
the system.
The RSE policy allows employers to make deductions for costs of up to 50% of the employees return
international airfares costs and this was provided with the relevant application to recruit (ATR).
While the Inspector is satisfied that the deductions were permitted under the RSE scheme and
employees had given their written consent for the airfare deductions, failing to record this correctly

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in the system can create confusion for the workers and potentially result in repayments being made
to the workers for unlawful deductions from wages.
A deduction was also identified for RSE workers which was recorded as “property damage”. When
queried with the employer they provided a copy if invoices, an email, and text exchanges from one
worker requesting that the costs be divided evenly among the group. The deductions were for
damages and missing items from one of the houses.
The text exchange was made by one employee. However, another employee named in the text

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exchange did not live at the property and was also charged. Deductions were not submitted to the

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unit for approval prior to being made and only one worker had given written consent (by way of a
text message) for the deductions to be made.

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The total amount charged was $790. This was divided evenly, and six workers were charged $131.67

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each.

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The employer advised that they could not obtain written consent from the workers at the time as it

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was during lock down however any deductions must include each worker’s express consent.

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Failing to ensure all workers had given written consent to the deductions is a breach of section5 of
the Wages Protection Act 1983.

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Further to this, failing to notify the RSE Unit in advance fails to meet the requirements of
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WH1.20.10.2 of the RSE policy requirements.
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Minimum Wage
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The records sampled were for RSE workers and a New Zealand resident worker for employment
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periods from 2019 to 2021. The employment agreements offered minimum wage for all employees
sampled.
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When reviewing the records, the Inspector found that the New Zealand resident worker sampled
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was paid $17.70 per hour in their first week back after a period of absence. The minimum wage rate
at that time was $18.90 per hour.
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The worker was paid at the relevant minimum wage rate in the following weeks, but a corrective
payment was not made until the Inspector brought the issue to the employers’ attention. It is likely
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that this error would not have been identified had the Inspector not sampled this workers records.
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As mentioned in the record keeping section of this report, there were instances where inaccurate
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information had been recorded in the pay roll system. This has led to small underpayments to
workers because of hours not being correctly entered into the payroll system. Similarly, there were
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instances where additional hours were paid to workers however these did not align with
underpayments from the week prior and the employer was not able to identify what the payments
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were for.
The Minimum Wage Act 1983 requires that workers be paid no less than the relevant minimum
wage rate for all hours worked. As part the Inspectors intended enforcement action, the employer
will be required to review all time sheets and wages paid to ensure that all workers have received
their correct wage payments each pay period. Where any underpayments are identified, corrective
payments will need to be made to ensure that the requirements of the Minimum Wage Act 1983 are

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complied with. Where any overpayments have been made, these cannot be used to offset the
underpayments.

Holiday entitlements
The employer engages RSE workers on fixed term agreements and pays their holiday pay with their

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wages. This is permitted under section 28 of the Holidays Act provided they are employed on a fixed

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term agreement of less than 12 months.
As a result of the border closures the RSE workers were in New Zealand for significantly longer than

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usual however the employer has provided new fixed term agreements at the end of each fixed

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period of employment and has therefore complied with the requirements of section 28 of the

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Holidays Act 2003.

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Non RSE workers are employed on casual agreements and the records sampled show that the work
was intermittent and irregular which also complies with section 28 of the Holidays Act 2003.

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Holiday pay entitlements for permanent workers were not sampled during this assessment.

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Public Holidays
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Wage records and payslips show that employees were paid time and a half for work performed on
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public holidays. Alternative days were provided to the sampled workers where that day was an
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otherwise working day. Therefore, the employer has complied with the requirements of section 56
of the Holidays Act 2003.
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Section 49 of the Holidays Act 2003 requires that employees who do not work on a public holiday
and that day is an otherwise working day, receive payment for the day at not less than the
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employees relevant daily pay or average daily pay for that day.
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Relevant daily pay is the amount the employee would have received had they worked on the day
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concerned. While the records do show that employees were paid for unworked public holidays,
based on their patterns of work, the employer’s payment of eight hours per day is not a true
reflection of the employees’ relevant daily pay.
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The employer advised that they pay eight hours as a standard rate for public holidays. This figure is
based on information they were given by their payroll adviser but did not consider the variable
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hours required of the workers. An eight-hour payment is not a true reflection of relevant daily pay
for the workers sampled.
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The employees work variable hours and therefore an average daily pay calculation would be the
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more appropriate calculation to use.

The employee’s average daily pay must be calculated in accordance with the following formula:

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where—

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 a - is the employee’s gross earnings for the 52 calendar weeks before the end of the pay
period immediately before the calculation is made;

b - is the number of whole or part days during which the employee earned those gross
earnings, including any day on which the employee was on a paid holiday or paid leave; but
excluding any other day on which the employee did not actually work.

Using the average daily pay calculation, the Inspector assessed that the workers have been

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underpaid for all unworked public holidays and alternative days by between 0.5 and 1.5 hours on

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each day in question.
As the employer has applied an eight-hour rule to all workers, the issue is systemic, and the

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underpayments are likely to affect all current and former employees.

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As part of the Inspectors intended enforcement action, the employer will be required to undertake

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an audit of all current and former employees for the past six years to recalculate payments for

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unworked public holidays, ensuring that each employee has been paid at least their relevant or
average daily pay for every unworked public holiday and alternative day paid during their

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employment.

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This also has a flow on effect to holiday pay which will also need to be recalculated and paid because
of any underpayments made for wages, public holidays, alternative days, or sick leave etc.
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Other types of leave

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The records sampled did not show any payments made for sick leave, bereavement leave, or family
violence leave however the same relevant daily pay or average daily pay calculations are required.
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Therefore if, during the employers’ review of their payroll system, these types of leave are
identified, these this will need to be recalculated as well.
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RSE Pastoral Care requirements.

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The RSE scheme imposes additional requirements of employers to provide pastoral care for their
workers. This includes accommodation, access to banking and religious services and ensuring the
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safety and wellbeing of the workers while in New Zealand.

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It came to the regional Labour Inspectors attention in 2021 that RSE workers were living in
accommodation located at 2714 Methven Highway which was not a known address to the regional
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Labour Inspector.
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WH1.10.1.f.iii of the RSE Policy requires that employers provide Immigration New Zealand with full
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details of how they intend to address pastoral care requirements, including suitable
accommodation. As the property had not been declared, workers were being housed in
accommodation that had not been assessed in accordance with RSE policy and was found to be
unsuitable for RSE workers.
A review of the Labour Inspectorates previous interactions found that the property had been
previously used in 2013 however the employer failed to meet policy requirements by not ensuring

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all intended accommodation meets requirements and communicates with the regional Labour
Inspector before using any accommodation.
Workers no longer accommodated at this site, and it does not meet current RSE requirements.
The employer has recently expressed a willingness to investigate purpose-built accommodation in
Rakaia.
The employer currently has approval to use one rental property and has nominated the use of a local
motel. Should the employer seek to use the motel, evidence of bookings will be required. Both

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properties appear to meet RSE requirements.

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Conclusion

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The employer has failed to comply with minimum employment standards in that breaches of the

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Minimum Wage Act 1983, the Wages Protection Act 1981 and the Holidays Act 2003 have been
found.

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The issues are systemic and likely to affect all current and former employees. The Inspector

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considers the failings to be careless mistakes rather then cynical and as such it is appropriate that an
Improvement Notice be issued to the employer to review and correct the issues identified.
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The Inspector also identified failings regarding the RSE policy which the Inspector is obligated to
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report to the RSE Unit.

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Inspector signature:
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Date: 28 January 2022

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