Smiths City caught out not paying employees for pre-work meetings

Smiths City chief executive Roy Campbell says the company will do an audit.

The Employment Court has ruled Smiths City Group must pay their employees for the pre-work meetings it claimed were optional.

The national retail chain, which operates 34 stores with about 400 store-based employees, had held unpaid 15-minute sales meetings for many years before opening the stores at 9am.

The Labour Inspectorate issued an improvement notice to Smiths City in January 2016, as the failure to pay employees during these meetings meant they were not paying at least minimum wage for all hours worked.

Smiths City lodged an objection to this notice to the Employment Relations Authority, arguing the meetings were not work and the minimum wage did not apply.

The initial determination ruled in their favour, but on appeal, the Employment Court ruled on the side of the Labour Inspectorate – these meetings were work and the employees must be paid accordingly.

The court also ruled Smiths City could not use payment of commissions and incentives to satisfy their non-compliance with the Minimum Wage Act, as this was additional income earned outside the contractual hourly rate, not a substitution.

The group must now comply with the improvement notice, fix their practices to meet employer obligations, and pay any arrears owed to employees.

Smiths City maintains the pre-work meetings were voluntary to attend, but says they were to give staff information for the day ahead. However, it now accepts the court’s decision the meetings constituted work.

“We have now moved the sales meetings into employees’ normal working hours. We are complying with the Employment Court order that we conduct an audit to identify where wages have been paid below the statutory minimum,” chief executive Roy Campbell says.

“The audit is covering all current and previous employees for the last six years. We will calculate the arrears of pay below the minimum wage and reimburse any affected employees accordingly.”

Great expectations
Labour Inspectorate regional manager Loua Ward says if the activity is integral to the employees’ role and there is expectation to attend – then this is work and employees should be paid for it.

“Employers should not pass the cost of doing business onto their employees. Employees must be paid for all the work they do, and this includes handover times, briefings, and in some situations, the travel time to and from a work site.

“Too often we encounter employers attempting to avoid paying their employees by dressing up activities outside of businesses hours as something that is for the benefit of the employee or something that’s not work. However, we will look beyond that at the real nature of the activity.”

She encourages other employers who are failing to pay their employees for such activities to fix these practices, as “following this decision, they cannot continue to plead ignorance.”

Smiths City shares have fallen 4.6%, or 2c, to 42c. It matches the six-year low it fell to earlier this month.


14 · Got a question about this story? Leave it in Comments & Questions below.

This article is tagged with the following keywords. Find out more about MyNBR Tags

Post Comment

14 Comments & Questions

Commenter icon key: Subscriber Verified

Well speaks volumes.

No excuses for bad HR practices or after hour meetings.

Looks like the writing is on the wall.

Reply
Share
  • 0
  • 0

This outfit will go belly up for the second time.
It is a matter of when not if.
They have long ago grown out of their boot size and need to sell up or close down most of their outlets and run back to CHCH real quick.
They can not survive in their present form.

Reply
Share
  • 1
  • 0

There was compulsion to attend meetings , and some staff on below hourly rate were unhappy that commissions were used to calculate minimum wage levels. Shame that the rest of the sales force, mostly on retainer and commission won't benefit but an expensive lesson to a company that treated their staff as an expense, not an assett.

One of the many ex employees

Reply
Share
  • 0
  • 0

So is that worked there more than 6 years ago and lest than 15 years ago miss out and still had to attend the bloody meetings
X employee from 2003 till 2009

Reply
Share
  • 0
  • 0

So what about the staff that were attending these meetings pre 6 years ago as it states for 15years they have been having these meeting being x staff I would love my share too but I left 9 years ago dose this mean I miss out for all the meetings I had to turn up for

Reply
Share
  • 0
  • 0

Smith's City has bigger issues than their wage issue to deal with.
For years they have under performed and
Shareholders must be getting to the end of their tether.
They need to rebrand and change the name and their image.
What is Smith's City?
Is it a furniture retailer with sport and tools?
I think it's retail model is outdated and needs to change?
Is their latest foray into the North Island going to be a repeat of their previous one which was a disaster when they purchased Smith & Brown stores and LV Martins I think.
Smith's City if it doesn't make some major changes to its model will in due course fold or close down.
The directors and CEO needs to realise that loyalty customers are fast disappearing and that the internet has had an affect on brick and mortar stores.
Yet having said that there are some very good such retailers ie Briscoe, Rebel Sports, The Farmers, Katmandu on the increase like Hallensteins etc.

Reply
Share
  • 0
  • 0

Unfortunately yes, and also any holiday pay entitlements not calculated correctly, but if you worked there under six years ago and had variable earnings you may wish to contact them and ask that your holiday pay be correctly calculated. Some current staff ended up with over $1000. Worth a try before they go under again, Auckland gave their opinion of them in the eighties and it appears they are doing the same for a second time. Deja vu all over again?

Reply
Share
  • 0
  • 0

While not condoning what has gone on here, I wonder what the status is when it comes to inviting a minimum wage employee to an after work Christmas party?

Reply
Share
  • 0
  • 0

Charge them for what they eat and drink?

Reply
Share
  • 0
  • 0

Spurious and silly argument.

Reply
Share
  • 0
  • 0

Commonplace for 70% or more of companies I fear.

All my previous employers were happy to see us work outside the working hours of our agreements and nothing was offered in terms of payment.

Time off in lieu had to be begged for so HR consultants will be pretty busy in the coming months and years.

Tip of the iceberg

Reply
Share
  • 0
  • 0

The retrospective part of this makes me nervous. In the eyes of the employers at least there appears to be a discretionary aspect to the meetings which puts the question of pay into a grey area. Now that it has been cleared up by the Employment Court employers should have the opportunity to address going forward. But to allow back dating of claims six years seems draconian and will certainly send some employers to the wall - and that shouldn't be an outcome welcomed by anybody.

Reply
Share
  • 0
  • 0

It may well be a small price to pay to actually be employed?

Reply
Share
  • 0
  • 0

After years of being on both sides of the fence this complaint about meetings is almost laughable. Many employees would spend at least 2 hours a working day on personal cell phones texting and talking, smoking and extra long tea breaks . All at the employers cost.

Reply
Share
  • 0
  • 0

Post New comment or question

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.
CAPTCHA
This question is for testing whether or not you are a human visitor and to prevent automated spam submissions.