In 2019, Gate Gourmet catered for five million flights and more than 700 million passengers globally. (File photo)
A global aviation catering company which claimed more than $1.5 million in Covid-19 wage subsidies is challenging a decision which found it breached employment law by not paying staff minimum wage during New Zealand’s lockdown.
Gate Gourmet is a Zurich-headquartered company that provides airline catering services for airlines and lounges at more than 200 airports worldwide, including Auckland International Airport.
During the Covid-19 lockdown, the company received more than $1.5m in wage subsidies for just over 130 employees.
However, in July the Employment Relations Authority (ERA) found Gate Gourmet breached the Minimum Wage Act by failing to pay staff the minimum wage during lockdown.
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At an Employment Court hearing on Tuesday, Gate Gourmet challenged the ERA ruling.
Employers are being accused of taking advantage of badly worded wage subsidy rules and not paying workers what they are due.
The hearing was heard by Chief Judge Christina Inglis, Judge Joanna Holden and Judge Kathryn Beck, who reserved their decision.
Chief Judge Inglis said this case is of “huge public interest” and she hopes to get the decision out promptly.
Emma Butcher, on behalf of the catering company, said this is a simple matter of whether the Minimum Wage Act applies to the payment of employees who are not working.
“This is not a case about exploitation of workers,” Butcher said.
“The Minimum Wage Act has no application to these facts and as such the determination is incorrect and should be over turned.”
Following the alert level 4 lockdown in March, Gate Gourmet was deemed an essential service, however told employees it would need to partially shut down operations.
The company said if an employee had not been rostered on, and they had not been asked to work, they should stay at home.
During its partial close-down, employees were being paid 80 per cent of their normal pay, conditional on the company receiving the government wage subsidy.
It presented a written offer setting out three options that it was offering staff.
The employees were paid weekly at the minimum wage. Prior to March 30, they were paid $17.70 an hour or $708 a week for working a 40-hour week.
On April 1, the adult minimum wage increased by $1.20 to $18.90 per hour.
Since April 1, the applicants have been paid at 80 per cent of their normal pay or $604.80 per week.
Gate Gourmet told staff those who worked would be paid the new minimum wage rate and that employees who were not rostered, and did not work, would continue to be paid at 80 per cent of normal pay.
The union objected and also advised Gate Gourmet that it believed it was not entitled to reduce the pay of any full time employee below the minimum wage of $756 per week.
Michael O’Brien, acting on behalf of five employees, said the court needed to examine why the employees were not working.
“The non-work of the employees is of no fault of the employees; it was through a considered approach from the employer,” O’Brien said.
Varying hours, engaging employees in other work and redundancy could all have been options, he said.
An employee even offered to take this time to do a deep clean of the facility, O’Brien said.
“Despite the Covid lockdown … employees were lawfully able to work. The employer made the decision to have them not attend work.”
Business NZ’s lawyer Peter Kiely, acting as an intervener, said this case has the potential to create a huge liability for all businesses.
Kiely said under the Minimum Wage Act, payment is not required when the employee is not working.
The pandemic was an “unparalleled crisis time for business” and the societal and economic effects of the lockdown were “severe”, Kiely said.
However, Peter Cranney, counsel on behalf of the NZ Council of Trade Union, said the Covid-19 crisis was irrelevant to the case.
He said Gate Gourmet was deemed an essential service and could have required its employees to do whatever work it needed during the time.