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The Tools for Compliance

The Department has a number of tools available to enforce compliance with the law.  We use our professional judgement and the details of each situation to determine which option is appropriate.

Under the Act, labour inspectors have a warrant of designation, signed by the Chief Executive of the Department, which provides them with the power to take action to enforce compliance and to recover penalties in respect of the minimum code.

Facilitation

The labour inspector is involved in formal and informal facilitation of employment relationship problems.  Informally, labour inspectors form opinions about compliance with legislation and work with the parties to resolve the problem, based on that opinion. This may be done by speaking individually with each party either on the phone, or through face-to-face meetings. The inspector aims to ensure that the employer and employee understand their obligations and entitlements and, where possible, how they might prevent a similar dispute arising in the future.  For example, the labour inspector may facilitate parties to resolve a disagreement in relation to a request for flexible work arrangements under Part 6AA of the Employment Relations Act 2000.

Enforceable undertaking

Labour inspectors have the ability to enter into an enforceable undertaking with an employer who is not operating in a compliant manner.  The undertaking is a voluntary commitment by an employer to address the non-compliance and to take any steps that the inspector considers appropriate having regard to the breach.  The process allows for dialogue and negotiation about how the minimum standards are to be met.  If the employer does not comply with the enforceable undertaking, the inspector may seek a compliance order to enforce the agreement and a penalty may be incurred for failure to comply with the order.

Improvement notice

Labour inspectors may issue an employer with an improvement notice that requires compliance with the law.  This method of achieving compliance is most likely to be applied if the employer has first failed to reach a voluntary agreement with the labour inspector to address the breach.

The notice must set out the compliance failure, the inspector’s reasons for believing the employer is failing, the steps the employer could take to comply with the provision, and the date by which the employer must comply with the notice.  An employer may lodge an objection to the notice with the Authority within 28 days and the Authority will confirm, vary, or rescind the notice.  The improvement notice is enforced through a compliance order and a penalty may be sought for failure to comply with the order.

Demand notices

Labour inspectors are able to issue demand notices in respect of breaches of the Minimum Wage Act 1983, the Holidays Act 2003 and parental leave legislation.  A demand notice imposes a legal requirement to comply.  It may be served when an employee makes a complaint to the labour inspector or the labour inspector believes, on reasonable grounds, that an employee has not received wages or holiday pay, or other money payable by the employer to the employee, under the Minimum Wage Act or the Holidays Act.

In issuing demand notices, the labour inspector must give the employer no less than seven days to comment and must be satisfied the employee is entitled to the money.  They must also besatisfied that the employer is not willing to pay in a reasonable manner or within a reasonable time.

There is the ability for the Employment Relations Authority to award penalty interest on monies owed where there is long-standing or repeated non-compliance with the demand notice.

Money recovery and fines

Labour inspectors may also act on behalf of an employee to recover money payable by an employer under the Minimum Wage Act 1983 or the Holidays Act 2003.

The Employment Relations Authority or the Employment Court can authorise a labour inspector to seek arrears directly from officers of a company, if certain criteria are met.

Compliance action

A labour inspector may commence proceedings in the Employment Relations Authority for a compliance order against any employer who fails to keep, or provide when requested, a lawful wages and time record (inclusive of holiday leave), or an employment agreement.  They may also commence proceedings if the employer has failed to comply with an enforceable undertaking, an improvement notice or a demand notice (see definitions above).

Determinations

A labour inspector can produce a written determination that is legally binding on the parties, subject to a right of appeal through the Employment Relations Authority (the Authority), or the Employment Court.  This applies in relation to the Holidays Act 2003 in the following areas:

It also applies in relation to the Parental Leave and Employment Protection (Paid Parental Leave) Amendment Act 2002 where a labour inspector may determine eligibility on the hours or earnings tests, for parental leave.

The labour inspector also has the power to bring an application to the Employment Relations Authority (the Authority), on behalf of an employee, for a determination in relation to minimum statutory employment standards.  A determination can secure a final and binding obligation on the employer to comply with standards, such as the minimum wage, holidays or other statutory leave.  The Authority can award penalties against the employer if the non-compliance or non co-operation is considered to be deliberate.

Finally, a labour inspector can bring an application (independently of the employee) to the Employment Court asking for a determination on whether a person is an employee or not.

Penalties

A labour inspector may seek a penalty for non-compliance with a range of statutory obligations relating to:

Areas of specialist enforcement