A recent, breezy, 54-page judgment from the Employment Court illustrated the costly consequences for employers who breach labour laws. The Court ordered an employer to compensate three underpaid employees to the tune of a combined $35,000, with a further penalties claim pending.
In Soapi v Pick Hawkes Bay, the Court found that the employer (PHB) deducted excessive portions of wages from employees working through the Recognised Seasonal Employer (RSE) scheme.
Payment of employees’ wages are protected by the Wages Protection Act 1983 (WPA), and the Minimum Wages Act 1983 (MWA).
PHB breached both pieces of legislation. It deducted excessive portions of wages, taking all but $100 of employees’ weekly pay to cover things like accommodation, domestic travel, insurance, return airfare, the RSE visa cost, and personal protective equipment.
PHB relied on consent forms employees had signed, agreeing to weekly deductions of specified amounts to cover costs like accommodation, travel, and insurance. The consent forms did not explain how these deductions would apply in-practice and PHB did not act consistently with those forms.
The case highlights four key aspects of wage deductions:
- Wage deductions must be consented to, and the employer cannot deviate from those terms.
- An employer cannot make deductions from wages without consent, even to recover debt.
- Wage deductions cannot be made to pay for personal protective equipment.
- Except in certain circumstances, wage deductions cannot reduce an employee’s pay to below the minimum rate of pay.
Health and safety requirement
Section 27 of the Health and Safety at Work Act 2015 prohibits the imposition of a levy or charge on workers for health and safety. Therefore, the deductions for the cost of personal protective equipment were unlawful. The Court held that PHB had to provide this equipment to the employees.
Minimum wage
Employees are entitled to minimum wages under section 6 of the Minimum Wage Act 1983.
The Court clarified that employees are entitled to receive this minimum rate of pay, and not just (as PHB argued) entitled to be paid at that rate before deduction.
An accommodation allowance can be included in the calculation of minimum wages, but only if the cash value is fixed in the employment agreement or is within the proportional limits in the MWA (15% of wages for board, 5% for lodging). The employer did not meet either of those tests in this case.
In addition, the employer deduced for accommodation based on a 12-month stay, when they only lived there for seven months. This made the deductions unreasonable, and unlawful under section 5A of the Wages Protection Act.
Key takeaways
The Court ordered PHB to pay a combined amount of $34,948.60 to compensate the underpaid employees. The Court adjourned to hear further submissions on a claim against PHB for additional penalties.
Employers considering deductions should take care to ensure that consent is documented, precise and signed and that the deductions comply with all relevant laws.
Lane Neave’s Employment Law and Immigration Law teams are on-hand to provide advice and assistance.
Author: Evelynn Turi
Update: On 21 November 2025, PHB was granted leave to appeal. The Court of Appeal will determine if the Employment Court correctly interpreted and applied sections 6 and 7 of the Minimum Wage Act. We will continue to watch this case and share updates.
