The below is ALWU’s open letter addressing law firms’ response to questions around Minimum Wage Act compliance put to them by Alison Mau in June 2019.

See Alison’s article on Stuff.co.nz and law firms’ responses to her questions.

The responses from the firms suggest that they are not monitoring hours for minimum wage compliance.  The law is clear: wellbeing initiatives, days in lieu and monthly or annual bonuses are insufficient to remedy minimum wage breaches.  Employees must be paid at least the minimum wage, every fortnight, directly to the employee. Section 7 of the Wage Protection Act 1983 states that all wages are to be paid in money. Therefore, paying employees in prezzie cards or by giving them days in lieu when they work extra hours that push there hourly wage below minimum wage is also a breach of the Wages Protection Act as they should be paid (in money) at least minimum wage for every hour they work.  Firms should not be relying on staff to self report minimum wage breaches or excessive hours as it puts employees’ relationships with their managers at risk.

ALWU notes that all of the reward schemes are discretionary and decision-making is done by partners who have a direct financial incentive in juniors working long hours. Further, this discretion means that it’s invariably applied unfairly.  It will always be easier for the people at the top to reward employees who reflect their cultural values and who they find easier to get along with.

Many of the firms say they are paying employees at or above the living wage. The salaries they pay to employees may be at or above living wage when calculated on a 40 hour work week. However, when junior lawyers work more than 40 hours their pay may fall below the living wage unless they are otherwise compensated. In some circumstances, employees’ rate of pay will drop below the minimum wage and this has happened in many of the firms.  None of the firms appear to have systems that monitor minimum wage compliance. Living wage salaries are a great start, but that is a separate issue to minimum wage compliance which is measured on a fortnightly basis. Paying a living wage for an annual salary is quite different to ensuring minimum wage compliance every fortnight of the year. As lawyers, it is their job to understand the Minimum Wage Act and as employers it is their job to comply with the Act.  

It is also a requirement of the Employment Relations Act to keep records relating to minimum entitlement provisions.  An employer must keep records in sufficient detail to demonstrate that the employer has complied with minimum entitlement provisions.  This is especially relevant where there is a risk that employees may work long enough hours for their remuneration to fall below the minimum wage.  This risk is present for all junior legal employees and firms should keep time and wage records for all employees. There is no clear indication firms are accurately monitoring all hours worked by their employees (not just billable hours).

Many of the firms also say that there is no expectation on employees to work beyond their contracted hours.  This ignores the reality that most employees work longer than contracted hours at some point in the year, if not regularly.  Junior lawyers are unable to say no to work and they are expected to meet the deadlines given even if it means working late.  The power dynamics within the workplace mean that junior lawyers are pressured to do as they are told, to get the work done and not to question or make a fuss.  Not to do so would be seen as not wanting to work hard or progress their careers and would risk damaging their relationship with their supervising partners.

The Bazley Report recommends standardised and formalised overtime payments for all employees working additional hours as a matter of course.  This is the best way to ensure that (in particular junior) employees are in no danger of working for less than the minimum wage. It is a standardised practice in many industries and there are no good reasons for withholding its implementation in the legal industry.  It is time for the legal industry to move into the 21st century in many different areas and remuneration is one of them. If law firms believe that their employees do not regularly work long hours then it will cost them nothing extra to implement a policy of payment for overtime.  

There is an inherent problem when firms self-monitor and self-report on their systems, culture and the changes that they are making or need to make.  Self-reporting lacks true accountability. The power imbalances also mean that they cannot rely on staff to speak up if there is an issue. All of these firms need independent external investigators to review their policies, systems and culture and give them recommendations about what needs to change.