Smiths City Group shares fell 4.6 per cent after the electronic retailer was ordered to pay staff for their attendance at 'voluntary' sales meetings over the past six years.
The Employment Court today ruled against the Christchurch-based retail chain, which objected to a Labour Inspectorate notice two years ago that by not paying staff who attended pre-work meetings it failed to meet minimum wage obligations.
For at least 15 years, Smith City Group Ltd, which has about 400 store-based employees, has been holding 15-minute sales meetings before opening its 34 stores around the country each day.
The meetings, which the company claimed were optional to attend, were unpaid.
However, an Employment Court decision showed there was very much an expectation to attend, with staff being questioned if they were late or absent.
"A telling observation was made by the manager who gave evidence about this expectation,'' the decision read.
"They regarded those who did not regularly attend the meetings as tending to be poorer performers and that attitude was undoubtedly conveyed to sales staff.
"In combination, the company's expectation to attend and the managers' attitude about those who did not, created pressure that brought results.''
The Ministry of Business, Innovation and Employment today released a decision by the Employment Court saying that if the activity - in this case, the meetings - are integral to a worker's role and that there is an expectation to attend, then that is considered work and employees should be paid for it.
In a statement released by Smiths City the company said it now accepts the Employment Court's decision that the meetings constituted work as defined by the Minimum Wage Act.
Roy Campbell, Smiths City chief executive, said: "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. 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."
Labour Inspectorate regional manager Loua Ward said employers should not pass the cost of doing business on to the people on the floor.
"Employees must be paid for all the work they do and this includes handover times, briefing 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 business hours as something that is for the benefit of the employee or something that's not work,'' Ward said.
"However, we will look beyond that at the real nature of the activity.''
An Improvement Notice was issued to Smiths City Group in January, 2016, as it was found that because the company was not paying workers for attending the daily meetings, it was therefore not paying at least minimum wage for all hours worked.
The retailer objected to the notice; arguing that the meetings were not work and that minimum wage did not apply.
An initial determination ruled in Smiths City's favour, but an appeal to that was made and the Employment Court ruled that the meetings were, in fact, work and that store employees should be paid for attending them.
Smiths City Group will now have to comply to the improvement notice and pay any arrears owing to its workers.
In a statement released by the retailer, which was founded in 1918, it said the company accepted the decision and would be carrying out an audit.
Chief executive Roy Campbell said they had since moved sales meeting into 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,'' he said.
"The audit is covering all current and previous employees for the last six years. We will calcualate the arrears of pay below the minimum wage and reimburse any affected employees accordingly.''