KEY POINTS:
Employers trying to pay their workers less because they are in KiwiSaver and receive an employer contribution to their savings are being warned they could be breaking the law.
Since April 1, employers have been required to contribute 1 per cent of an employee's earnings to that person's KiwiSaver account.
The Government is helping the transition by compensating employers through a tax credit.
Labour Minister Trevor Mallard said it appeared some employers were offering employees who had joined KiwiSaver, pay increases that were 1 per cent lower than those given to non-KiwiSaver workers, ostensibly to cover the employer contribution.
But the employers could then pocket the Government's tax credit, leaving them clear winners.
"Employers are getting a tax credit of $20 a week, which will fully compensate for the 1 per cent employer contribution for employees who are on a salary of up to $104,000," Mr Mallard told the Weekend Herald.
"Therefore, any suggestion that employees also have to cover this employer contribution through their remuneration is unethical."
Mr Mallard would not name the employers who had been accused in the letters sent to him, but it is understood one is a large company.
He said the Department of Labour was looking into whether the actions amounted to a breach of good faith under the Employment Relations Act, which carried fines of up to $10,000.
Engineering, Printing and Manufacturing Union national secretary Andrew Little said he had heard of employers who were making workers - usually on individual employment contracts - to sign agreements saying the employers' KiwiSaver contribution would be deducted from their pay.
This meant that these workers were then paying their contribution and their employer's, but the employer could still claim the Government's tax break.
"It's certainly unfair; it's potentially illegal," Mr Little said.
"The key thing for the employee in that situation is to stand their ground.
"It's unlawful for the employer to make any unilateral deduction if it's not agreed to," the union chief said.
"Once they sign up to KiwiSaver the employer contribution is compulsory and they have to do it."
Mr Mallard said he might have to consider whether rules were needed to stop the practice.
