Retail staff being paid as little as $7 an hour

A retail company was effectively paying its staff as little as $7 an hour. Photo / Getty Images

A Government-funded employment standards task force has been set up in South Auckland after growing concerns about workplace abuse - including retail staff being paid as little as $7 an hour.

The Labour Inspectorate was allocated $32 million to strengthen compliance with minimum employment standards in this year's Budget, of which $1.4 million was used to set up the new team of 10 staff.

George Mason, general manager of the Labour Inspectorate, said South Auckland was a hotbed of red flags because of its high numbers of young and migrant workers working in target industries including hospitality, retail and horticulture.

"[Counties Manukau] flags up immediately all the target and risk factors of the inspectorate," Mr Mason said.

"You're talking short payment of wages, failure to keep records, failure to properly account for the hours employees have worked."

Mr Mason said minimum employment breaches ranged from minor offences to outright exploitation, including one case where a retail company was effectively paying its staff as little as $7 an hour.

The adult minimum wage in New Zealand is $14.75 an hour and the starting-out or training minimum wage is $11.80 an hour.

Khoobsurat, an Indian clothing store in Papatoetoe, was ordered to pay $30,000 in penalties and more than $18,500 in arrears for lost wages and holiday pay to two employees after an Employment Court decision in July.

"[Employees] were working more than 40 hours a week but the employers were only paying them for - and critically, only recording - 20 or 25 hours of work a week. Holiday and leave weren't being paid, so that tells you those workers, in terms of the hourly rate, were down around $7 an hour or less."

The case has similarities to an earlier employment breach where workers at Auckland's Masala restaurants were found to be paid as little as $2 an hour. The owners of the company were eventually sentenced to a combined 15 months' home detention in October on immigration and exploitation charges.

They were also ordered to jointly pay more than $60,000 in arrears and penalties to four members of staff.

Mr Mason said recent audits in South Auckland businesses in the retail, construction and hospitality sectors had revealed minimum employment standard breaches in 21 out of 30 businesses.

"Of those 30 audits around 21 have at least one labour standards breach and ... those cases are likely to be problematic. It tells you there's a pretty high strike rate in terms of compliance."

He said non-compliance ranged from minor to serious offences, with minimum wage breaches at the more exploitative end of the spectrum.

In the contracted labour sector, where companies employed construction and other workers on short-term contracts from recruitment agencies, there were potentially hundreds of workers not receiving their full entitlements, something the Inspectorate was currently investigating.

"What's really significant is there's a great deficiency in record-keeping, both time record-keeping and holiday record- keeping. Without those records we can't know the exact nature of the breaches.

"We're very focused on the records because that will tell us whether or not we have problems with the way workers are being treated," he said.

"But the fact the employers aren't even keeping the records is a pretty strong indicator from our perspective that all isn't well."