Eliminating wage theft in the New Zealand aged care sector

With increasing public scrutiny and legislative attention, aged care providers must ensure compliance to avoid severe consequences.

In New Zealand, wage compliance has come under greater focus following the implementation of recent reforms, such as the Pay Equity Settlement Amendment Act 2022, aimed at ensuring fair wages, especially for care and support workers. These reforms highlight the importance of aged care organisations adhering strictly to employment legislation, including the Employment Relations Act 2000.

Wage compliance remains a critical area of vulnerability. Aged care providers must proactively demonstrate compliance with employment standards, ensuring employees receive accurate entitlements. This is vital not only for retaining skilled workers but also for maintaining public trust and providing quality care to ageing New Zealanders.

Recent cases in New Zealand, including high-profile investigations by Employment New Zealand, highlight that underpayments often stem from complex employment agreements and administrative errors rather than intentional misconduct. Nevertheless, consequences for breaches can include significant financial penalties, reputational harm and diminished employee morale.

Given the aged care sector’s dependence on a predominantly female workforce, providers must prioritise wage compliance strategically. Investing in a workforce management system is one practical measure to reduce administrative errors, simplify complex employment agreements, holiday entitlements and ensure accurate payments.

Understanding the wage compliance challenge in New Zealand

New Zealand’s employment landscape is governed by comprehensive legislation and compliance can be challenging due to factors including:

1. Multiple agreements and job classifications: Aged care facilities typically employ caregivers, registered nurses, kitchen staff, cleaners and administrative personnel, each potentially covered by different employment agreements or pay equity settlements, each with unique pay rates, allowances and conditions.
2. Complex leave and entitlement structures: The Holidays Act 2003 has nuanced requirements for calculating leave entitlements, often causing confusion and errors among employers.
3. Variable shift patterns: Employees frequently move between roles, shifts and locations, complicating the accurate calculation of pay and allowances.
4. Reliance on outdated systems: Many providers still use manual processes or legacy payroll systems, increasing the likelihood of human error.

This complexity creates a situation where even diligent aged care providers may inadvertently breach wage compliance.

The cost of non-compliance

Underpayment is more than a regulatory issue; it directly impacts workforce stability. New Zealand’s aged care sector is already facing severe staff shortages, exacerbated by a growing ageing population. Providers unable to guarantee accurate and timely payment risk damaging employee trust, increasing turnover and ultimately jeopardising the quality of care.

Ensuring wage accuracy is essential for aged care organisations aiming to meet community expectations of transparency and fairness. Technology plays a crucial role in enabling compliance.

Leveraging technology to prevent wage theft

Digital workforce management platforms offer robust solutions to challenges leading to wage theft, including payroll errors and misinterpretation of employment agreements. By automating tasks such as rostering, attendance tracking, entitlement calculations and payroll integration, providers significantly reduce compliance risks. Key technological benefits include:

1. Automated interpretation of employment agreements: Modern software platforms interpret complex agreements and New Zealand’s employment legislation, accurately applying pay rates, overtime, shift allowances and leave entitlements.
2. Intelligent rostering and compliance monitoring: Digital rostering tools facilitate compliance by considering contractual obligations, employee qualifications, fatigue management and availability. Automatic alerts can identify potential breaches of employment agreements, allowing managers to proactively address issues.
3. Accurate attendance tracking: Replacing manual timekeeping with digital tools such as biometric clocks or mobile applications ensures precise recording of employees’ working hours, directly linking to payroll systems and preventing disputes or underpayments.
4. Integrated payroll solutions: Seamless integration between workforce management and payroll systems reduces manual errors and ensures accurate, timely payments, aligned with legislative requirements.

Conclusion

Whether intentional or accidental, wage theft significantly harms New Zealand’s aged care sector. Fair compensation must remain foundational as the industry navigates ongoing reforms. Although technology alone cannot eliminate wage theft entirely, combined with committed leadership, robust governance and a culture of transparency, it can substantially mitigate compliance risks.

By embracing modern workforce management technologies and embedding compliance into operational practices, aged care providers in New Zealand can safeguard their workforce, reduce risk and reinforce a trusted and effective aged care system.

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