Letterbox with circular: providing accommodation to workers - how to do it right

Question: Can I pay a worker with accommodation?

Answer: No, work which has been carried out must be paid for in currency. However you are able to provide accommodation for your worker and deduct the cost from their wages. This can only be done with the consent of the worker in the form of a written tenancy or accommodation agreement. The agreement should be separate, or able to be separated, from the employment agreement.

Be aware! You cannot make a job offer dependent on the employee staying in the accommodation being provided – in other words, you may not refuse someone the job because they choose to live elsewhere whilst in your employment.

It is important to note that since both a rental agreement and employment agreement are in place, you must ensure you comply with the relevant tax and legal obligations which come with being a landlord and being an employer.

Question: Can I choose how much to charge for the accommodation?

Answer: You will need to decide the value of the accommodation cost to deduct from wages, however this amount must be based on fair market values for similar types and quality of accommodation in comparable locations.

If there is no specific agreement about the cost of accommodation to be deducted from wages, the maximum an employer can deduct from wages is 15% for board (accommodation and meals), and 5% for lodging (accommodation only).

Question: How do I know if my worker is an employee or a volunteer?

Answer: The definition of an employee under the Employment Relations Act 2000 is "a person of any age employed by an employer to do any work for hire or reward under a contract of service".

Therefore if your worker meets any of the below criteria they will be deemed an employee, not a volunteer:

  • If they are paid for their work – including receiving free accommodation or food, or the equivalent cost being deducted from wages.
  • The business makes money as a result of the worker's efforts.
  • The work they perform is essential to the business, and would normally be done by an employee
  • The hours of work are controlled or scheduled.

If they are defined as an employee, they must also be legally entitled to work in NZ. It is the employer's responsibility to make sure they have a valid work permit or visa before taking them on as workers. It is a criminal offence to employ people who would be breaching their visa conditions by working in NZ.

Question: What about WWOOFers?

Answer: WWOOFers ("Willing Workers On Organic Farms") have historically been used extensively in the farming and accommodation industries. The WWOOFer scheme involved casual workers working in exchange for accommodation or board.

A 2018 Labour Inspectorate investigation discovered the practice meant businesses were not meeting various legal obligations, and the workers were not being afforded the right protections under New Zealand employment law.

For this reason, anyone deemed an employee and working in NZ must:

  • Be legally allowed to work in NZ; and
  • Be paid for the work they perform in money; and
  • Have wages calculated at the relevant minimum wage rate for the hours worked; and
  • Have an employment agreement in writing; and
  • Receive at least the minimum holiday and leave entitlements; and
  • Have their hours worked, wages paid and leave taken recorded appropriately; and
  • Have a written rental agreement if they reside in accommodation provided by the employer, agreeing to those costs being deducted from their wages.

Contact us if you would like assistance with the matters discussed in this article, or any other employment, wage or HR problems - our experienced professionals can make sure you are armed with the right information.