Even though progress with the Holidays Act review is slow, the Employment Court has recently shed light on ordinary weekly pay (“OWP”) calculations for those who receive commission.
The Court has said that OWP is what is “ordinarily or usually payable” to an employee for an ordinary working week. The Employment Court’s judgment is Tourism Holdings Ltd v A Labour Inspector  NZEmpC 87.
Tourism Holdings Ltd (“THL”) operates tour bus business throughout New Zealand called Kiwi Experience. The tour bus drivers’ pay included commission earned on the sale of activities booked by them for passengers. Basically, if passengers wanted to book a side trip, like a bungy jump, the drivers would sell the trip and get commission on the sale.
THL’s position was that this commission was only “earned” after a number of steps had been taken, the last being drivers attending a debriefing session where commission documents were submitted. A reconciliation would then follow.
THL’s view was that the commissions were not a “regular part of the employee’s pay” for an ordinary working week and so should not be included in the calculation of OWP.
They argued that the commissions were not earned weekly, but at irregular intervals measured by the length of each trip and the subsequent reconciliation. Because of this, it was argued that the commission did not fall within the meaning of a “regular part of the employee’s pay”.
The Labour Inspector opposed this view, but the Court agreed with THL that the commission did not form part of the drivers’ OWP.
It was determined that the commissions were paid “commonly”, but they were earned over varying intervals of time. They were therefore not “regular” in that they were not payments received under the employment agreement for an ordinary working week.
While every situation where commission is earned will depend on the particular facts, what this means is that the frequency in which pay is earned (i.e. regularly or irregularly) impacts whether such payments are ordinarily or usually payable for an ordinary working week, and therefore whether they are included in the calculation of OWP.
This is helpful clarity from the Court on a piece of legislation that has very many grey areas, however, we understand the Court of Appeal has granted leave to appeal, so this may not be the final word.