There has been a fair bit of talk in the media over the last year or two regarding how staff are paid down on the farm with various people poking around and making general assumptions around the subject of unfair hours worked and the potential for under payment of time worked by staff particularly through Calving and Mating.
Dairy farming is an industry with its own peculiar requirements insofar as staff are generally paid a salary, there are seasonal periods of long and short work hours, there is often accommodation “thrown in” coupled with other non-cash benefits like meat and to top it all off a standard working week can range between 5 and 18 days in duration.
To begin with best practice when employing farm staff is to cover off all expectations in the Employment contract so that both the Employer and Employee know precisely what has been agreed to right from the outset. The areas that are generally agreed to include:
- Salary
- Accommodation and value (this should be at market value)
- Other non-cash benefits
- Roster period ( may be several different rosters over a season)
- Expected hours of work
- The requirement to record hours worked each and every day
- Other general parameters
The above are summarised into three main areas: Salary or Total Package Value (TPV), Rosters and Timesheets
SALARY OR TPV
The value of on-farm accommodation is part of the TPV (Total Package Value). Legally farm accommodation should be set at FMV (Fair Market Value). Look at this from the point of view that if there was no on-farm accommodation then staff would be paying FMV elsewhere.
TPV includes items such as:
1/ Salary
2/Accommodation
2/ Meat allowance
3/ Power and telephone
As an example let’s say that Bill, a Farm Assistant is paid a base salary of $36000, he is given ½ a beast per annum (value is say $800) and also has a farm house provided which has a Fair Market Value of $200 per week. Bills’ TPV (Total Package Value) is therefore $47,200. If the agreed accommodation value is just $100 per week then the TPV is $42,000. It stands to reason then that the lower Bills’ TPV is set, then the closer Bill will be to working to the minimum wage for every hour he works. The upshot of this exercise is clearly that accommodation values are better set at FMV (Fair Market Value). It stands to reason therefore that on-farm accommodation is best set at a market rate thus making staff TPV reflect the true value of remuneration.
TPV should therefore be the datum point for measuring staff time against minimum wage for any given pay period.
ROSTERS
Rosters vary from one farm to another and to a degree from one island to another. For example many farms in the South Island use a 3 way roster, say a 7-2, 7-2, 7-3, some have just a simple 5-2 whilst others may make use of an 11-4 and so on. On farm rosters may change seasonally as well so measuring Rostered time off balances (does the staff member owe the boss time or vice- versa) can be a nightmare depending on how complex the roster is over the season. If excel spread-sheets are your forte’ then complex rosters may be dealt with slightly more easily than say a calculator, pen and paper.Throw into the mix, insufficient time and manual calculations,you end up with a recipe for errors.
TIMESHEETS
It is a legal requirement that all the hours worked by staff , annual leave and special leave are recorded in one form or another. Options include paper timesheets, a diary, finger print or facial recognition system, a spread-sheet or some kind of App. Whatever the method there is always going to be the dairying nemesis of measuring staff time against minimum wage for any given pay period and for most this can be tricky. For example how is the salary converted to an hourly rate? This would be easy if for every week staff worked the same hours. It would be easy if the Roster stayed the same for the entire season as well but let’s face it, neither generally occur on-farm. Measuring hours worked for any given pay period has its complexities, for example:
1/ Staff hours are measured against minimum wage for a pay period not exceeding 2 weeks.
2/ Should hours worked for a given pay period mean that the “Pay” has fallen below minimum wage then the “Top Up” should legally be paid at the completion of that pay period.
3/ Records should obviously be kept to verify each and every pay period.
It makes sense then, that some RTO (Rostered Time Off) should fall in to each and every pay period to mitigate the risk of hours worked falling below minimum wage. Unless your Farm Roster falls into a standard week i.e. A 5-2 roster then the best pay period is most certainly fortnightly. The benefit of a fortnightly pay period is that there will normally be some RTO (Rostered Time Off) in that pay period unless you utilise a roster greater than 14-2 of course.
In summary, as we move toward the 2016 season there are a number of points to take into consideration:
- Consider making it mandatory for all farm staff to fill out timesheets in one form or another (Not keeping records of staff time is akin to not having a Warrant and Rego on your road vehicles)
- If you don’t already pay staff fortnightly and you have a roster period other than a 5-2 then look seriously at changing pay runs to a fortnightly period.
- Assess whether accommodation is at FMV (Fair Market value) and alter as necessary.
Making sure that Salaries, RTO and Timesheets are all in order for the coming season is a good start to creating a happy and long lasting relationship with farm staff. This will be particularly important should your records ever come under scrutiny.
With the high annual turnover of staff in Dairy, taking your best shot at keeping your good staff certainly doesn’t stop with just accurate record keeping. Keeping things transparent will help keep staff motivated and productive as well as help to keep the “green-eyed monster” at bay. By transparent consider giving staff regular access to the following:
- Accumulated Annual Leave values.
- RTO balances.
- Let them know how they are tracking with hours against minimum wage for any given pay period and when they exceed their hours for any given pay period top up the pay there and then.
- Consider giving staff an indication of what their hourly rate is for any given period, be it weeks or months so they have an accurate measure of what their hourly rate might be.
- Explain to staff the importance of correctly filling out timesheets and how the information can benefit both parties.
At Agrismart, we cover all the above issues plus a whole lot more and as this is the time of the year to get all of your compliance ducks in a row why don’t you contact us now and see for yourself how easy it can be to get your compliance sorted.
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