Director and manager liable to pay over $90,000 for breaching minimum employment standards…

The director of a company and his wife, a manager, have recently been held liable to pay over $90,000 in reparations to an employee after the company breached minimum employment standards.

The employee worked for the company for just over 12 months. The company went into liquidation at the end of 2020, but the employee claimed that he had not been paid for many of the hours that he worked. The employee also claimed that he had not been paid his annual leave and public holiday entitlements.

Despite the company being in liquidation, the Employment Relations Authority was able to look into the issue as the director and manager of the company could be held personally liable for the breaches.

The Authority first had to determine whether the employee’s claims were accurate.

Evidence showed that the employer had failed to keep wage and time records. The director provided various reasons for this failure such as the device that kept the wage records had been stolen. The director did not provide sufficient evidence to support these reasons.

In any case, the Authority held that the employer had failed to keep accurate wage and time records, regardless of the reason. Keeping wage and time records is a legal requirement for employers in New Zealand and the director therefore breached minimum employment standards.

The director had also failed to pay the employee his annual leave and public holiday entitlements. This was accepted by the director.

The Authority ordered the company to pay the employee $29,990 in minimum wages, $10,240 in annual leave entitlements, $1,970 for work on public holidays and $1,720 for alternative holidays for public holidays worked.

However, the company had been liquidated and therefore could not pay the Authority’s orders. ?

The Authority held that both the director and his wife could be held personally liable to pay the amounts, because they were persons involved in the employment breaches. As director of the company, the director had a strong influence over the operations of the company.

Further, the wife had sufficient influence over the management and administration of the company in her role as manager. The employee had raised various issues with the wife as manager, which she had failed to address.

The director was therefore ordered to pay a penalty of $20,000 for the breaches, while his wife was ordered to pay a penalty of $10,000. The director was also ordered to repay a $21,000 premium that had been paid by the employee.

It is important to be aware of minimum employment standards, both as an employee and an employer. This case emphasises that individuals can be held personally liable for breaches of employment standards.