Liquidation and s 142W - Don't ignore those wage arrears
Just weeks after the Bikes and Beyond debacle, here’s another example of a small business owner who thought that voluntary liquidation is going to get him off the hook regarding wage arrears.? ?
It’s a well known fact that setting up a new business is often risky and half of all start-ups fail within a few years, but wages and holiday pay are somewhat protected (alongside the PAYE payable on those wages).? Redundancy compensation is not subject to the same protection even if the employment agreements allow for it.
A Newmarket restaurant called Inca with the legal name Inca Watt Limited was put into liquidation on 2 November 2023 and the six month liquidator’s report indicates that 22 former employees are owed a total of around $67,000.? The report also hints that the cupboard is probably bare – “It is unknown at this stage if any funds will be available for distribution to preferential creditors” which includes employees.
We are unaware of any claims before the Employment Relations Authority for recovery of the wage arrears but this could change any day.? The only reason we know about Inca is because Stuff reported that its director Nic Watt opened a new restaurant called CanTing while his 22 long-forgotten employees continue to wait for their wages and holiday pay.?
The legal name behind CanTing could be any one of several companies Watt is a director of (Inca Watt is the only company in liquidation).?
We don’t know exactly who was responsible for the non-payment of wages but under Section 142W of the Employment Relations Act:
142W: Involvement in breaches
(1) In this Act, a person is?involved in a breach?if the breach is a breach of employment standards and the person—
(a) has aided, abetted, counselled, or procured the breach; or
(b) has induced, whether by threats or promises or otherwise, the breach; or
(c) has been in any way, directly or indirectly, knowingly concerned in, or party to, the breach; or
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(d) has conspired with others to effect the breach.
142Y: When person involved in breach liable for default in payment of wages or other money due to employee
(1)?A Labour Inspector or an employee may recover from a person who is not the employee’s employer any wages or other money payable to the employee if—
(a)?there has been a default in the payment of wages or other money payable to the employee; and
(b)?the default is due to a breach of employment standards; and
(c)?the person is a person involved in the breach within the meaning of?section 142W.
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In other words, the 22 employees can instruct an employment lawyer or advocate to recover their $67k (plus interest and costs) from Nic Watt personally.? CanTing is already linked by way of a mainstream media article to non-payment of wages and that is a reputational threat.
While the economy is still a bit flat it's good to see new owners of failed businesses get back on their feet, but allowing wage arrears to follow them around is unwise. Hopefully Mr Watt is running around like a headless chook today doing his best to placate his former employees and settle these debts as I type this.
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Tristam Price, Editor