An employer operating a laundromat has been ordered to pay over $157,000 in wage arrears, lost remuneration, compensation and penalties after the Employment Relations Authority (Authority) determined that four migrant workers were unjustifiably dismissed and disadvantaged under the Employment Relations Act 2000 (Act).
This outcome is a stark reminder to employers of the potential cost in getting employment processes wrong.
Background
The four employees travelled to New Zealand on Accredited Employer Work Visas to work for Miaodi’s Laundromat t/a Mr Suds (Mr Suds). They were paid for the hours set out in their employment agreements but regularly worked additional hours. The employees were told by their employer that they would be paid for the additional hours worked in a lump sum at the end of the year, when the business could afford it.
The employees gave evidence in the Authority that they lived in the laundromat, and that the doors were locked at night to prevent them from leaving.
The employees made a complaint to MBIE and were issued Migrant Exploitation Protection Visas. The employer then conducted an on-site visa check and suspended the employees until they could clarify their visa status. From then on the employees were not offered any shifts but received no notice that their employment had been terminated. The employer’s position in the Authority was that the employees had not been dismissed but had failed to return to work after being suspended.
The Authority’s determination
The issues before the Authority were:
- Whether the employees had been unjustifiably dismissed.
- Whether the employees were unjustifiably disadvantaged by being paid their wages as a lump sum at the end of the year.
- Whether arrears were owed for unpaid wages and annual holiday pay.
- Whether penalties should be imposed.
The Authority found that the employer refusing to offer shifts amounted to “sending away” the employees and was an unjustified dismissal under the Act. The Authority also found that not paying the employees for their additional hours worked at the time they had worked them amounted to an unjustified disadvantage.
The Authority noted that there was nothing in the employment agreements that provided for the employer to pay the employees for additional hours worked via lump sum at the end of the year. The Authority found that doing so was unlawful and meant that the employer was in breach of the Minimum Wage Act 1983.
The Authority found that the employer was also liable for:
- failing to pay the employees their annual holiday entitlements
- failing to keep time and wage records
- breaching their good faith obligations under the Act.
The Authority ordered the employer to pay:
- $10,000 for breaches of minimum employment standards
- approximately $29,000 in unpaid wages and annual holiday pay
- 13 weeks’ lost remuneration to each employee in respect of their unlawful dismissal
- $18,000 compensation to each employee for hurt, humiliation, and loss of dignity.
Implications and recommendations
While employers should clarify an employee’s visa status, it is important to be open and transparent. This decision of the Authority makes it clear that suspending an employee and not providing them work in the interim can amount to unjustified dismissal.
It is not lawful for an employer to pay wages for additional hours worked in a lump sum or otherwise at the employer’s convenience. Wages must be paid when earned, and in a manner consistent with the employment agreement.
Employers should also seek specialist advice when navigating the intersection of employment and immigration related matters in the workplace. This is necessary to avoid liability for personal grievances, as well as wage and holiday pay arrears and related penalties.
If you have any questions in respect of the above or any other employment matters, please do not hesitate to contact a member of our Employment Team.
