Well, we are off to an interesting start to 2023, for those of us interested in minimum entitlements legislation.
An Employment Court decision has ruled that the owners of four alcohol retail stores are personally liable to pay five former employees wages and holiday pay, totalling $259,685. The owner of the businesses has also been banned from employing anyone for a year.
Employment Court cases can be lengthy. However, in this case, the Labour Inspectorate and the Respondents filed a joint memorandum and agreed a statement of facts in the Court, which Judge Kathryn Beck considered in making her orders.
Nikhil Himalaya and owners, Ravinder and Anuradha Arora, accepted the breaches of the Minimum Wage Act 1983 and the Holidays Act 2003. They failed to pay wages at no less than the minimum wage, incorrectly calculated holiday pay at termination, and failed to maintain holiday records.
As part of the consequence, the Judge also ordered a banning order against owner Ravinder Arora for 12 months, which means that he will not be able to employ or be involved in employing anyone for a year.
The Inspectorate said that, as there were no records, they relied on technology to verify the evidence provided by the former employees. This type of data analysis will be a method used by Labour Inspectorates in the future, where records are not maintained or cannot be produced.
What is interesting is that there were no penalties ordered against the Respondents. It is usual for the Inspectorate to seek penalties where breaches of minimum entitlements occur and the Inspectorate is reluctant to resolve matters, even in mediation, because of the penalties sought. It may have been that the banning order, together with the recovery of $259,685 in wages and holiday pay, was seen as a reasonable sanction for the breach or there may have been other mitigating factors considered by the Labour Inspectorate when agreeing on the joint memorandum.
Although, in this writers view, while most employers invest in processes and payroll systems to ensure their employees receive their minimum statutory entitlements, there still exists employers who, for whatever reason, breach minimum standards. The Courts provide a very strong incentive for compliance with financial sanctions and orders that prevent employers from employing staff, and this case highlights that.
Unfortunately, there are also good employers who believe they are complying, but just get it wrong. These employers fall into the same non-compliance category and can also face hefty penalty sanctions.
No employer should set and forget their payroll system. An annual check to ensure compliance with minimum statutory entitlements should be part of every wise employers plan to protect their business.
Three60 Consult’s payroll and minimum entitlement review service has been very busy with employers wanting a review to ensure that their payroll systems are calculating wages and holiday pay correctly and that the systems in place meet their legal obligations.
Tasneem Begum and I are both ex MBIE Labour Inspectors and in undertaking these reviews, we usually find areas of non-compliance, even where reliable payroll systems are being used. Because the reality is they do not accurately account for the different types of working patterns. We are then able to assist the employer in remedying the breach and ensuring their processes are compliant. So, when the Labour Inspector comes knocking, you can rest assured you have got things right.
If this is an area you need assistance with, get in touch with our Minimum Entitlements team today.
Lynn Booker, Senior Associate
