Whangarei Funeral Home on the hook for over $30k; Restaurant ordered to pay $300k in penalties
Have you been keeping up with the latest employment law developments? The first half of 2024 has seen some significant cases with hefty consequences for employers.
Below, we delve into two cases that highlight just how important it is understand and comply with employment law. From hefty fines to directors being personally pursued for their company’s (expensive) employment law failings, these cases serve as timely reminders of the potential costs of non-compliance.
Ford v Haven Falls Funeral Home Ltd
A Whangarei-based funeral home, Haven Falls Funeral Home Ltd, found itself in hot water after the Employment Relations Authority (the Authority) ruled in favour of a former casual employee, Mr Ford.
At the beginning of his employment, Mr Ford was flown from Whanganui to Auckland and Whangarei for an initial eight-week training programme. However, after just three weeks, Mr Ford was sent home due to performance concerns and informed his employment would not continue. Haven Falls argued that as a casual employee, Mr Ford had no expectation of ongoing work and could be dismissed without following usual due process.
The Authority disagreed. Since Mr Ford was in the middle of a pre-arranged eight-week training period, Haven Falls was required to follow standard dismissal procedures. The company was found to have unjustifiably dismissed Mr Ford.
As a result, Haven Falls was ordered to pay Mr Ford:
- $20,000 for hurt and humiliation
- Approximately $4,000* in lost wages
- Interest on the lost wages component for four years**, and
- A contribution to legal costs.
Haven Falls was ordered to pay over an estimated $30,000 in remedies to the Employee after only a three-week engagement. This case serves as a strong reminder of just how important it is to correctly classify the type of employment and identify the appropriate process before terminating employment.
Zhang v Panda Restaurant Ltd
Mr Zhang, a head chef at Panda Restaurant Ltd (Panda) in popular Browns Bay, relocated to New Zealand on a Work Visa tied to his Employer.
Before arriving into the country, Panda’s company Director asked Mr Zhang to pay over $90,000 (over a number of installments), plus an additional $23,900 for restaurant supplies and equipment. Mr Zhang also claimed he was then significantly underpaid, working approx. 70 hours per week but being paid for only 40-48 hours. Mr Zhang said that when he tried to raise these issues with his employer, he was forced to resign.
Panda tried to argue that Mr Zhang was a shareholder of the company and that the parties had actually started the business venture together. However, Mr Zhang was not listed as a shareholder on the companies register, and the Authority found the initial payments were unlawful premiums, as they did not benefit Mr Zhang in any way other than securing his employment. It also ordered the company to pay arrears of wages, holiday pay, and public holiday pay, and issued a penalty of $47,200 for failing to provide wage and time records (amongst other breaches), with Panda’s sole Director to personally pay an additional $8,000.
The Authority found that Mr Zhang was constructively dismissed and awarded him $18,000 for hurt and humiliation, as well as ordering the company to pay interest on the unlawful premiums and outstanding wages and a contribution to Mr Zhang’s costs. The total amount ordered to be paid by Panda Restaurant Ltd was close to $300,000.
Importantly, the Authority found that if the company was unable to pay, then Mr Zhang was granted leave to recover the arrears of wages, leave pay, the premium payments (and interest on these) from the Director of Panda personally. He was also granted leave to pursue the Director’s ex-Husband who was involved in the collection of the premium payment, if the Director or Company could not meet these.
This case serves as a good reminder that breaches of fundamental employment law will and do attract personal liability for Directors in some circumstances. This is something for all employers to be mindful of and to regularly check that your business is compliant with its employment obligations.
What should your business do?
To keep on the right side of the law, consider the following:
- Know your obligations: Stay informed about employment law changes and ensure your business policies and procedures are up-to-date.
- Treat all employees fairly: Regardless of employment status, treat all employees with respect and adhere to proper processes.
- Document everything: Maintain accurate records of employee hours, wages, and performance to protect your business.
- Seek legal advice early on: If you’re unsure about your obligations, consult with an employment lawyer up front. “Act now, beg for forgiveness later” does not fly in the Employment Relations Authority.
*We are unsure from case reports of the exact amount of the lost wages payment, but as an example, if Mr Ford was paid minimum wage and rostered to work 40 hour weeks during the engagement, the company would have had to pay him in the region of $4000.00 (gross).
**The estimated interest charged was based on the above amount payable over 4 years, in accordance with the Ministry of Justice Civil Debt Calculator.
How can we help?
WRMK Lawyers has Northland’s largest team of employment law specialists. We help our clients with all their employment processes. Please give one of us a call or contact your usual WRMK lawyer for advice.
Our thanks to Kezia Purdie for writing this article.
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