'The directors were knowingly party to the non-payment of monies owing'
The Employment Relations Authority (ERA) has ruled in favour of former Kariki Pharma Ltd (KPL) employee Alexis Lopez, awarding him a total of $232,000 for two years of unpaid work.
Lopez served as the company's technical officer after joining KPL in December 2019, but his employment quickly became marred by payment issues.
According to the ERA, Lopez was initially compensated late for several months in 2020 and subsequently ceased to receive any payment at all. In an effort to resolve the situation, he negotiated to receive shares in exchange for his unpaid salary during the latter part of 2020. Despite this, by December 2021, Lopez expressed concerns about the ongoing non-payment.
KPL proposed alternative employment agreements with reduced terms, which Lopez found unacceptable. After enduring 106 weeks without pay, he resigned in July 2022, having not received any of his overdue wages or holiday pay.
Lopez brought his case before the ERA, claiming unpaid wages, holiday pay, KiwiSaver contributions, and penalties for violations of various employment laws, including the Wages Protection Act 1983 and the Minimum Wage Act 1983. He also alleged unjustified disadvantage and constructive dismissal against both current and former directors of KPL.
During the ERA hearing, KPL acknowledged it owed money to Lopez but disputed the total amount claimed. The directors argued that Lopez had agreed to defer his salary until the company secured investor funding, which never materialised.
ERA rules on unpaid wages
ERA member Claire English concluded that there was no evidence to support the claim that such an agreement existed.
"The evidence shows that the directors were knowingly party to the non-payment of monies owing to Mr Lopez during his employment, and were directly or indirectly knowingly concerned in the breaches by way of non-payment of monies owed to him on the termination of his employment," English stated in her determination.
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"This means there is qualifying conduct, making the second, third, fourth, and fifth directors persons involved in breaches of employment standards."
Lopez maintained that he repeatedly raised concerns about his unpaid wages and the financial pressure it placed on his family, emphasising that he had invested approximately $140,000 of his own funds into KPL and persuaded family members to do the same.
English's determination highlighted the initial excitement among the directors about the potential of KPL. However, she noted that as the situation progressed, Lopez's trust in the company eroded.
The ERA ordered KPL to pay Lopez a total of $193,153 for unpaid wages, $13,721 for unpaid holiday pay, $5,936.26 for KiwiSaver contributions, and $20,000 for emotional distress. Additionally, KPL was fined $10,000, with $7,500 of that amount designated for Lopez.