Says employer enticed him with New Zealand's family benefits
The Employment Relations Authority (ERA) recently dealt with a case involving a worker who alleged that his employer required him to pay a substantial premium for his employment and subjected him to serious exploitation.
The worker, a Chinese national with around 30 years of experience as a chef specialising in Sichuan cuisine, sought to recover the premium payments, claiming arrears of wages, holiday pay, and leave entitlements.
He also pursued a personal grievance for unjustified constructive dismissal and compensation.
Background and premium payments
The worker first met with the employer's director and manager while still living in China. The worker claimed that during these meetings, the manager asked if he had thought about sending his child to New Zealand and emphasised the benefits a New Zealand education could have.
The worker alleged that the manager suggested his child could attend school tuition-free if he came to New Zealand on a work visa.
Subsequently, the worker made three payments totalling NZ$92,946 to the employer's director before arriving in New Zealand to work. He also paid NZ$23,900 for items such as crockery and furniture for the restaurant.
The worker argued that these payments constituted premiums for his employment, while the employer claimed they were capital contributions and that the worker was a shareholder in the business.
Employment agreement and work conditions
According to records, the worker signed employment agreements with the employer, which specified his salary and hours of work.
The first agreement, dated January 2018, recorded his base annual salary as $45,000, while a second version of the agreement provided by the worker showed a higher salary of $62,400. The employer claimed that the second agreement was forged and that the worker's salary was $45,000.
The worker claimed that he actually worked significantly more hours than he was paid for, estimating that he worked approximately 70 hours per week while only being paid for 40-48 hours. The ERA found that the worker's evidence about his hours of work was largely credible and supported by other witnesses.
Constructive dismissal claim
The worker claimed that he had a personal grievance for constructive dismissal due to the long hours he was required to work, low remuneration, and the way he was treated when he raised issues about his working conditions.
He alleged that when he complained about his employment conditions, he was induced to resign.
The ERA found that the worker's resignation was reasonably foreseeable given the nature of the breaches and his increasing unhappiness with not being repaid the premium amounts.
The ERA noted that failure to pay wages in full when due and owing is a serious breach of the duty owed to the worker as the employer's employee.
ERA’s findings
The ERA ultimately found in favour of the worker, determining that the payments he made constituted premiums for employment and that he was entitled to recover them. The ERA also found that the worker was owed arrears of wages, holiday pay, and leave entitlements.
In assessing whether the payments constituted premiums, the ERA stated, "The Authority has looked at the true nature of the arrangement to ascertain whether there were benefits to [the worker] separate from the benefits of employment. Through the payments he made, [the worker] paid for capital expenses that would normally be borne by an employer setting up a business of this kind. He did not objectively receive anything for the payments, other than the promise of and obtainment of a job with [the employer]."
The ERA also upheld the worker's personal grievance for unjustified constructive dismissal, noting that his resignation was readily foreseeable given the circumstances.
In its determination, the ERA ordered the employer to pay the worker the premium payments, arrears of wages, holiday pay, leave entitlements, interest, and compensation for the unjustified constructive dismissal.
The ERA emphasised the need for both specific and general deterrence, stating that the breaches in this matter were sustained and systematic breaches of minimum employment standards.
