Director sues former lover turned business partner for unpaid wages

Former domestic partners had their dispute settled by the Employment Relationship Authority after the co-director claimed that she was not paid properly.

In 2018, Rungwanwilai Kongbang and Craig Johnson entered into a domestic relationship, with Kongbang working as a Thai masseuse. They resided rent-free in Johnson's grandmother's house, and he provided financial support to Kongbang.

The latter proposed the idea of establishing a massage business, leading to the incorporation of "LTL" with Johnson as the sole shareholder and director.

Eventually, Kongbang became a 50% shareholder, obtained a partnership work visa, and assumed responsibility for the day-to-day operations.

Initially employed part-time due to visa restrictions, Kongbang later transitioned to full-time employment. The business expanded, moving to larger premises, and she served as the manager from October 25, 2018, until October 31, 2020, earning $28.38 per hour for a maximum of 40 hours weekly.

According to records, issues arose concerning cash transactions, with Johnson mentioning the allocation of funds for various business expenses. An absence of structured banking and accounting practices was noted. In April 2019, Kongbang became a co-director.

The personal relationship between Kongbang and Johnson deteriorated by January 2020, leading to Kongbang's resignation as a director on November 1, 2020. Subsequently, she established her own competing massage company, Maepra Thorani Limited.

Upon leaving LTL in October 2020, Kongbang took staff, appointment books, and the company webpage to her new venture, effectively closing down LTL.

The aftermath resulted in extensive litigation between the parties, including disputes over personal and business matters.

Unpaid wages

Kongbang claimed she was never paid the hourly rate stated in her contract or for the amount for all hours she allegedly worked. She said she received wages of less than $500 per month into her account and that this was contrary to the income LTL declared to IRD and falling below the minimum wage rate.

She said she worked at least 60-76 hours per week from October 2018 to October 2020, and that she has been paid for only a small proportion of the hours she actually worked in breach of the Minimum Wage Act 1983.

Kongbang’s evidence was that she was underpaid almost $100,000, and since LTL failed to provide wage and time records, the burden is on the employer “to prove that she did not work the hours she claims to have; it is not on her to prove that she did.”

Employer’s obligation to maintain records

The Authority said that employers have an obligation to maintain wage and time records.

“Where an employer fails to keep wage and time records, the Authority may accept as proven all claims made by the employee about the hours, days and time worked by them, unless the employer proves those claims to be incorrect.”

Johnson said there were wage and time records, however, they “were deleted from the work computer about the same time Kongbang left LTL.”

‘Implicit in underpaying herself’

The Authority noted that Kongbang was an employee of a company, and as a co-director and 50% shareholder, she “exercised significant control” over its affairs.

“She was responsible for keeping employees’ hours of work and, including herself, was responsible for both her own and other employees’ wages, annual leave, holiday pay and all other employment matters.”

“The wages were paid by bank transfer and cash payments. If Kongbang’s claim that she was underpaid is correct, then she was implicit in underpaying herself wages,” the Authority said.

Despite this responsibility on Kongbang, the Authority reviewed the company’s transactions and saw that the employer owed her payments. Thus, it ordered the employer to pay her reimbursement for lost wages, unpaid holiday pay, and interest.