Company and director face hefty fines after ERA investigation
The Employment Relations Authority (ERA) recently dealt with a case involving a foreign worker who paid a substantial sum to secure employment in New Zealand, only to be dismissed after less than a week on the job.
The worker alleged he was charged an unlawful premium for employment, left without work for several weeks after arriving in the country, and then unfairly dismissed. He sought compensation for his losses including unpaid wages and holiday pay.
The employer denied seeking or receiving any premium and claimed they provided work as soon as it became available. They also argued they did not dismiss the worker, contending instead that he was inadequate and abandoned his job after failing to show up for a painting trial.
The Chinese worker had about ten years' experience installing outdoor advertising boards in China and Singapore when he was offered a construction worker position by a director of a New Zealand construction company.
The construction company was an accredited employer under the New Zealand immigration system, allowing it to hire migrant workers under the Accredited Employer Work Visa scheme. The employer had travelled to Singapore specifically to recruit workers due to a labour shortage in New Zealand.
After being introduced to a Singaporean agent by the employer, the worker paid approximately NZ$11,000 in instalments, ostensibly for "business consulting services." The payments were broken down as a 1,000 Singapore dollar "pre-trip evaluation fee", 4,000 Singapore dollar "visa processing fee" and 6,500 Singapore dollar "business consulting fee".
The ERA investigated whether this payment breached Section 12A of the Wages Protection Act 1983, which prohibits employers from seeking or receiving any premium regarding employment. The ERA found that no actual business consulting services were provided to the worker.
"It is more likely than not that [the employer] and/or [the company] was seeking and received money from [the agent] and/or [the agency]," the ERA concluded. "[The employer] likely knew at the time that charging a premium was unlawful under New Zealand law."
The worker's visa was granted in May 2023, but he didn't arrive in New Zealand until July. Despite his employment agreement stating work hours would be 30 to 40 per week, he then waited until early August before starting work, and was dismissed after less than a week.
On 14 August 2023, a team leader at the construction site told the worker he was "no longer needed" and should not return to work. The following day, the worker discovered he had been removed from the company's WeChat group for employees.
The employer claimed the team leader had acted without authorisation from management and that the worker's performance as a carpenter was unsatisfactory. The employer also argued the worker had abandoned his employment by failing to attend a painting trial that had been arranged with a subcontractor after his initial dismissal.
The ERA rejected these arguments, finding there was "an unambiguous sending away" of the worker. While discussions continued after this date, these were related to the worker's immigration status rather than any genuine intention to offer him another position.
"Even if there were legitimate performance concerns, [the company] was obliged to deal with those by putting them to the employee, assisting him and giving him a chance to improve, rather than immediately dismissing him. A fair and reasonable [employer] could not have dismissed him without having taken these steps," the ERA stated.
The worker sought lost wages for 41 weeks following his dismissal, less the casual income he managed to earn. The ERA noted his difficulties in finding alternative employment due to limited English skills and visa restrictions.
After obtaining a migrant exploitation visa in October 2023, the worker found some casual work one or two days a week. The ERA awarded him three months' wages under section 128 of the Employment Relations Act, totalling $13,035.20 gross after deductions for casual earnings.
The worker also sought $20,000 compensation for humiliation, loss of dignity, and injury to feelings. The ERA awarded $17,000, noting the significant personal impact of the dismissal.
"[The worker] was significantly affected by his dismissal – sadness with no job or income, having to borrow money from family and friends to survive. He felt helpless and guilty, unable to earn in a foreign country to provide for his family back home. Despair lead to physical and mental exhaustion. Impacted his financial stability and mental health," the ERA stated.
The employer was also ordered to pay $123.25 gross in outstanding holiday pay based on the 55.5 hours the worker had actually worked, calculated at his hourly rate of $27.76 with 8% holiday pay.
The ERA imposed penalties of $10,000 on the company and $6,000 personally on the director for seeking a premium. Of the company's penalty, $8,000 was to be paid to the worker and the remainder to the Crown.
The practice of charging premiums to migrant workers for employment opportunities is expressly prohibited under New Zealand employment law, regardless of where the transaction takes place. The ERA found sufficient connection to New Zealand jurisdiction even though payments were made overseas.
The ERA emphasised the seriousness of premium-seeking: "Prevention of the seeking of premiums is an important part of New Zealand's employment protections. Breaches are serious. The amount of money [the worker] was required to pay was significant from his perspective. He spent all his savings on, as well as borrowing money, to pay the fee, hoping to create a better future for his family."
In rejecting jurisdiction arguments, the ERA noted: "Here a New Zealand based director of a New Zealand employer in person took the employee, who had entered into a verbal employment agreement and thus was intending to work in New Zealand, to make the payment a premium. There was a sufficient connection with New Zealand."
"I conclude that the appropriate penalties are $10,000 for [the company] and $6,000 for [the director]. These amounts are consistent with those imposed in other premium decisions," the ERA stated, demonstrating the seriousness with which such violations are treated.
