ERA examines irregular salary records and workplace evidence in payment dispute
The Employment Relations Authority (ERA) recently dealt with a wage and holiday pay dispute where a worker sought $32,788.85 in outstanding payments for the period between January and September 2023.
At issue was whether the worker was employed by the company as a senior software developer and entitled to unpaid wages and holiday pay for 540 hours of work. The worker provided evidence of regular fortnightly payments that later became sporadic.
The worker maintained he continued working despite irregular payments because of repeated assurances about business recovery. The employer's limited participation in ERA proceedings became a significant factor in the case's progression.
The worker presented an unsigned employment agreement from 2018 showing an annual salary of $95,000. The agreement included standard employment terms, including KiwiSaver contributions and holiday entitlements under the Holidays Act 2003.
The former chief executive officer provided key documentation through a spreadsheet dated October 2024, stating: "Although I no longer have access to the payroll system I did keep a record of outstandings for staff in case there was an opportunity to claw some or all of it back, eventually."
Bank statements between December 2022 and September 2023 showed a pattern of changing payments. While early statements reflected regular fortnightly payments of $2,369.78, later payments varied significantly.
A witness who also experienced payment issues testified: "Payment was often delayed despite being advised payments would be made fortnightly." The witness described receiving payments based on immediate financial needs rather than hours worked.
Bank records showed payments ranging from $293.24 to $2,115.23, made at irregular intervals. This pattern emerged after the company lost a major client in November 2022.
The ERA noted that pursuant to section 132 of the Employment Relations Act 2000, when employers fail to maintain adequate wage records, the Authority may accept workers' claims unless proven incorrect by the employer.
The ERA examined section 6 of the Employment Relations Act 2000, which requires determining "the real nature of the relationship" between parties.
In analyzing the relationship, the ERA cited Leota v Parcel Express Limited: "An employee works for the employer, and the employer's business, to enable the employer's interests to be met. An independent contractor is an entrepreneur, providing their labour to others in pursuit of gains for their own entrepreneurial enterprise."
The ERA found "unequivocal" evidence of employment, noting the worker "was under the control and direction of [the employer] and enabled [the employer's] interests to be met."
The employer's participation in proceedings was minimal. One day before the investigation meeting, they requested a postponement, writing: "I am in the middle of a structure deal that will likely mean the survival of the company... I'm going to need another 2 weeks."
The ERA determined the worker was owed payment for 540 unpaid hours between January and September 2023. The total amount of $32,788.85 included $29,079.00 in wages and $3,709.85 in holiday pay.
The Authority ordered the employer to pay the full amount within 28 working days, plus $71.55 for the filing fee incurred. As neither party had legal representation, no costs were awarded.
