Engineer wins $19,000 payment battle after employer ignores payment obligations
The Employment Relations Authority (ERA) recently dealt with a case involving a worker who claimed unpaid notice period and outstanding annual leave after his employment ended.
The worker argued that his employment ended when he was given an ultimatum to either resign or be dismissed, with a promise that he would receive payment for a month's notice and outstanding leave.
Despite the employer's assurances, the worker maintained that he never received these promised payments. This led him to file an application with the ERA seeking the money he believed he was rightfully owed under both his employment agreement and specific communications with his employer.
The worker also contended that the employer had agreed to make these payments during a mediation process, adding another layer to the dispute. Meanwhile, the employer barely engaged with the Authority's process, submitting only a brief statement alleging performance issues without providing evidence.
The worker was employed as a mechanical engineer between 10 January 2022 and 27 December 2022 at an engineering company. According to his evidence, he was given what amounted to an ultimatum to either resign or be dismissed, and he chose to resign but was directed not to work during his notice period.
Email communications submitted to the ERA showed that the resignation arrangement included promises that he would be paid for a month's notice period plus any outstanding annual leave. The worker testified that despite these promises, he never received any of these payments.
The engineering company submitted only an initial statement in reply that broadly claimed performance issues with the worker's work. However, they did not provide any supporting evidence for this claim, nor did they meaningfully engage in the Authority's investigation process beyond this initial response.
The case had a complicated history beginning when the worker filed his first application with the Employment Relations Authority in August 2023. This application was incorrectly closed in May 2024 based on mistaken information that the parties had resolved the matter through mediation.
"The file was, in error, administratively closed on the basis that the application had been withdrawn. That occurred following advice that the parties had resolved the matter at mediation. A review of the relevant correspondence from [the worker] at the time confirms that [the worker] did not confirm in writing that the matter was withdrawn," the Authority noted.
In April 2024, the worker filed a second application seeking compliance with what he believed were outcomes already agreed upon during mediation. During a case management conference held in September 2024, it became clear there was actually no signed record of settlement between the parties.
The Authority attempted to facilitate resolution by directing both parties to attend mediation. However, the employer consistently failed to participate despite being properly served with all relevant documents and notices for each step of the process, including the scheduling of the investigation meeting.
When the investigation meeting was held in January 2025, the engineer was the only witness present. The employer did not attend despite the Authority delaying the meeting's start time to allow for any late arrival.
The worker provided pay records from September 2022 as evidence of his usual pay rate and working hours. These records showed he earned $9,583 gross for a four-week period, at an hourly rate of $55.29 for 173.33 hours.
The worker testified that he did not receive regular payslips throughout his employment, but maintained that the September 2022 records were representative of his usual hours and pay, with some variation. This evidence became crucial for the Authority's calculations of what he was owed.
Under the Holidays Act 2003, workers employed for less than 12 months are entitled to holiday pay calculated at 8 percent of their gross earnings upon termination. The worker in this case had been employed for approximately 11 months.
The Authority calculated that the worker was employed for 50.6 weeks, with estimated total earnings of $121,229 based on the available pay information. Using the statutory 8 percent calculation method, they determined the holiday pay amount.
"I am satisfied that [the worker] is entitled to payment for the one-month notice period. That is consistent with both the explicit communications between the parties and clause 29 of [the worker's] individual employment agreement," the Authority member stated in the determination.
The ERA ordered the engineering company to pay the worker within 21 days of the determination. The total amount was $19,281 gross - comprising $9,583 for the unpaid notice period and $9,698 for unpaid annual holidays.
Regarding the employer's vague counterclaim about performance issues, the Authority stated: "The matter was not pressed, no evidence in support of that assertion was provided to the Authority, and the claim is dismissed."
On the question of whether mediation had resulted in a binding settlement, the Authority was clear: "I am not satisfied, given the absence of any signed record of settlement, that the parties entered into a binding settlement agreement."
