Unpaid wages lead to costly ERA determination for employer
The Employment Relations Authority (ERA) recently dealt with a wage arrears claim filed by a worker against his employer, Modern Auto Repair Centre Limited (MARC), and its sole director and shareholder. The worker claimed he was owed several weeks of unpaid wages and that he had been unjustifiably dismissed after raising the issue with his employer.
In his claim, the worker alleged that his wages were paid irregularly throughout his employment, often requiring him to remind his employer to pay him. The worker also claimed that after approaching his employer about unpaid wages and requesting a payslip for mortgage purposes, he was told to leave the workplace and not return.
The employer denied owing any wages and contested the dismissal allegation, claiming instead that the worker had resigned following a heated argument. This disagreement formed the basis for the ERA's investigation, which examined employment records, bank statements, and witness testimony to determine what actually transpired.
The worker started as a full-time panel beater at the car repair centre in February 2021 at $28 per hour, which later increased to $32 in May 2022. His employment wasn't continuous - he left for approximately 11 weeks between May and August 2021 before returning.
The worker claimed he left because his employer failed to pay wages on time, which the employer denied. The employer claimed the worker left to pursue other opportunities but then asked for his job back during Auckland's second COVID-19 lockdown.
The worker acknowledged finding work difficult during the lockdown but said it was the employer who contacted him to return.
By October 2021, wage payments had become irregular again. From early March to mid-May 2022, the worker was on ACC after fracturing his thumb at work. Later, his wife emailed the employer about payment issues, noting that one week's wages was paid late, while another week's wages wasn't received until 16 days after it was supposedly paid.
The dispute escalated on 26 August 2022 when the worker approached the director about five weeks of unpaid wages and requested a payslip for mortgage purposes. The worker claimed the director became verbally abusive and asked him to leave.
The ERA found serious deficiencies in the employer's record-keeping. While the worker's employment agreement stated he would be paid fortnightly, in reality, wages were calculated weekly but paid irregularly.
"[The employer's] handwritten notebook did not record what is typically required of a wages and time record by s 130 of the Act," the determination stated. The notebook lacked basic information required by law, including the worker's postal address, kind of work, hours worked each day, and method of calculation.
The Authority cross-referenced the director's notes with both parties' bank statements and found the worker was owed $9,888.76 in unpaid wages. The employer's holiday records were equally deficient, with the ERA finding the worker had never been provided with annual leave, calculating $4,401.17 in unpaid holiday pay.
Although the employer initially acknowledged two weeks of unpaid wages might be owed, this position changed during the proceedings. "Based on the information and evidence before me, all payments from MARC have been accounted for yet there remains a total deficit in wages owing to [the worker] of $9,888.76 (net)," the determination noted.
The employer and worker had different accounts of the worker's last day. The worker claimed he was told to leave and not return after requesting unpaid wages.
The employer claimed the worker took exception to a co-worker starting a customer's vehicle and later had a heated exchange when asked to move a vehicle himself, approaching the employer in a threatening manner.
The ERA found no corroborating evidence for the employer's version of events. "It is not clear from the information and evidence before me that [the worker] resigned. On the contrary, an email from him to [the employer] makes clear that he was asked to leave work 'and not come back' which on a plain reading supports a dismissal rather than a resignation," the Authority noted.
The ERA determined that no proper process was followed: "Even for a small employer such as MARC, there was no process followed whatsoever and it cannot be said that the company's actions were those of a fair and reasonable employer in terms of the test of justification at s 103A of the Act."
The ERA ordered the employer to pay the worker $14,289.93 in wage and annual leave arrears, plus interest from when the personal grievance was raised. The worker was also awarded $5,120 in lost wages for the four-week notice period in his employment agreement.
The worker found new employment as a sandblaster on 13 September 2022, though at a lower rate of $27 per hour. The Authority awarded $13,500 in compensation for the effects of the unjustified dismissal.
"[The worker] stated that he felt humiliated after he was dismissed, that neither he nor his wife could sleep because they were concerned for their future, and that he felt ashamed as a father and as a husband because of the loss of employment," the determination explained.
The Authority further declared the director personally liable for wage and leave arrears should the company be unable to pay.
