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Directors continue to be held personally liable for labour law breaches

Contributor:
Fuseworks Media
Fuseworks Media

The Employment Relations Authority (ERA) has ordered Satyam Limited, which was operating a convenience store in Dunedin, to pay $18,000 in penalties, and its director, Sunilkumar Dalpatbhai Mistry, to personally pay a further $9,000 in penalties for negligent record keeping and holiday pay breaches.

The penalties are in addition to $3,000 of infringement fees paid earlier for record keeping failures and more than $6,000 owed to five workers in unpaid holiday entitlements.

The Labour Inspectorate investigated Satyam Limited, in December 2017, as part of a proactive audit of retail operators. It found the employer failed to keep accurate time, wage and holiday records, and to pay workers time and a half for working on public holidays.

The Labour Inspector issued an improvement notice requiring the employer to rectify their practices. Despite several engagements, the employer was still unable to demonstrate full compliance, and the Labour Inspectorate took the case to the ERA.

The ERA found Mr Mistry directly responsible for the failures in that his actions were negligent and not consistent with the employer’s obligations of good faith.

"The penalties send a clear message that employers cannot avoid their obligations and that the Labour Inspectorate will seek personal accountability from directors," says Labour Inspectorate Southern Regional Manager Jeanie Borsboom.

Personal liability means individuals cannot avoid payments to the ERA even if they close their business.

Over the past year, the Labour Inspectorate has taken 19 cases to the ERA or the Employment Court that resulted in company directors being found personally responsible for employment law breaches. This totalled to $259,083 in wage and holiday pay arrears to workers and $475,176 in penalties to be paid personally by the individuals (this includes the $9,000 penalty ordered against Mr Mistry).

"Retail is a focus area for the Labour Inspectorate as the sector tends to employ many vulnerable workers, including migrants and young people on minimum or low wages.

"The employer’s half-hearted attempts to rectify their record keeping were not enough. This is not acceptable, especially given Mr Mistry is a director and shareholder of other companies.

"Had the employer complied with the improvement notice within a reasonable timeframe, the penalties would have been avoided. These are obligations that employers must take seriously and if they do not have the necessary skills or resources, then they should seek professional advice and services," says Ms Borsboom.

Satyam Limited ceased trading from August 2018. Sunilkumar Dalpatbhai Mistry is currently listed as the director and shareholder of three other companies that are trading as convenience stores: A1 Trade Limited, Harinaman Limited and Haricharan Limited, which trades as the Rendezvous dairy.

MBIE encourages anyone concerned about the employment situation of themselves or someone they know to call its contact centre on 0800 20 90 20, where their concerns will be handled in a safe environment.

Information and resources about employment rights and obligations are available on employment.govt.nz.

The government is taking action to address the exploitation of temporary migrant workers in New Zealand, and wants feedback on a number of proposals. Go to mbie.govt.nz/exploitation review to read the proposals and have your say. The closing date for feedback on the proposals is 5pm, 27 November 2019.

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