Liquor store penalised $40,000 for underpaying staff and other breaches

February 18, 2019

An Auckland liquor store has had penalties for employment breaches increased from $220 to $40,000 on appeal from the Labour Inspectorate.



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You must always pay employees at least the New Zealand minimum wage, and pay employees for all holiday entitlements. Calculating holiday pay is tough, we recommend an online payroll provider. 


Daleson Investment, which ran Thirsty Liquor in Onehunga, was taken to the Employment Court late last year by the Labour Inspectorate, which challenged an earlier decision by the Employment Relations Authority.


The inspectorate had sought lost wages and penalties from Daleson Investments after finding that six employees had been underpaid.


It found two employees had been paid under the minimum wage, four had not received holiday pay, four had not received public holiday pay and one had not been provided with a written employment agreement.


The authority upheld the claim, ordering Daleson to pay $12,542.52 plus interest. The company paid the wages back, minus the interest which it later repaid after a further ERA investigation.


The Labour Inspectorate then asked the authority to impose penalties. which it did at $220.


Arguing that the penalty was manifestly "inadequate", the inspectorate then took the matter to the Employment Court.


The penalty was just 0.1 per cent of the authority's original starting point of $220,000, the inspectorate said, and the ERA's approach to penalty-setting reflected errors in fact and law.


Daleson had in the meantime been sold to new owners, including the company directors' son.


The Employment Court's Chief Judge Christina Inglis noted that at the ERA hearing, there was clearly an issue about the majority of the wages and holiday pay owed.


Daleson had argued that it believed one of the affected workers had stolen from the company and his wages had reflected this. In another case, the underpayment had been an administrative error.


The company director claimed not to have had a good understanding of the authority's processes which had undermined his ability to give input into the ERA's two investigations.


Judge Inglis noted the authority had taken into consideration that the outstanding arrears had been paid, and that Daleson could not remedy the written employment failure because the staff member was no longer worked there.


Further, "while non-compliance with the statute was an issue, no employee loss was sustained."


However, she did accept that errors of fact and law had been made by the authority and even after making certain concessions, came to a figure of $91,000.


She ordered Daleson to pay a penalty of $40,000, adding that a "penalty in excess of this figure would not be inappropriate ".


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