Understanding employment law is essential for every employer, as failing to comply can lead to significant financial penalties and legal consequences. Two recent cases highlight the importance of following proper employment processes, demonstrating how breaches can result in substantial payouts and even personal liability for company directors.

Case 1: Haven Falls Funeral Home – Over $30,000 in Penalties

A Whangarei-based funeral home was ordered to pay over $30,000 after unjustifiably dismissing an employee, Mr. Ford, during a training period.

What Happened?

Mr. Ford was hired on a casual basis and flown to Auckland and Whangarei for an eight-week training program. However, after just three weeks, he was sent home due to performance concerns and informed his employment would not continue. The employer argued that, as a casual employee, Mr. Ford had no expectation of ongoing work and could be dismissed without following usual procedures.

The Authority’s Decision

The Employment Relations Authority (ERA) ruled in favor of Mr. Ford, stating that:

• The pre-arranged eight-week training period implied an expectation of ongoing work.
• The employer failed to follow a fair dismissal process.
• The employer’s reasoning did not justify immediate termination.

Penalty Breakdown

The funeral home was ordered to pay:

• $20,000 for hurt and humiliation.
• Around $4,000 in lost wages.
• Interest on lost wages accrued over four years.
• Legal cost contributions.

Key Takeaway for Employers

Proper classification of employees and adherence to fair termination processes are crucial to avoiding costly legal disputes.

Case 2: Panda Restaurant Ltd – Nearly $300,000 in Fines and Penalties

In a shocking case of employment exploitation, Panda Restaurant Ltd was found guilty of forcing an employee to pay over $90,000 in unlawful premiums and failing to comply with wage regulations.

What Happened?

• Mr. Zhang, a head chef on a work visa, was required to pay over $90,000 to secure his job, plus an additional $23,900 for restaurant supplies.
• He worked 70-hour weeks but was only paid for 40-48 hours.
• When he raised concerns, he was forced to resign.

The Authority’s Decision

Panda Restaurant Ltd attempted to argue that Mr. Zhang was a business partner rather than an employee. However, the ERA found that:

• The payments were unlawful premiums, offering no real benefit to Mr. Zhang.
• The company had failed to pay correct wages and holiday pay.
• Mr. Zhang was a victim of constructive dismissal.

Penalty Breakdown

• $47,200 fine for failure to provide wage and time records.
• $18,000 compensation for hurt and humiliation.
• Additional penalties and arrears, bringing the total to nearly $300,000.
• The restaurant’s director was personally ordered to pay $8,000.
• Mr. Zhang was granted leave to recover unpaid wages from both the director and her ex-husband.

Key Takeaway for Employers

• Employment law violations can lead to personal liability for company directors.
• Wage records must be accurate and up to date.
• Employees cannot be required to pay for their own job placement.

What Employers Should Do to Stay Compliant

To avoid costly mistakes, businesses should:
✔ Know employment laws: Stay updated on changes and legal obligations.
✔ Follow fair processes: Treat employees with fairness, regardless of contract type.
✔ Maintain accurate records: Track wages, hours, and employment agreements.
✔ Seek legal advice early: Consulting an employment lawyer before taking action can prevent serious issues.

Need Employment Law Advice?

For employers in Masterton and Wellington, getting legal guidance can help protect your business from expensive claims. Leading law firms offer fixed-price consultations to ensure compliance and minimize risk. Don’t wait until it’s too late—get expert advice today.

Need guidance on the RMA changes or their implications? Contact Core Legal Wellington for expert advice tailored to your needs.