ERA finds employer exploited vulnerable migrant worker in licensed hospitality business
A bar worker on an accredited employer work visa claims he was constructively dismissed after working full-time for over five weeks without receiving wages, and that he was required to pay a $12,000 premium to secure the position.
The employer denies the worker was ever employed, claiming it merely provided voluntary assistance to help him learn bar operations and obtain his license controller qualification at his request.
The worker seeks remedies for lost wages, compensation for injury to feelings, reimbursement of the premium payment, wage arrears, including holiday pay, and penalties for multiple statutory breaches.
The employer strongly contests that the employment relationship existed and denies that any premium was sought or received.
Background and visa circumstances
The worker came to New Zealand on 3 July 2023 on an accredited employer work visa to start a job as a duty manager in a liquor store in Christchurch. The worker gave unchallenged evidence that the broker for this employment was the former director of the employer, who is also a close relative of the current director.
The worker understood from the former director that the job was with their friend and customer, and he paid a sum equivalent to $30,000 for the visa, with the former director making arrangements for the payment.
On 28 July, the employment for which the visa was granted ended when the liquor store employer told the worker there was no more work and that the shift was to be his last. He had received no wages for the work performed.
He turned to the former director for advice and support, who told him he would try to resolve the issue with the employer and proposed an immediate solution: the worker could work at the bar but he must pay $12,000 for the job to transfer his visa to the employer, they would help him with his rent of $200 per week, and he was to go to the bar to start training.
The worker accepted the offer, with this arrangement agreed on 2 August. Also on 2 August, the worker sent the current director information about a license control qualification, which he had been unable to progress with his employer at the liquor store. A duty manager in a liquor store must hold such a qualification, as must a duty manager in a bar.
Work arrangements and duties performed
As directed by the former director, the worker started work with the employer on 3 August. He said he started work that day between 4pm and 5pm and finished between 10pm and 11pm, and that the current director told him to work with another employee who would show him what to do.
The other employee, in his evidence to the Authority, confirmed the worker's evidence, including that they worked together at the bar from 3 August and that the worker worked the same hours he did Monday to Saturday.
The worker described in detail the work he performed and the people with whom he worked. He provided WhatsApp messages with the current director from 5 August to 20 September which variously included: "start mopping," "ask for ID," "start cleaning the Beer tap," "stay with him when he is clearing the pokies," "get the signs in," "pick up the glass jugs from the smoking area," and "lock the front main door." The worker says these are work instructions received from the current director, who was sitting in the office observing the bar on CCTV, confirming shift start times and directing his duties.
The current director says he was helping the worker out to learn bar operations, and the communications were for this purpose or to ask the worker to communicate instructions to other staff because he could not get hold of them. The current director accepted that he dropped the worker off at home on Friday, and Saturday night shifts finished late, and there were no bus services available.
In support of his claim that he was an employee, the worker provided video recordings of him opening and closing tills in the bar, being shown how to close gaming machines and how to generate a consumption report.
He said he made these recordings on his phone so he could undertake the tasks himself. In another video used for promotional purposes on the bar's website, the worker can be seen working behind the bar. The current director says these videos are not evidence of employment but rather how the employer supported the worker to learn about bar operations.
Premium payment and rent arrangement
On 13 August, the worker met with the former director and the current director at the bar. The worker says the former director told him they were prepared to offer him a job so he could transfer his visa to the employer, and the current director confirmed this in front of him.
The worker asked if he would be paid for the work he had done to date, and they said no because he was training, but they would help him with his rent payments of $200 per week. The worker said he agreed to this because he had no choice and sent his bank account details to the former director.
On 14 August, the former director deposited $200 into the worker's bank account with the reference "rent." The worker said that when he received the rent payment into his account, he felt he could trust the former director about the offer of a job with the bar, and he set about arranging the $12,000 he needed to pay as part of the agreement. He had $2,000 available.
On 15 August, he contacted friends overseas, explained he needed money for his employment in New Zealand, and they each agreed to give him $5,000, which they immediately deposited into his bank account.
On Thursday, 17 August, the former director sent a text message to the worker, "Friday tomm." The worker understood this as code that he had to meet the former director the next day with the $12,000. The following day, the worker withdrew $10,000 in cash from his bank account.
At about midday, as arranged, he met the former director outside his house and handed him a bundle of $12,000 in cash through the window of a car in which the former director was sitting.
The worker's bank account records were provided to the Authority and support the money deposits and withdrawals he described. Witnesses corroborated the worker's evidence that he needed to borrow money to secure a job.
One witness who has known the worker, current director and former director for some years said he was in regular contact with the worker, knew he was concerned that he was not being paid for the work at the bar, and when the worker stopped working at the bar he contacted the current director and former director seeking to reconcile the parties including asking them to return the $12,000 paid for the job.
He said this was agreed on condition that the worker left New Zealand because they did not want trouble with immigration. The current director denied any knowledge of the $12,000 payment or that he discussed the payment with this witness or the worker.
Employment ending and subsequent events
On 21 August, the worker attended a one-day license control qualification course. He understood a friend of the former director's had booked and paid for the course payment, which he reimbursed. He received the certificate on 21 September.
By 12 September, the worker realized something was not right. He had received no more rent payments and had been paid no wages. His requests for payment had been brushed aside. That day, he told the current director he could not work if he was not being paid. The ERA found this was his last day of work with the employer.
On 20 September, the current director called him to ask him to work that night at the bar. He did not know what to do, so he contacted the former director, who asked him why he had not been at work. When he told the former director he could not work unless he was paid, they said they would speak to the current director.
The worker went to the bar that evening, anticipating that matters would be clearer between the parties. He waited at the bar to talk to the current director, and when they spoke the current director told him he would not be paid for his work.
On 11 December, the worker's representative wrote to the employer outlining this employment relationship problem, including raising personal grievances and seeking reimbursement of the $12,000 premium. The Authority was satisfied that the parties attempted to resolve these matters between themselves, including attending mediation.
Employment relationship determination
The employer says it did not offer employment to or employ the worker, and he could not work for it under the terms of his visa. It says that when he asked for help to learn bar operations after his employment ended, the employer provided it, including help to get a license control qualification.
The employer says the worker was never given instructions about when to start work or called to work, that he came and went to the bar as he pleased, and the current director may have asked him to pass on messages to staff when they were busy when he was sitting at the bar.
The ERA found the worker was employed by the employer. The Authority was satisfied that the employer's former director offered the worker a job in his bar on condition that he paid $12,000 and his rent of $200 per week would be paid while he trained in the role.
The ERA was further satisfied that the parties through their actions met, or in the employer's part partially met, the terms of that arrangement: the worker paid the former director the job price and in exchange he worked in the bar diligently learning bar operations and gaining the necessary certification, and the former director paid $200 into the worker's bank account and liaised with the bar manager to facilitate the worker's access to the bar, training to learn bar operations and help to get his license control qualification.
The Authority found that at all times the former director was acting on behalf of the employer: he offered the worker a job at a bar owned by the employer, received the job price money from the worker to secure the job at the employer and was at all relevant times the sole director and shareholder of that entity.
Personal grievance findings
The ERA found that even if it was accepted that the worker's involvement with the employer's bar was in a training capacity, in circumstances where a reward is expected and received, an employment relationship is more likely to arise. Given the evidence before the Authority of reward expected and received, including the promise of formalizing immigration status in exchange for the job price payment, a rent payment made and received, assistance with the license control qualification process with the addition of the integration indicia, the Authority determined the parties were in an employment relationship.
The ERA found the worker's evidence that he was not paid wages for the hours he worked, and he had an expectation he would be paid for those hours because he was an employee was accepted. He raised the non-payment of wages on multiple occasions and was eventually told he would not be paid.
The Authority determined that failure to pay wages in full when due and owing is a serious breach of the duty owed to the worker as an employee. The employer breached this duty because it did not pay the worker subsequent to his commencing employment, continued not to pay him and failed to engage constructively with him when he raised non-payment of wages. This failure caused the worker to suffer a disadvantage in his employment, establishing a personal grievance for unjustifiable disadvantage.
The ERA found that no premium is to be charged for employment, and the employer required the worker to pay a premium as a job price and received the premium payment after the employment relationship commenced. Such action is unlawful and unjustified, and is not the action of a fair and reasonable employer.
The Authority accepted counsel's submission that the action was exploitative, put the worker into further financial and emotional hardship and further widened the inherent inequality of bargaining power in the employment relationship.
The ERA also accepted that the employer had capitalized on its position of trust and confidence arising from the employment relationship for its financial gain, establishing this personal grievance for unjustified action.
Penalty determinations
The ERA found penalties were sought for six statutory breaches: three for breaches of the Employment Relations Act and three for violations of minimum entitlement provisions under the Holidays Act, Minimum Wage Act and Wages Protection Act. The breaches were established.
The employer has been found to have failed to provide a written employment agreement, failed to keep wages and time records, breached the duty of good faith, was unable to pay at least the applicable minimum wage for every hour worked, failed to pay holiday pay when due and owing, and sought and received a premium.
The Authority found that the employer's failure to provide its employee with a written employment agreement and failure to maintain wage and time records constituted a breach of statutory obligations that hindered the worker's ability to bring his claim. He has had to establish his terms of employment without a written employment agreement and has not had the benefit of wage and time records to calculate his arrears claims.
The established breach of good faith is significant given the fundamental nature of the obligation and the worker's vulnerable status as a migrant worker whose visa restricted his ability to work, and the employer's knowledge of these matters. The ERA determined the employer's actions must be seen as intentional and its culpability high.
The Authority ordered a penalty of $8,000 for the Employment Relations Act breaches, with the employer ordered to pay half the penalty to the worker to compensate him for the inconvenience and resources expended in pursuing statutory entitlements.
For the minimum entitlement provisions breaches, the ERA found the employer's actions in failing to pay the worker at least the minimum wage for every hour worked, pay him holiday pay when his employment ended and requiring him to pay and receiving from him a premium for the job are clear breaches of the relevant minimum statutory provisions.
The Authority determined there are no factors that weigh in mitigation, and the employer has taken no steps to mitigate these breaches. At all relevant times, the breaches were overseen by and known to the then-director of the employer and the manager of the business in which the worker worked. The employer knew the worker was a vulnerable migrant worker and its actions have been found to have exploited that vulnerable position.
The ERA ordered a penalty of $10,000 for these breaches, with the employer ordered to pay half the penalty to the worker to compensate him for the inconvenience and resources expended in pursuing the payment of statutory entitlements and the recovery of the premium.
The Authority ordered the employer to pay the worker within 21 days: $14,982 gross for lost wages; $30,000 for compensation; $7,469.77 gross in arrears of wages and holiday pay; $12,000 in premium reimbursement; and total penalties of $18,000, half to be paid to the Crown and half to the worker.
The employer must also calculate and pay the worker interest on wage arrears, holiday pay and premium within 21 days.
