ERA awards damages and penalties for breaches of employment agreement obligations
The Employment Relations Authority (ERA) found that a truck driver was unjustifiably disadvantaged by his employer's repeated failure to pay wages on time, despite determining that his dismissal was not unjustifiable because he had requested the termination letter himself.
The driver claimed he was unjustifiably dismissed and disadvantaged when the logistics company failed to pay his wages regularly from November 2023 onwards.
The company argued it faced business difficulties that reduced available work, but continued paying the driver's full salary even when he declined alternative work assignments.
Employment context and wage payment issues
The driver commenced employment with the logistics company on 3 June 2022 as a truck driver qualified for Class 4 vehicles.
His employment agreement specified weekly wage payments into his bank account and provided for two weeks' notice for termination or resignation.
The company operated various trucks, including Class 4 vehicles for timber transport and Class 5 vehicles for container transport.
Until November 2023, the driver received regular and timely wage payments with no employment issues, describing his relationship with management as "like brothers" in a family-type environment.
However, from November 2023 onwards, he began experiencing delays in receiving his wages on the scheduled weekly payment dates.
The ERA found the company started experiencing business difficulties in late 2023 and early 2024, including loss of timber delivery contracts that directly affected work availability for Class 4 truck drivers.
Despite insufficient work to occupy the driver's full contractual hours, the company continued paying him for a full 40-hour week even when he was frequently at home with no active duties.
Escalating wage payment concerns and worker requests
On 22 February 2024, the driver emailed the company stating he had received wages for one week but not the previous week, requesting payment and payslips.
On 24 April 2024, he sent another email reporting he had not received payment for the last two weeks and requested all payslips from November 2023, noting he needed timely payments for a home loan application.
The situation deteriorated further by July 2024, when the driver sent a third email stating he had not received a salary for three weeks despite multiple requests.
He reported that visa card applications had been rejected due to irregular salary payments and questioned which law required employees to request wages "like beggars" from their employers.
The ERA found the company directors would sometimes make personal loans to the driver to cover wage shortfalls until the company could make actual wage payments, with the driver repaying these loans when wages were eventually paid.
The Authority determined this arrangement was not only a breach of the employment agreement and good faith obligations, but also created an embarrassing and humiliating situation for the driver.
Alternative work offers and termination request
During the business downturn, the company offered the driver alternative work, including truck cleaning in the yard, pallet delivery work, and Class 5 truck driving after training.
The driver declined truck cleaning work, refused pallet work because the pallets were too heavy to maneuver, and rejected Class 5 truck work because the different hours did not accommodate his domestic commitments.
The ERA found there was no evidence that the company pressured the driver to accept alternative work or leave employment. Despite insufficient Class 4 truck work and the driver's refusal of alternatives, the company continued paying his full 40-hour weekly salary.
The Authority noted the company offered to train the driver for Class 5 licensing and provided equipment for pallet work to address his concerns about heavy lifting.
On approximately 15 July 2024, company directors told the driver he should look for alternative employment because they could not provide five days' work per week, but assured him he would remain employed on full pay until he found other work.
The driver refused to seek other employment and specifically requested a termination letter to claim financial assistance from Work and Income New Zealand.
Dismissal analysis and disadvantage findings
The ERA determined the dismissal was not unjustifiable because the driver specifically requested the termination letter for his own purposes.
The Authority found credible evidence that no pressure was placed on the driver to leave, with the company continuing to pay full wages despite work shortages and declined alternative assignments.
However, the ERA found the driver was unjustifiably disadvantaged by the company's repeated failures to pay wages on time after November 2023.
The Authority determined this constituted an unjustifiable action that adversely affected the driver's employment terms and conditions, breaching both the employment agreement and good faith obligations.
The ERA awarded $10,000 compensation for unjustifiable disadvantage under section 123(1)(c) of the Employment Relations Act, finding the irregular wage payments created financial difficulties and embarrassment for the driver, who had to request personal loans from directors to cover payment delays repeatedly.
Unpaid entitlements and penalty assessment
The company failed to provide the requested wage and time records, allowing the ERA to accept the driver's claims under section 132(2) of the Employment Relations Act.
The Authority ordered payment of $705.07 in wage arrears, $2,464.00 in outstanding annual leave, and $56.41 in holiday pay on wage arrears, plus interest on these amounts.
The ERA imposed penalties totaling $5,500 for breaches of the employment agreement and section 4 of the Wages Protection Act 1983, with an additional $1,500 penalty for failing to provide wage and time records when requested.
The Authority found the repeated wage payment failures represented significant breaches of employment standards despite the company eventually paying full entitlements through circuitous arrangements.
The total award comprised $10,000 for disadvantage compensation, $3,225.48 in unpaid entitlements plus interest, $5,500 in penalties (with $550 paid to the driver), $4,500 toward legal costs, and $71.56 filing fee reimbursement.
The ERA emphasised the importance of maintaining employment standards, including timely wage payments to employees.
