ERA rules employer failed to meet obligations on salary cuts, bonus payments
A former marketing manager at Worldwide Holidays Limited (WHL) has won over $140,000 after his former employer failed to meet their obligations for salary reductions and missed bonus payments.
The case stems from Xiaoyu Kan's employment with WHL, which began in May 2017 and ended with his resignation on 31 December 2021.
During his time with the company, Kan was entitled to a base salary, plus a guaranteed bonus that was based on the profitability of the business divisions he managed.
However, the COVID-19 pandemic in 2020 heavily impacted WHL, forcing the company to implement drastic cost-saving measures. These measures included salary cuts and the suspension of bonuses for all employees, including Kan.
Kan argued that WHL had unlawfully reduced his salary and failed to pay him his bonus entitlements for the years 2021 and 2022.
He also claimed that his holiday pay was wrongfully deducted during a period when he was allegedly working but was recorded as being on leave.
WHL, on the other hand, maintained that Kan had agreed to the salary reductions and the suspension of his bonuses due to the company’s financial struggles.
The dispute escalated after Kan's resignation in December 2021, which followed a period of deteriorating relations between him and the company.
WHL took legal action against Kan regarding the transfer of ownership and administration of a WeChat account that he had set up for the business, further souring the professional relationship between the parties.
In his complaint to the Employment Relations Authority, Kan sought compensation for wage arrears, unpaid bonuses, and holiday pay. He also argued that WHL had failed to properly consult with him before implementing the salary reductions, which were made without his consent.
The ERA's investigation found that while WHL did face financial challenges due to the pandemic, the manner in which the pay cuts and the suspension of bonuses were implemented was not legally sound.
"I am satisfied that Mr Kan did not agree with the proposals regarding the salary reductions and non-payment of bonuses, and subsequently did not agree to vary his employment agreement to implement the proposals," the ERA ruled.
"Whilst there may have been some discussion or communication as to WHL's proposal, there is no written record of the terms and conditions of employment being varied, nor any other written record of the purported agreement."
According to the ERA, Kan didn't really have a choice when he agreed to the salary reductions and non-payment of bonuses as they were already imposed by WHL and he needed to remain employed.
"The salary cuts and non-payment of bonuses were not implemented in a procedurally fair way and were not consistent with WHL's good faith and contractual obligations."
The ERA ordered WHL to pay Kan a total of $140,493.90 in arrears and bonuses, in addition to interest and holiday pay. This amount includes:
