Employee argues employer failed to pay redundancy notice despite documentation
The Employment Relations Authority (ERA) recently dealt with a personal grievance claim involving a worker who was made redundant but never received his final pay despite the company producing a payslip showing the payment had been made.
The worker argued he was unjustifiably disadvantaged when his employer failed to pay his four weeks' notice period following redundancy, leaving him without income while supporting a young family with another child due.
He sought compensation for the disadvantage and payment of his final wages, which totalled over $11,000.
The case raised important questions about employer obligations to pay final wages and the consequences when companies fail to meet basic payment requirements.
Employment termination and redundancy process
The worker was employed by a construction company until his role was made redundant on 11 July 2024.
The company director gave him a letter stating that, due to the company's financial position caused by a client not paying and disputing a significant amount of money, several roles needed to be made redundant.
The redundancy letter, signed by the director, stated: "Please be advised that your role has been made redundant as of Today date. You will be paid out the 4-week notice period as per your contract. You are not required to work out your notice period Your final Pay will be processed on Thursday 18th July in full."
The worker explained that before receiving the formal redundancy letter, the director had invited him to meet and told him his role would be ending due to the business's financial situation.
The worker was given the option of either being paid out a four-week notice period without working, or working the notice period.
He agreed to be paid out, and the following day received the letter confirming he would not be required to work and would receive the full notice payment.
Final pay dispute and non-payment evidence
Despite the company producing a final payslip dated 22 July 2024 showing payment of $11,210.81 gross had been made to the worker's bank account, the worker maintained he never received this money.
The worker confirmed under oath that he did not dispute the calculations on the final payslip, but the key issue was that despite the payslip recording payment on 22 July 2024, the money was never actually transferred to his account.
The ERA examined the worker's bank statements for the period around 22 July 2024 and found no deposit on that day or the surrounding days matching the amount shown on the payslip.
The final payslip included the same bank account reference that appeared on previous payslips, which the worker confirmed was his correct account.
The Authority noted that neither the company nor its director participated in the investigation process to provide their version of events or evidence of payment.
The ERA found on the balance of evidence that the money had not been paid and that the company owed the worker the full gross amount calculated on the final payslip.
Director liability and company status
The worker applied for leave to pursue the company director personally under employment law provisions that allow recovery from directors when companies fail to meet employment obligations.
The ERA found the director could be regarded as "a person involved" in the breach of wage payment obligations as the sole director of the company.
The Authority noted that the company was showing a "Final Notice" on the New Zealand Companies Office Register for removal, suggesting the business may no longer exist.
The ERA granted leave for the worker to seek recovery of the wages from the director personally if the company was "unable to pay" the ordered amount.
The ERA stated: "If [he] does this I will then consider the application that [the director] is to be held fully liable for this payment as a person involved."
The Authority indicated that if this matter returned, both parties would be given an opportunity to be heard on the director's personal liability.
Unjustified disadvantage and compensation
The worker claimed unjustified disadvantage based on the late payment of his April 2024 wages and the non-payment of his final wages.
While the ERA noted the April payment was about eight days late and would have been stressful for someone with a young family and a mortgage, it focused primarily on the non-payment of the final wages as the main disadvantage.
The ERA found that ending an employee's employment, writing that they would receive four weeks' paid notice, and producing a payslip indicating payment had been made when it had not, had "an element of something more than inadvertent."
The Authority noted this was exacerbated by the director's failure to engage meaningfully in resolving the matter.
The ERA awarded $3,000 compensation for humiliation, loss of dignity and injury to feelings, stating this was at the lower end of the scale compared to other cases where adverse behaviour was more serious.
The Authority accepted that the worker's partner was not working and was about two months from delivering their second child when the final payment was due, creating significant financial pressure.
ERA findings and final orders
The ERA rejected the company's claim for any reduction in remedies due to alleged equipment not being returned, noting that employers cannot "set off" against statutory wage obligations.
The worker confirmed under oath that he had not retained any company equipment.
The Authority declined to award a penalty for breach of good faith, finding that while there was likely a breach for not communicating reliably about payment, the remedies already ordered were sufficient.
The ERA noted the worker appeared unsure about this aspect of his claim and was primarily focused on recovering his final pay.
The ERA ordered the company to pay the worker $11,210.81 in unpaid wages, $3,000 in compensation, $1,125 in costs, and a $71.55 filing fee within 21 days.
The total award of approximately $15,400 reflected the serious nature of failing to pay final wages to an employee with family obligations.
The ERA emphasised that if the company defaults on the wage payment, the worker may return to seek recovery from the director personally.
