ERA orders over $17,000, including penalties after deliberate breach of mediated agreement
The Employment Relations Authority (ERA) ordered a former employer to pay over $17,000, including penalties and interest, after he breached a settlement agreement by making late payments before stopping payments entirely, despite initially agreeing to weekly installments.
The worker had entered a mediated settlement to resolve her employment dispute through regular weekly payments rather than pursuing formal proceedings.
The employer initially made payments, but they became routinely late before ceasing altogether, forcing the worker to seek enforcement through the Authority.
Settlement agreement and payment arrangements
The worker and employer entered a Record of Settlement countersigned by a mediator, regarding the ending of employment.
The settlement provided for payment of $8,000 to the worker and $10,000 to her representative for costs, both to be paid over time at $75 per week.
The settlement included a provision for the repayment rate to increase over time.
The agreement also specified that if breached, the full outstanding amount would become payable immediately, together with further costs and interest.
The worker agreed to these terms as an alternative to continuing formal proceedings through the Authority.
The worker's evidence indicated she was willing to enter this compromise agreement rather than continue with proceedings, accepting part payment of sums over time rather than requiring immediate payment.
The ERA found these payment terms were beneficial to both parties, giving the worker certainty through regular weekly payments while allowing the employer manageable repayments.
Payment compliance issues and cessation
The employer initially agreed to repayments, though they were never increased and remained at the starting rate of $75 per week.
The worker's representative assisted by sending weekly invoices as reminders, but despite this, payments were frequently late, with no reasons provided.
Evidence showed that payments began routinely arriving late, with 20 payments late to the worker and 16 payments late to her representative, before payments stopped altogether at the beginning of July 2025.
Payments became overdue from 14 July 2025, with the worker receiving no further contact from the employer about the breach.
The worker's representative followed up with the employer in early July about missing payments and was told he was "contracting" and would be in a better position going forward.
The worker had no personal contact with the employer about the breach, though she saw him at the council offices when attending on unrelated business and noted he appeared well.
Impact on the worker and enforcement proceedings
The non-payment adversely impacted the worker's household budgeting and the well-being of her and her children.
She gave evidence that this was particularly difficult as she had recently given birth, and the money she should have received would have been of great assistance during this time.
The worker experienced both stress and frustration from the settlement breach.
She believed the weekly repayment agreement was fair and manageable for the employer, and when he agreed to these terms after negotiation, she trusted him to abide by them.
His failure to honor the agreement caused significant distress.
Following the filing of compliance proceedings, the employer attended a case management conference with the Authority, where he accepted that he had not paid as required by the settlement.
He stated he was "in a better position now" and expected to be able to pay in the future, though he provided no explanation for why payments had stopped.
Investigation meeting and employer non-attendance
The employer attended case management conference calls with the Authority to discuss the matter's progress, accepting that he had made late payments and stopped payments due to inability to pay at the time.
He engaged in email correspondence about the investigation meeting and was told it would be held in person, with attendance expected.
The employer did not attend the investigation meeting. Shortly after the 9:30 AM start time, the Authority Officer called the employer on his previously used phone number to remind him that the meeting was occurring and matters could be determined in his absence.
The phone rang before going to voicemail with a message left, but the employer did not return the call or attend.
The ERA proceeded with the investigation in the employer's absence, finding he was aware of claims against him and the investigation meeting through previous case management teleconferences and email discussions about setting a suitable date.
The Notice of Hearing sent to his usual email address warned that non-attendance could result in a determination issued in favor of the worker with costs awarded against him.
Breach findings and immediate payment orders
The ERA found no dispute that the employer breached the settlement terms through persistent late payments followed by persistent non-payment, which he himself had accepted.
Based on careful financial records provided by the worker, the Authority was satisfied that $4,250 to the worker and $6,325 for her representative's costs remained outstanding.
The settlement provided that "if any breach of this agreement occurs, the full amount of money outstanding at the time of the breach becomes payable in full, enforceable, and further costs and interest shall be applied."
The ERA determined the worker was entitled to the benefit of this agreement and protections under the Act.
The Authority ordered the employer to pay the worker the outstanding sums totaling $10,575 in full with no deductions.
The ERA also awarded interest on the total outstanding amount from 14 July 2025, continuing until payment is made in full, as provided for in both the settlement agreement and the Interest on Money Claims Act 2016.
Penalty assessment and proportionality determination
The worker requested penalties under section 149(4) of the Employment Relations Act, which provides that a person breaching an agreed settlement term is liable to penalties up to $10,000 per breach for individuals.
The ERA considered the non-payment as appropriately globalized as a single breach representing failure to pay when due.
The Authority found the employer's actions were intentional, not about whether he was aware of breaching the law, but whether he acted intentionally in doing the act in question or failed to take reasonable steps to fulfill legal obligations.
The ERA concluded the failure was deliberate based on the employer's own acceptance and repeated weekly reminders provided through invoices.
The ERA found the worker suffered loss by being deprived of money on which she should have been able to rely, suffering stress and distress as obvious and foreseeable results of non-compliance.
The Authority determined that a real need existed for both specific and general deterrence, as the employer benefited from ending proceedings while withholding agreed benefits from the worker.
Penalty calculation and cost awards
The ERA adopted a starting point of 80% severity for failures to pay proper entitlements based on Employment Court guidance, though it reduced this to 70% considering the penalty was made against the employer personally rather than a business. This resulted in a penalty of $7,000.
The Authority awarded two-thirds of the penalty ($4,620) to the worker, finding she had been forced to inordinate lengths to obtain undisputed payments.
The remaining third ($2,380) was ordered paid to the Crown.
The ERA found this division appropriate given the worker's circumstances and efforts required to seek enforcement.
For costs, the worker sought the Authority's usual tariff for a half-day investigation meeting plus filing fee reimbursement. The ERA noted the settlement provided for costs if any breach occurred.
The Authority awarded $2,250 as cost contribution for a half-day meeting and $71.55 filing fee reimbursement, finding the worker as the successful party was entitled to these amounts.
