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Debt Collection Unit Set Up To Chase Non-compliant Businesses

In the mediaNovember 13, 2019

Debt Collection Unit Set Up To Chase Non-compliant Businesses

The Labour Inspectorate has announced it’s making a bigger effort to track down employers and individuals who have failed to comply with or ignored orders to back pay workers.

These orders are handed down from the Employment Relations Authority or the Employment Court when an employer has breached employment laws or exploited their workers.

As such, the Ministry of Business, Innovation and Employment (MBIE) has set up a debt collection unit to deal with non-compliance.

A law change in 2016 means that directors and managers can now be held personally liable for penalties.

“Even if employers decide to wind up the company, we can still chase the individuals in respect of the recovery of the debt. We have done so on a number of occasions and recovered tens of thousands of dollars,” Labour Inspectorate National Manager Stu Lumsden said.

Since being set up in October 2018, the debt collection unit has collected more than $750,000 in penalties according to MBIE’s records.

One example of the Labour Inspectorate’s debt collection unit kicking into action was when they caught up with restauranteurs who owed wages and holiday pay to employees at their old restaurant.

Having previously run an Indian restaurant, the restauranteurs sold up and opened a new business, under a different trading name.

The MBIE eventually caught up with them, ordering them personally to pay just under $42,000 in back pay and just over $47,000 in penalties.

“Employers cannot avoid their legal obligations by selling their business,” said Labour Inspectorate Regional Manager Jeanie Borsboom.

“Employment law allows Inspectors to pursue employers personally for penalties and money owed to workers, even if their business no longer exists.

“[These penalties] also send a strong message that if employers continue to ignore their obligations, including not paying determined wage arrears, they risk significantly higher penalties – in this case nearly three times higher than the arrears owed to the exploited workers.”

Employsure’s Senior Employment Relations Adviser Gabby Adds advises Kiwi businesses that the best way forward is to be compliant.

“A business should make sure it gets the basics right. It can be hard finding business success, but Employsure is here to help you comply with the Employment Relations Act,” Adds said.

“The penalties for not complying with underpayment notices can be large, so it is important for businesses to ensure they comply with the law.”

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