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MBIE’s Stern Warning to Employers

Published May 16, 2019 (last updated June 30, 2023) - Ben Fairfax

Director and managers personally liable for employment law breaches

The Labour Inspectorate has issued a statement reminding individuals, including business directors, senior managers and legal or business advisors, that they can be held personally responsible even if they are unofficially connected to a business that breaches minimum employment standards.

The reminder follows a recent Employment Relations Authority (ERA) determination that found three individuals were personally involved in employment law breaches at two Christchurch restaurants, and ordered them to repay more than $40,000 in arrears.

Labour Inspectorate Regional Manager David Milne said the penalties stemmed from ongoing non-compliance.

“The employer failed a whole raft of basic legal requirements such as providing employment agreements, maintaining accurate wage and time records, and paying minimum wage, holiday pay and leave entitlements to seven workers at two Christchurch restaurants. Instead of rectifying their practices, they denied responsibility and continued to operate as they had before. Later they sold their business,” Mr Milne said.

“From 2016, the Employment Relations Act enables persons other than the employer to be held accountable if they’re knowingly involved in breaching employment standards.”

What does this mean for employers?

It is crucial that small business owners understand their obligations under the Employment Relations Act. Non-compliance, even unintentional, can be costly and detrimental to your business.

Unlike big corporations, small businesses don’t always have in-house HR and legal departments to interpret the complex language of the Employment Relations Act. Changes to legislation and workplace compliance are becoming increasingly complex and difficult to manage, especially for overstretched small business owners.

Yet a business, no matter how big or small, needs to have the right framework to succeed – policies and procedures are an integral component of that framework. Having solid policies and procedures not only provides direction during moments of uncertainty, but protects your business and gives you the blueprint to remain compliant.

It’s more important than ever to be compliant

From pay rates to record keeping, Employsure is here to help. Contact Us for a confidential discussion about how we can support your business.

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