Personal liability for breaches of employment standards

June 6, 2024

 

The director of a company and his wife, a manager, have recently been held liable to pay over $90,000 in reparations to an employee after the company breached minimum employment standards.


The employee worked for the company for just over 12 months. The company went into liquidation at the end of 2020, but the employee claimed that he had not been paid for many of the hours that he worked. The employee also claimed that he had not been paid his annual leave and public holiday entitlements.


Despite the company being in liquidation, the Employment Relations Authority was able to look into the issue as the director and manager of the company could be held personally liable for the breaches.


The Authority first had to determine whether the employee’s claims were accurate.


Evidence showed that the employer had failed to keep wage and time records. The director provided various reasons for this failure such as the device that kept the wage records had been stolen. The director did not provide sufficient evidence to support these reasons.


In any case, the Authority held that the employer had failed to keep accurate wage and time records, regardless of the reason. Keeping wage and time records is a legal requirement for employers in New Zealand and the director therefore breached minimum employment standards.


The director had also failed to pay the employee his annual leave and public holiday entitlements. This was accepted by the director.


The Authority ordered the company to pay the employee $29,990 in minimum wages, $10,240 in annual leave entitlements, $1,970 for work on public holidays and $1,720 for alternative holidays for public holidays worked.


However, the company had been liquidated and therefore could not pay the Authority’s orders. 


The Authority held that both the director and his wife could be held personally liable to pay the orders made against the company, because they were persons involved in the employment breaches.


As director of the company, the director had a strong influence over the operations of the company. Further, the wife had sufficient influence over the management and administration of the company in her role as manager. The employee had raised various issues with the wife as manager, which she had failed to address.


The director and manager were therefore ordered to personally pay the Authority’s orders against the company. The director was also ordered to pay a penalty of $20,000 for his involvement in the breaches, while his wife was ordered to pay a penalty of $10,000.



The director was also ordered to repay a $21,000 premium that had been paid by the employee.


It is important to be aware of minimum employment standards, both as an employee and an employer. This case emphasises that individuals can be held personally liable for breaches of employment standards.


If you are confused about these standards or believe you have been treated unfairly, it pays to seek advice from a professional with experience in the area.


Source: Rainey Collins May 2024

Employment Relations Amendment Bill

By Stuarts Accountants • August 19, 2025
Key Proposed Changes 1. “Specified Contractor” Gateway Test The Bill proposes a clearer test to distinguish independent contractors from employees. If all of the following criteria are met, a worker qualifies as a specified contractor, and is excluded from the legal definition of an "employee": 1. A written agreement specifies they are an independent contractor. 2. They are not restricted from working for others (except when engaged with the contracting party). 3. They are not required to work at specified times or days, or can subcontract their work (subject to vetting/statutory compliance). 4. The contract does not terminate if the contractor declines additional work. 5. The contractor had a reasonable opportunity to obtain independent advice before entering into the arrangement. Implications: This aims to increase business flexibility and clarity. Contractors who meet the test cannot challenge their status in the Employment Relations Authority or Courts. 2. Remedy Assessment in Personal Grievances The Bill would narrow remedies available in personal grievance cases if the employee is found to have: * Committed serious misconduct (no remedies available). * Contributed to the grievance situation (no reinstatement or compensation for hurt, humiliation, or loss of benefit; other remedies may still apply but can be reduced by up to 100%). * Additionally, adjudicators (Authority or Court) must consider whether the employee’s conduct impaired the employer’s ability to act fairly, and raise the bar for procedural error claims. 3. High-Income Threshold for Unjustified Dismissal Claims Employees earning over NZD 180,000 per annum (base salary only—excluding bonuses, allowances, commissions, overtime, superannuation) would not be eligible to raise personal grievances for unjustified dismissal —unless they explicitly opt in via their employment agreement. * Key details: * A 12-month transitional period will apply for existing employees (unless they opt in earlier). * The income threshold will automatically adjust annually based on average weekly earnings, which introduces complexity in ongoing compliance. 4. End of the “30-Day Rule” for Collective Agreements * The “30-day rule”—which required terms of a collective agreement to apply to new employees for their first 30 days before they could move to an individual agreement—is to be repealed. * Under the proposed change: * Employers would provide new employees with information about collective agreements and unions. * Employees can immediately choose to sign an Individual Employment Agreement (IEA), which may include a **90-day trial period** if agreed. Additional Context & Commentary * Intent and Government Rationale: The Bill is positioned by the Government as a means to enhance labour market flexibility, reduce compliance costs, boost business innovation, and rebalance employer-employee interests, particularly in the personal grievance sphere. * Current Status: As of July 2025, public submissions were open (closing 13 August 2025), and the Bill was advancing through the select committee and readings. * Notably, in June 2025 the Parliament rejected amendments proposing to delay commencement to June 2026, keeping an earlier timeline —perhaps December 2025—for enactment. Summary Table Key Change - Description & Effects “Specified Contractor” Test - Workers meeting five criteria are excluded from employee status—limiting legal challenges Remedy Restrictions - Serious misconduct or employee contribution reduces or eliminates remedies $180,000 Threshold - High-earning employees excluded from unfair dismissal claims unless they opt in Repeal of 30-Day Rule - Allows immediate use of IEAs and 90-day trials for new hires, bypassing collective terms What to Watch Next Select Committee Process: Ongoing debates, public submissions, and possible amendments. Threshold Adjustments: Details on how the automatic salary threshold updates will work. Implementation Timeline: While December 2025 is possible, it depends on the legislative process and Royal Assent.  Sources: [1]: https://www.bellgully.com/insights/the-employment-relations-amendment-bill-has-landed-and-it-has-the-potential-to-transform-employment-relations-in-new-zealand/?utm_source=chatgpt.com "The Employment Relations Amendment Bill has landed" [2]: https://www.dentons.co.nz/en/insights/articles/2025/june/19/employment-relations-amendment-bill-2025?utm_source=chatgpt.com "Employment Relations Amendment Bill 2025" [3]: https://www.laneneave.co.nz/news-events/era-four-key-changes/?utm_source=chatgpt.com "Explained: Employment Relations Amendment Bill" [4]: https://www.parliament.nz/en/pb/hansard-debates/rhr/combined/HansDeb_20250624_20250625_52?utm_source=chatgpt.com "Employment Relations (Pay Deductions for Partial Strikes) ..." [5]: https://knowledge.dlapiper.com/dlapiperknowledge/globalemploymentlatestdevelopments/2025/significant-amendments-to-the-employment-relations-act?utm_source=chatgpt.com "Significant amendments to the Employment Relations Act" [6]: https://www.lexology.com/library/detail.aspx?g=b905b99b-6503-4444-b0a3-be27a0d206fa&utm_source=chatgpt.com "Key insights into the new Employment Relations ..." [7]: https://www.parliament.nz/en/pb/sc/committees-press-releases/public-submissions-open-on-the-employment-relations-amendment-bill/?utm_source=chatgpt.com "Public submissions open on the Employment Relations ..." [8]: https://www.mbie.govt.nz/dmsdocument/30958-employment-relations-amendment-bill-2025-approval-for-introduction-proactiverelease-pdf?utm_source=chatgpt.com "Employment Relations Amendment Bill 2025: Approval for ..." [9]: https://www.humankind.nz/blog/an-update-on-employment-law-changes?utm_source=chatgpt.com "An update on employment law changes - Humankind NZ"

Income Protection Insurance

By Stuarts Accountants • May 22, 2025
What is Income Protection Insurance? Your income is often your biggest asset and losing it can turn life upside down. If you’re unable to work—either temporarily or permanently—because you’re sick or injured, Income Protection Insurance will provide you with money to live on as a monthly payment while you’re not receiving your salary or wage. Income Protection Insurance benefits: Income support Pays you a monthly benefit if you’re unable to work because of illness or injury Rehabilitation & retraining support Helps you with your rehabilitation and retraining costs Recurrent disability Pays you a monthly benefit if you suffer the same sickness or disability within a year Return to work Pays you a bonus benefit if you are able to return to work Family assist We’ll pay for a nurse or family member to look after you at home for up to 6 months Accommodation support Pays for your family to be with you if they live more than 100km away Disability reset Allows you to claim again if you suffer a related sickness or injury Elective surgery Pays you a monthly benefit if you are disabled due to an elective surgery Payment while overseas Pays you a monthly benefit if you are disabled while overseas Funeral assistance We reimburse your family up to three times the monthly benefit for your funeral costs if you die Grief support Helps with the cost of professional grief support to cope with sudden changes Overseas assist Reimburse you and one support person for travel back to New Zealand if disabled overseas New parent premium waiver We’ll pay your premiums for six months while you’re on parental leave Ref: Asteron Life

Shareholders Agreements

By Stuarts Accountants • May 22, 2025
What is a shareholders’ agreement? A shareholders’ agreement is essentially a contract between company shareholders. It regulates and guides decision-making. Shareholder agreements deal with matters such as: Who the company directors and shareholders are (plus their rights and responsibilities) Voting rights (i.e. which shareholders – or what percentage of shareholders – need to approve various activities and transactions) Restraints of trade that apply to directors and shareholders Sale of company assets Funding, guarantee and insurance arrangements Shareholder agreements also provide a process for complicated situations, for example: Where one of the shareholders dies or becomes totally and permanently disabled If a shareholder-employee leaves employment of the company Where one of the shareholders wants to sell their shares If a dispute crops up between shareholders Shareholder agreements bind shareholders to the agreed terms. They also provide guidance when navigating business issues that aren’t covered by the Companies Act 1993. A shareholders’ agreement can be prepared for a new company or an established business that has traded extensively. If necessary, the agreement can be amended to account for company growth and capital funding Why prepare a shareholders’ agreement? Shareholder agreements aren’t mandatory, but we strongly advise having one. As with all relationships, a business relationship is likely to have its ups and downs. To demonstrate the importance of a shareholders’ agreement, let’s consider an example scenario where an agreement would be helpful: Two business partners form a company as 50/50 shareholders. They decide not to enter into a shareholders’ agreement. The pair successfully trade for several years and enjoy a healthy working relationship, managing company affairs as a team and resolving disputes amicably. Shareholder A dies suddenly. Without a shareholders’ agreement in place, Shareholder A’s 50% shareholding transfers to his wife by virtue of survivorship. His wife is now an equal shareholder of the company. The Companies Act 1993 doesn’t cover this type of situation, so Shareholder A’s wife isn’t obliged to sell her shares to Shareholder B. The company continues to trade while Shareholder A’s wife enjoys the fruits of the company’s success, without materially contributing to the running of the business. A tailored shareholders’ agreement can determine a share sale procedure in the event of shareholder death or incapacitation, ensuring a fair outcome for everyone involved. Most people enter into business arrangements thinking they’ll always be able to work through issues amicably. Unfortunately, that isn’t always the case, particularly when the personal relationship becomes difficult or if one of the shareholders dies and suddenly the remaining shareholders are finding themselves dealing with the deceased person’s family or representatives. A shareholders’ agreement can help you reach a satisfactory resolution to problems efficiently and at minimal cost, compared to the cost of trying to resolve issues without a shareholders’ agreement. Ref: 1 August 2022 • Commercial law