Liquidated Business – Still Liable For Breaches Committed While Trading.

Liquidated Business Still Liable For Breaches Committed While Trading.

Many business owners believe that they are safe from past behavior once their company has been placed into liquidation. In a recent decision from the Employment Relations Authority (ERA) it was held that a liquidated business could still be held liable for breaches committed while it was still trading.

Background

Ex-restaurant owner, Shen Yuan, has just been ordered to pay nearly $100,000 to a former chef despite the business being liquidated in 2022.

This was after a ruling from the ERA, that as sole director of the restaurant, Yuan was responsible for multiple breaches of minimum employment standards and for taking advantage of vulnerable migrants.

 

Compensation

He was ordered to pay $43,943.42 in wages arrears (made up of a number of entitlements), $21,000 as repayment for a premium demanded from him and $20,000 in penalties.

A breakdown of the wage arrears is:

• $29,990.93 for minimum wages,
• $10,248.13 for annual leave entitlements,
• $1971.86 as pay for work on public holidays,
• $1732.50 for alternative holidays for public holidays worked.

 

Reasoning

Simon Humphries, head of Labour Inspectorate, said “Business owners and employers who have exploited vulnerable workers cannot hide behind the fact that the business where breaches of minimum employment standards were committed no longer exists.”

He went on to add that “the Labour Inspectorate will vigorously clamp down on those who exploit vulnerable workers, even if they no longer own the business where the exploitation took place.”

 

Takeaways

This case reflects the ERA’s commitment to protecting employees vulnerable to exploitation and the lengths they will go to enforce this. It highlights the importance of ensuring your business is compliant in every area of the law, especially minimum employment standards. This will only become more important as the law develops in this area.

 

If you are an employer unsure about your compliance with minimum employment standards, get in touch with the team here at Watermark Employment Law – we would love to assist you with this matter.