What happens if my employer stops paying me?


Some employees are treated poorly and suffer harsh consequences at the hands of their employers. This was the case for an employee in the recent case Liao v WSL International Limited in the ERA, where the employee had to pay her own wages, pay a premium to retain employment and faced stressful and worrisome situations at the hand of her employer.


Ms Liao was employed by WSL International Limited (WSL) as a restaurant manager for Ram’s Restaurant in Wellington from the end of November 2016 to the beginning of June 2020. On June 2, 2020, Ms Liao was dismissed after she mistakenly turned the air conditioning unit off. Ms Liao believes that she is owed unpaid wages and a “deposit” she paid to retain her employment with the restaurant when she went away on holiday to China.  


Course of Events:  

Ms Liao’s employment was fraught with concerning incidents. She asserts that she paid entire salary out of her own pocket, including taxes, by sending funds to Mr Li, who reciprocated the amount. Also, shortly after commencing employment, Ms Liao went to China for a vacation in February 2017. During her absence, Mr Li insisted on a $10,000 “deposit” for her to retain her job upon her return.  


Mr Li prohibited Ms Liao from taking sick or annual leave, using threats to ensure compliance. Throughout her tenure, he also coerced her into selling cigarettes and drugs. Although Ms. Liao received the Covid-19 government subsidy, Mr Li explicitly instructed her to pay the subsidy to him upon her return.  


Mr Li regularly lost his temper and insulted Ms. Liao and other employees by using inappropriate and abusive language. He even mentioned using a gun for retaliation if he was threatened. Consequently, Ms Liao feared for her safety and sought medical assistance due to the stress and anxiety she suffered during her time at the restaurant.  



The ERA member found that Ms Liao had not correctly been paid her wages owed in the sum of $59,890 under s 131 (1)(a) of the Employment Relations Act. Section 131 (1)(a) of the Employment Relations Act states that where “there has been a default in payment to an employee of any wages…the whole or any party, as the case may require, or any such wages or other money may be recovered by the employee…” Ms’ Liao’s wages were not paid to her at any point throughout her employment, so it was held that there was a default of wage payments under s 131 and Mr Li was ordered to pay $59,890.  


Because the premium of $10,000 was paid by a Chinese bank account to another Chinese bank account, the transaction falls outside the Wages Protection Act 1983 and was unable to be recovered, however Mr Li would have been liable for penalties if the incident had been raised within 12 months of occurring or coming to the attention of Ms Liao. There was also likely to have been an unjustified dismissal claim, however, the 90-day time frame to raise a personal grievance had unfortunately passed.  


Key Takeaway: 

Employers must ensure they pay their employees in accordance with the Employment Relations Act 2000, or else consequences will follow. Employees must receive compensation for their time worked, and if this does not occur, then legal action is likely to be taken.  


If you are an employee who has not been paid fairly, or if you are an employer who requires some advice on wages, please get in touch with the Watermark Employment Law team. We are happy to assist you.