Company ordered to pay “back pay” to employee of over $185,000…

In a recent Employment Relations Authority case a poorly worded employment agreement cost the employer over $185,000.  The agreement was for a bonus based on annual gross sales over a set figure.

The employee took a personal grievance and claimed he was entitled to the bonus based on total company sales.  The employer claimed that the bonus was only triggered when the employee’s personal sales exceeded the target.

The ERA held that the clause meant total company sales and therefore the employee had been short paid $185,000 over three years of employment.

It "pays" to get the wording of all your agreements clear.  If you need help give me a call on 04 473 6850.

Alan Knowsley

Sting in Holiday’s Act costs employer $13,500 extra pay…

A small employer recently had problems with its cleaner and tried to enforce standards regarding the cleaning done.  Despite promises, the cleaner did not improve and decided to leave his employment.

The employer and employee had entered into the employment agreement on the basis that the employee would be paid an hourly rate, and not be paid for any additional holiday pay, statutory holidays, time in lieu and time and a half.

When the employee resigned after several years’ employment he claimed for constructive dismissal and a personal grievance for holiday pay, statutory holidays, time in lieu and time and a half for statutory holidays worked.

The Employment Relations Authority awarded the employee over $13,500 for these unpaid wages as it is illegal to contract out of the Holiday’s Act and therefore the employee was entitled to be paid all these entitlements from the start of their employment.

You cannot wrap up all holiday entitlements into a single pay rate; they must be paid separately and on top of the pay rate.  Holiday pay (apart from a specific exception in the Act) must be paid at the time of the holiday and not with the normal wages. Many employers have ended up paying holiday pay twice when they paid it originally with the normal pay cycle instead of at the time of the holiday.

If you need help getting your holiday pay entitlements sorted call me on 04 473 6850 for an initial chat.

Alan Knowsley

PS The employee's claim for constructive dismissal was unsuccessful as he had left of his own choice and the employee had not done anything to force him out.

Deaths at work - employer's liability

There has been a lot of publicity given to the recent study about New Zealand's workplace death rate compared to other countries. We are apparently twice as bad as Australia and four times Briton in death rates at work.

Accident Compensation cover is put forward as a reason. Apparently it is argued that employers do not take enough care to prevent deaths because they cannot be sued in New Zealand. Is this right? You can take out insurance against damages for being sued. The cost of a bad record is higher preminums not the damages. ACC also rates on safety record and likely harm in its premiums.

You cannot insure against fines and the fines will usually be way higher than your insurance premiums. The High Court has just decided that the starting point for failing to take all practicable steps to prevent a death is between $125,000 and $135,000. Enough to make the eyes water of most employers if the mere fact of not wanting to kill one of your staff is not enough.

Indeed just for not reporting a serious haarm accident OSH is pushing for a starting point fine of around $100,000.

You need to take all practicable steps to identify hazards, eliminate, minimise or isolate them.
Have you checked your policies lately, when did you last blow the dust off them, when did you last check for hazards and do something about them?

A failure to do so will result in significant fines and no one wants their employees to be injured or killed at work.  If you need help call me on 04 4736850

Alan Knowsley

Failure to Report Serious Harm Incidents…$50,000 to $100,000 Health & Safety fines per defendant “starting point” says OSH…

In a recent case where a company and its sole director were both charged with failing to notify the Department of Labour of a serious harm incident OSH was seeking fines for each of $50,000 - $100,000.

In this case the company and director were not charged with failing to take reasonable care not to injure their employee (who fell and injured his back), but only with failing to report to the Department of Labour (now the Ministry of Business & Innovation).  Both the company and director were each fined for the non-reporting.

The case illustrates the serious penalties that can be imposed in the Health & Safety area and the need to be fully aware of your responsibilities – not only to prevent accidents, but to report serious harm and not to interfere with the accident site.

The Judge commented on the failure to report resulting in OSH not being able to investigate the incident and prosecute those who may have been responsible.

If you need assistance with your Health and Safety responsibilities give me a call on

04 473 6850.