Former business owner wins back pay...

The Employment Relations Authority has upheld a claim for unpaid wages brought by the former owner of an automotive business who continued to work in the business after it was sold.

The sale and purchase agreement did provide for the former owner to continue working in the business but did not make it clear whether this was as a contractor or an employee or a volunteer.  The former owner claimed that he was working as an employee but the purchasers claimed the he was working as a volunteer to give him something to do and was then a contractor not an employee.

The Employment Relations Authority rejected the new owners’ claims and ordered that $19,000 in back pay be paid to the former owner for the work done.  The ERA held that it was inconceivable that the former owner would work for nothing for the extent that he did and there was no payment provision in the sale and purchase agreement which would have compensated him otherwise than by way of wages.

In an interesting twist to this case the employee was then fined $5,000 for breach of good faith for removing equipment from the premises of the new employer while he was an “employee” to set up his own business elsewhere.  He refused to return the equipment and so the penalty was imposed by the ERA.

Alan Knowsley

Employment Lawyer Wellington