Employer fined for breaching Record of Settlement

An employee applied to the Employment Relations Authority (“the ERA”) after her former employer breached the terms contained in a Record of Settlement agreed between the employer and the employee.

The employer had agreed to pay the employee $10,140.00, but it failed to make the payment due to constrained finances. The employer said that there would be increased business over the approaching summer period and asked the ERA to allow payments to be made by monthly instalments. The ERA agreed and cautioned the employer of the consequences of failing to comply with the ERA’s orders.

The employee had to make a second application to the ERA after the employer failed to make the payments agreed to. The ERA said that the employer was quick to enter an agreement to avoid sanctions but then became careless once the consequences were avoided. The employer should not have agreed to make monthly instalments if it was unwilling or unable to adhere to the agreement. The ERA said the breach was serious and the penalty should be proportionate to the level of seriousness of the breach and the harm caused.

The employer was penalised $4,000.00 plus costs and was still required to pay the employee the outstanding balance of the sum agreed in the Record of Settlement.

The maximum fine for breaching a Record of Settlement is $20,000.00 per breach so it pays to adhere to the terms of settlement to avoid further financial troubles.

Alan Knowsley

Employment Lawyer

Wellington