Labour Inspector v Parihar  NZEmpC 145
Employment Court – Breaches of minimum standards – Penalties – Liability of husband and wife partners in a partnership – Employment Relations Act 2000, pt 9A.
A key issue in this case was how penalties should be imposed in a business partnership, where the partners were husband and wife.
The defendants operated two liquor stores as a husband-and-wife business partnership. The partnership employed six Indian nationals on temporary work visas. Over a period of six years, the partnership underpaid the employees by over $250,000 and consistently breached the Holidays Act 2003 (external link) . The employer concealed underpayments by giving the employees employment agreements stating wages of $16–$20 per hour, while actually paying them as little as $8 an hour.
The defendants paid all arrears in full prior to the Employment Court hearing. At issue in the Employment Court was the amount of penalties the Court should impose for the breaches of the Minimum Wage Act 1983 (external link) and the Holidays Act.
Before addressing the quantum of penalties, the Court considered generally the liability of partners in a partnership. The Court found that under the Employment Relations Act 2000 (external link) and the Holidays Act, the “only logical approach … for the purposes of the imposition of penalties is to regard the defendants in partnership as individuals” (see paras 16–19). The Employment Court accepted that, in circumstances where the partners were husband and wife, the Court needed to avoid effectively imposing “double penalties” (see paras 12–14).
The Court calculated each partner's fine, based on their personal culpability. The Court arrived at a fine of $180,000 for the husband (see paras 44–46) and $20,000 for the wife (see para 48). The husband’s fine reflected “his overall culpability having regard to the persistent and cynical way he treated this group of employees and the way that he endeavoured to conceal the true position”. The wife’s involvement in the breaches was “minimal”, however, “[a]s a partner in the business, she had a responsibility to endeavour to cease her husband’s continued exploitation of the employees over a lengthy period”. The Court considered that a total fine of $200,000 was consistent with previous cases” (see paras 47–48).