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Labour Inspectorate chasing debt from employers

The Ministry of Business, Innovation and Employment (MBIE) has set up a debt collection unit targeting employers and individuals who have ignored orders to compensate workers.

These orders are from the Employment Relations Authority (ERA), or the Employment Court, and are imposed on employers who have breached employment laws, or exploited their workers.

The debt collection unit follows up on debt when the debt is owed to MBIE or its trust account. If the employer is ordered to pay the debt directly to the employee, the Labour Inspectorate would not get involved.

Stu Lumsden, Labour Inspectorate national manager, says that a legislation change in 2016 means that employers, including directors and managers, can now be held personally liable for penalties.

"Even if employers decide to wind up the company, we can still chase the individuals in respect of the recovery of the debt. We have done so on a number of occasions and recovered tens of thousands of dollars."

This is particularly important owing to a number of so-called “phoenix companies” – those that are liquidated by their owners after being penalised by the ERA, or the Employment Court. The companies are then set up under a new name to avoid paying workers any penalties following a complaint. Owners of these companies will not be able to avoid their liability from breaking employment laws.

Since MBIE began its debt collection initiative in October 2018, it has already collected over $750,000 in penalties.