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Restaurant owner penalised for unlawful wage deductions

A Rangiora restaurant and its owner who unlawfully deducted money from an employee’s wages and breached other minimum employment standards, must pay the employee over $40,000 in arrears and penalties.

The order was made by the Employment Relations Authority (ERA) in a recent determination. This follows an earlier Labour Inspectorate investigation into the matter.

Businessman Vijay Singh, the sole shareholder and director of Laxmi Narayan Restaurant Ltd, trading as Karfa Moroccan Cuisine, was also ordered to pay a further $11,250 in penalties to the Crown.

He was found to have unlawfully deducted money from his restaurant manager’s wages over a 2-year period, underpaid him, failed to pay him for holidays and leave, and under-recorded the hours the employee worked in exchange for having helped him obtain a work visa.

This resulted in the employee regularly receiving payment for fewer hours than he had worked and he was working up to 25 hours a week for which he wasn’t being paid.

The ERA ordered Laxmi Narayan Restaurant Ltd to pay the employee:

  • minimum wage arrears of $19,320.53
  • unlawful deductions of $3,865.79
  • holiday and leave arrears of $3,674.07
  • interest of $2,019.27.

Laxmi Narayan Restaurant Ltd is ordered to pay penalties of $17,000 while Mr Singh must pay a penalty of $5,500. Half the penalty amounts are to be paid to the employee and the other half to the Crown. If Laxmi Narayan Restaurant Ltd is unable to pay, Mr Singh is liable for both amounts.

Sends a strong message

Simon Humphries, Head of Compliance and Enforcement, Labour Inspectorate, said this determination, that Laxmi Narayan Restaurant and Mr Singh must pay money unlawfully deducted from the employee’s wages, sends a strong message that "it is unacceptable and where appropriate we will ensure enforcement will be pursued".

"Unfortunately, there are employers who abuse the visa process. They may agree to pay a worker a certain amount during the visa approval process, but once the worker is in New Zealand the employer pays them less than the minimum wage. Some employers also illegally deduct money from the employee’s wages to circumvent the contractual agreement made during the visa approval process."

Humphries said employers must ensure they pay employees what was agreed during the visa approval process. If they don’t, they risk being penalised and not meeting accreditation requirements.

In the Laxmi Narayan Restaurant Ltd case, the ERA ordered payment of arrears for the full difference of what was promised during the visa approval process and what was eventually paid.

The employee was paid for 34 hours at the contractual rate but was working up to 60 hours a week, being paid well under the minimum wage and significantly less than what had been agreed.

No place for dishonest behaviour

"There is no place for dishonest and unlawful behaviour in New Zealand workplaces. Employers can expect to be heavily penalised and this can include repaying underpayments," Humphries said.

"The pay order and penalties imposed on Mr Singh and his business should serve as a warning to other business owners who consider exploiting their workers by failing to pay them what was contractually agreed."

In making the payment order and imposing the penalties on Mr Singh, the ERA found that the impact of these breaches had been significant on the employee.

"He suffered stress and frustration at being paid less than he was entitled to, ultimately seeking employment elsewhere."

Anyone who suspects they may be a victim of migrant exploitation or are suspicious of potential migrant exploitation happening, can call Employment New Zealand’s free number 0800 200 088. Interpreters are available for this service.

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