The Employment Relations Authority has ordered an employer to pay $3,970 after underpaying an employee.

The employee argued that he had worked for the employer for a significant period, totalling eleven months of active employment.

The employer argued that there were several gaps in his employment where the employee did not perform any work, and that his employment ceased during the time when he wasn’t working. The employer argued that the employee was only employed for two separate periods, both of which ceased in ways that followed proper process.

The employee was employed under an employment agreement that stated his salary to be $50,000 during the first four months of the employment period, and that his pay rate was $20.65 per hour for the remainder.

Believing that he had been underpaid for his hours worked, the employee brought a claim to the Authority to recover the wages that he was owed.

The Authority had to determine how many hours the employee had in fact worked, which was made more difficult by the fact that the employer did not keep wage and time records.

The Authority assessed the employee’s income during his employment, and found that he was owed $3,970 in unpaid wages.

In response to the employee’s claim of unjustified dismissal, the Authority weighed up the circumstances leading to the ending of each of the employment periods. It was decided that the first period of employment ceased as a result of a resignation by the employee, and that the second period ended through mutual agreement.

The Authority denied the employee’s claim of unjustified dismissal.

Normally, the Authority would impose a penalty on an employer who failed to keep wage and time records, and who underpaid their employees, but in this circumstance the employee failed to raise the claim for a penalty within the required period.

The Authority therefore denied the employee’s claim that a penalty should be imposed on the employer.

The employer was ordered to pay $3,970 to the employee.

If there is confusion around the obligations of an employer in an employment relationship, it pays to seek advice from a professional with experience in the area.

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Sarah Jamieson & Matthew Binnie

Litigation Team
Wellington