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Wage arrears and Section 142W - by Tristam Price

Updated: Sep 8, 2023



Kihini Kitchens Limited fell way behind on the wages it owed its employee, Ms Yu Wang. The Employment Relations Authority (ERA) ordered Kihini to pay her $23,466.38 (gross) in back wages, plus interest, plus the $71.55 filing fee.



According to the Companies Office database, Kihini was incorporated in 2019 and it is not in liquidation, but it must be in financial difficulty if it owes five months in back wages. Director Mr Zhu did not turn up to the ERA’s Investigation Meeting, and Kihini’s website has disappeared. It’s not looking good.


Limited liability



Two exceptions – don’t trade while insolvent, like the Mainzeal directors did, and they’re now personally liable. Including Dame Jenny Shipley. Also don’t fail to pay wages for the same reason, as ERA Member Rachel Larmer explains:


[66] Section 142Y of the Act provides that an employee may recover wages or other money payable by an employer from a person who is not the employer in certain circumstances. These include where there has been a default in the payment of wages or other money payable, the default is due to a breach of employment standards, and the person the employee is seeking to recover the wages or other money from personally is a person involved in a breach of employment standards, within the meaning of s 142W of the Act.


[67] All of the factors required by s 142Y(1) of the Act have been met.


[68] Accordingly, Ms Wang is granted leave under s 142Y(2) of the Act to recover her wage arrears and any other money (such as interest) the Respondent owes her, but which it is unable pay, from Mr Zhu personally.


Penalties


Usually the company found to be in breach is ordered to pay a penalty in addition to back wages, but it appears that Ms Wang, who was self-represented, didn’t apply for a penalty.


Where a company has been placed in liquidation and has had a penalty awarded against it, the director (and/or any other person involved in the breach) will not be liable for that penalty; only wages and holiday pay, and sometimes interest, the filing fee and a contribution to costs.

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