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What a sham? Resolving immigration problems in the Employment Court - by Michael S.





A recent case in the Employment Court shows how people can make use of the Employment Court’s flexibility.


In 2017 New Zealander Mr Lee helped his old friend, Mr Kang from Korea, to get a New Zealand visa. He gave him a contract for a job in his company, NZMEC Limited.


Mr Kang worked for NZMEC Limited on and off until November 2018, when he was dismissed. The company then went into liquidation.


Mr Kang later made a claim for wages and holiday pay to the Employment Relations Authority, against Mr Lee, asking Mr Lee to be personally responsible for paying him money, as a party. That was possible because Mr Lee was a director of the company that had gone into liquidation, and because the claim related to minimum employment standards which Mr Kang said Mr Lee was involved in breaching.


Mr Kang then got a freezing order from Judge Kerry Smith in the Employment Court over Mr Lee’s assets, because Mr Lee was about to leave New Zealand for a trip to Korea.


Member Trotman held on 24 June 2020 that no money was owing, the job contract had been a sham, and a copy of her determination should be sent to Immigration New Zealand and the company’s liquidators. This sounds like potentially bad news for both parties.


Mr Lee applied for indemnity costs. On 04 August 2020 Member Trotman declined to award any costs because Mr Kang had been on legal aid.


Mr Kang then applied to the Employment Court for an order instead of Member Trotman's order, which you can do provided you can show a determination from the Authority. The order would be about the same thing that Member Trotman had determined, so what Member Trotman had said was a sham contract made up to persuade Immigration New Zealand to give Mr Kang a work visa.


Judge Holden made an order with four paragraphs on 03 December 2020.


The first paragraph says Mr Kang and Mr Lee had made a contract agreeing to settle the Employment Court proceedings.


The second paragraph says

(1) that Member Trotman’s two determinations are set aside

(2) a law firm not involved in the proceedings but specialising in “business, property and family wealth protection” will release some money, though we do not know how much money was released or who it was released to or why, and

(3) that there is no costs order.


The third paragraph says that the settlement contract is to be “confidential” except for the purpose of receiving the money from the law firm and for Mr Kang to make a claim against the liquidators of NZMEC Limited.


The fourth paragraph says the court file can only be searched by court order, after consultation with the parties.


Judge Holden says her last paragraph is pursuant to Schedule 3 Clause 12 of the Employment Relations Act 2000. Schedule 3 Clause 12 is not about suppressing a court file. It says that, where proceedings are resolved by a consent order, the court may make an order prohibiting the publication of all or part of the contents of that settlement.


The settlement contract does not appear to have been a contract of employment. That can apply where a settlement varies and so replaces an employment contract or part of it. This case was about an employment that had ended over two years previously, between Mr Kang and Mr Lee’s company, not between Mr Kang and Mr Lee. The only reason Mr Lee was a party was the specific claim was about employment standards ie. wages and holiday pay. The basis of Judge Holden's order is not clear.


It seems the file would have contained the evidence on which Member Trotman had decided that the job had been a sham and should be reported to Immigration New Zealand, which is a government department, and the company liquidator, who is an officer of the court. But Judge Holden set Member Trotman’s orders aside and the evidence on the file was suppressed so that it appears no-one could see it without the parties’ permission. This would resolve the difficulties Member Trotman's orders made for both parties.


We have become used to the mediators certifying a wide range of contracts as a Record of Settlement, so people can be fined or imprisoned for breach. The mediator puts in a clause that they are "confidential". We know they are gagging orders when they are enforced because someone has criticised the employer.


We are also used to the Authority certifying settlements that we don’t know anything about because they are also suppressed. Those seem to be issues between employers and employees, probably they are about money.


If Judge Holden’s decision in this case is followed, this would mean there is also a new way to resolve problems with Immigration New Zealand, when there is a difficulty over a work visa. The closing of the court file could be particularly useful where mistakes have been made in the past.


The parties can now have their own decision that a work contract is valid certified by a Judge, and surely Immigration New Zealand could not disagree with that.

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