Restaurateur who underpaid five migrants wasn’t deliberately exploiting them, finds tribunal
The employer has been found guilty of breaching employment laws on several counts.
Three of the overseas staff were related to the employer, although it's not clear what those family relationships were.
A restaurant business that left five migrant workers owed more than $147,000 has been ordered to pay $130,000 in penalties, even as the Employment Relations Authority (ERA) found it was negligent rather than deliberately exploiting them.
The distinction was at the centre of a penalty case against SSM Investments Ltd, which operated a restaurant and takeaway business in Cromwell; and its sole director and shareholder, Shazneen Shariza Khan.
The labour inspector argued the breaches were intentional. Khan and SSM took the opposite position, saying they reflected the failures of “a small and poorly run business lacking resources, rather than deliberate and calculated exploitation”.
ERA member Philip Cheyne ultimately accepted that the evidence did not establish deliberate exploitation.
He found Khan and the company should have known what employment law required, but concluded “the breaches were negligent, rather than intentional”.
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SSM was ordered to pay $90,000 in penalties, while Khan was personally ordered to pay another $40,000.
Those penalties are separate from the $147,001.19 in wage and holiday-pay arrears owed to the five workers, which have already been paid.
That finding came despite circumstances the labour inspector relied upon to argue the breaches were deliberate.
All five employees were migrants on work visas restricted to the Cromwell restaurant. Three were related to Khan, although the determination does not specify the nature of those family relationships.
Two of the workers were also directed by Khan to move from Cromwell to Auckland to work at a takeaway operated by Chicken Bites Ltd, another company she owned, even though their visas remained tied to the Cromwell restaurant.
The ERA said the workers’ migrant status and, in three cases, their family connection to Khan contributed to their vulnerability.
The labour inspector also pointed to the nature and extent of the employment breaches in arguing they were intentional.
SSM admitted failures involving minimum wages, unpaid hours, unlawful deductions, annual leave, public holidays, alternative holidays, sick and bereavement leave, and employment records.
There were also significant problems with the records used to establish how much the workers had actually worked.
At the Cromwell business, a logbook recording hours had been kept from March 2023 and photographed by employees, but Khan and SSM did not provide it to the labour inspector.
Instead, they supplied timesheets that the ERA said were inconsistent with other information.
No equivalent logbook or other record of hours was kept for the Auckland operation, leaving the labour inspector to rely largely on the two workers’ accounts of the days and hours they had worked there.
Khan and SSM disputed the Auckland hours but ultimately accepted the labour inspector’s calculations.
Cheyne said their acceptance did not deserve particular credit because they had no records capable of disproving what the employees said.
But he did not accept that those circumstances necessarily proved the breaches were intentional.
The agreed facts did not directly establish whether the conduct was intentional, inadvertent or negligent, he said.
Factors relied upon by the labour inspector as evidence of intention could also support a finding that Khan and SSM should simply have known and complied with their legal obligations.
The ERA therefore treated the conduct as negligence rather than deliberate exploitation.
The $147,001.19 in arrears represented wages and employment entitlements the workers should already have received. One worker was owed as much as $78,579.70.
Khan eventually consented to money from the proceeds of her house sale being used to meet those arrears, and the workers have now been paid. For penalty purposes, the Authority grouped the conduct into 17 breaches.
Cheyne said the offending involved minimum employment standards, significant amounts of money and “vulnerable employees, given their migrant employee status and the family connection”.
The ERA also took mitigating factors into account. Neither Khan nor SSM had previously been found by the ERA or the employment court to have engaged in similar conduct.
Khan said both businesses had failed and caused substantial financial losses. She was unemployed, had no savings and her family was living on her husband’s income.
