Employment Relations Authority Finds Director Personally Liable For Wage Arrears & Imposes Penalty of $30,000
The Employment Relations Authority has found a Director of an cleaning company that has since been removed from the company register personally liable for multiple (72) breaches of minimum standards. Directors of a company can be held personally liable for minimum entitlement breach if they are found to have been “involved” in a breach. The Director, Mr Singh, attempted to argue he was not a person “involved” in any breach because he left it to his account to keep records and make the correct payments to employees. The Employment Relations Authority did not accept this argument, finding that the Director collated and recorded hours of work and passed that information on to his accountant and his accountant did nothing more than calculate the wages payable based on that information. Mr Singh was ordered to personally pay the arrears and a penalty of $30,000.
This case highlights the importance of not “leaving it up to the accountant”, particularly if you are a Director of a small-medium-sized business. Keeping time and wage records, particularly for employees paid by the hour, is imperative.
If you are unsure about your obligations as a Director, seek legal advice.