| Restrictions | OK |
|---|---|
| Jurisdiction | Employment Relations Authority - Christchurch |
| Reference No | CA 61/08 |
| Hearing date | 5 Feb 2008 |
| Determination date | 08 May 2008 |
| Member | P Cheyne |
| Representation | D Rhodes ; A Gane |
| Location | Christchurch |
| Parties | Robertson Turnbull Ltd t/a Queenstown Night 'N Day Foodstore v Labour Inspector |
| Summary | PRACTICE AND PROCEDURE – Objection by applicant employer to demand notice issued by Labour Inspector - Demand notice required payment to employee for sum allegedly due under Minimum Wage Act 1983 (“MWA”) and Holidays Act 2003 (“HA”) – Applicant claimed calculated and paid wages and holiday pay owing but employee forfeited four weeks wages under employment agreement (“EA”) by failing to work out notice period – Respondent argued forfeiture provision unenforceable because employee lacked proper consent when agreement signed – Employee advised entitled to and given reasonable opportunity to seek independent advice on EA – Employee gave evidence forfeiture provision not explained and did not read agreement because friends advised employment agreements all same – Authority found employee able to understand advice despite English being second language - Found elected to sign agreement without obtaining specific advice – Employee resigned and gave four weeks written notice as required – Employee’s three final wage payments written as cheques and left on notice board – Employee stated knew nothing of cheques because usually paid by direct credit – Cheques not banked – Authority accepted employee not aware of cheques and change in payment method - Applicant claimed met obligations by calculating contractual wages due for three pay periods and placed cheques on notice board for employee, then deducted monies under forfeiture clause in EA – Authority found applicant breached s6 and s11 MWA because employee received no payment for three pay periods, so applicant defaulted in paying minimum wages due to her – Contractual obligation to pay wages by direct credit – Applicant stopped doing this without employee’s consent, to control when applicant received wages – Applicant could not rely on contractual provision about retaining wages during notice period nor widely worded consent to deduction clause, as both defeated by s11 MWA – Section 11 MWA entitled employee to recover minimum payments despite express agreement to contrary – Employee absent for four shifts during four week notice period - Only absences for shifts during notice period considered relevant to claim relating to forfeiture provision – Applicant told employee must make up for shift absences at conclusion of notice period – Employee declined, claiming unfit for work – Authority found under HA prevented applicant from validly extending notice period without agreement – No evidence of agreement – On face of EA, employee to forfeit four weeks wages due and absences during notice period – Authority noted breach of contract principle that is unconscionable to recover sum out of proportion to loss incurred – Found intention of contractual provision to secure performance of contract by imposing fine for breach – Found applicant’s evidence of cost to recruit and train new employee was irrelevant – No evidence of loss of sales, but accepted probably some inconvenience in organising replacements at late notice – Damage suffered by applicant for failure to work four shifts during four week notice period was negligible at best – Forfeiture of four weeks wages extravagant and unconscionable in comparison to loss likely to arise from breach – Provision amounted to penalty and unenforceable – Employee not paid holiday pay despite entitlement – Objection to demand notice not upheld – Employee entitled to sums specified in demand notice – Applicant to pay sum to Labour Inspector for employee’s benefit |
| Result | Application dismissed ; Arrears of wages ($1,819.04) ; Costs reserved |
| Main Category | Practice & Procedure |
| Statutes | ERA 2000 s224;ERA 2000 s226;Holidays Act 2003 s6;Holidays Act 2003 s23;Holidays Act 2003 s27;Holidays Act 2003 s60;Holidays Act 2003 s86;Minimum Wage Act 1983 s6;Minimum Wage Act 1983 s11 |
| Cases Cited | Dunlop Pneumatic Tyre Co Ltd v U Garage and Motor Co Ltd [1915] AC 70;Law v Redditch Local Board [1892] 1 QB 127;Lombank Limited v Excell [1963] 3 All ER 486;Ozturk v Gultekin T/A Halikainas Restaurant [2004] 1 ERNZ 572 |
| Number of Pages | 10 |
| PDF File Link: | ca 61_08.pdf [pdf 36 KB] |