The Employment Relations Authority has held that a director of a company which was unable to pay its debts was personally liable for the unpaid holiday pay owing to an employee.

The director was the sole director of the company and was personally involved in doing the paperwork and making the arrangements for payment of wages and holiday pay to employees.  The company failed to make the payment and the Employment Relations Authority held that the director was a party to the breach because he was the person involved in the breach.

The director was ordered to pay $16,484 personally to the employee for unpaid holiday pay.

If directors and other people involved in running a company are personally involved in a failure to pay employees then they can be made personally liable under provisions of the Employment Relations Act.  They cannot avoid liability by placing the company into liquidation.

Alan Knowsley
Employment Lawyer