Director held to be personally liable for unpaid wages...

An employee brought a claim for unpaid wages in the Employment Relations Authority after his employer failed to pay him following his resignation. 

The employer company eventually went into liquidation. The employee sought to recover the wages from the director. 

Under our employment law an employee may recover unpaid wages from a person who is not the employer if the default is due to a breach of employment standards. 

If the breach is by a company the person from whom unpaid wages can be recovered is the director of the company. 

The Authority found that the failure by the company to pay wages was a breach of employment standards. As the company was in liquidation, the director was held to be personally liable and ordered to pay the unpaid wages.

Additionally, the director was ordered to pay a contribution towards the employee’s legal costs.  

However, the Authority was not able to order the director to pay compensation for hurt and humiliation caused to the employee, nor for lost opportunities, because these remedies are not expressly recoverable from a person who is not the employer. 

Directors must be aware that they continue to be held liable towards their company’s employees even in the event of liquidation. It pays to get legal advice from a legal professional to understand employment obligations. 

Leading law firms committed to helping clients cost-effectively will have a range of fixed-price Initial Consultations to suit most people’s needs in quickly learning what their options are.  At Rainey Collins we have an experienced team who can answer your questions and put you on the right track.