Company penalised for failing to pay former employee holiday pay

A company has been ordered to pay a penalty of $4000 and legal costs by the Employment Relations Authority (ERA) for failing to pay a former employee his holiday pay entitlements. The ERA found that the company was able to pay, but intentionally withheld the payments, which resulted in an advantage for the company and a significant loss for the employee, who had to seek legal advice to recover the amount.

Holiday pay is paid at the end of an employee’s employment for annual holiday entitlements not taken or paid out. Failure to pay this amount can make a company liable for a penalty of up to $20,000.

The company tried to pay the outstanding holiday pay in weekly instalments, however this was rejected by the ERA as the company could not prove that its financial position required it. The company was therefore required to pay the balance in full.

The ERA also added that if the company was unable to pay the due amount to the former employee, the employee could recover the amount from a person who is not the employer, but who is directly and knowingly concerned in the breach of employment standards. In this case, the director, who is an officer of the company and who knowingly withheld the payments would have been personally liable if his company failed to pay the former employee. 

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.

Gianna Menzies