Constructive dismissal following non-payment of wages…

The Employment Relations Authority has upheld a personal grievance for a constructive dismissal.  The employee was paid irregularly and when he was paid, it was not the full amount he was due.  After putting up with this for some time he eventually told his boss that he could not continue with the situation if he was not being paid properly.  He therefore resigned.  This is a clear case of constructive dismissal, because failing to pay an employee is a fundamental breach of the employer’s obligations.

The ERA awarded short paid wages of $46,550, unpaid holiday pay of $7,200, unpaid Kiwisaver of $1,984, plus compensation for hurt and humiliation of $23,000 and costs of $6,000.

As the reason for underpayment and non-payment of wages was the poor financial position of the employer it is doubtful whether the employee will see anything from the employer by way of payment. However, he could bring a claim against the director personally if the director was involved in the non-payment of the wages.  That will enable the employee to get access to the director’s personal assets, rather than those of the company.




Alan Knowsley
Employment Lawyer
Wellington