The Employment Relations Authority has upheld a claim for unjustified disadvantage of an employee who was not given an employment agreement despite asking the employer.  The law requires all employees to be given an employment agreement in writing.  The Employment Relations Authority held that the starting point for a fine (maximum $20,000) was in this case $10,000 but reduced the fine to $2,000 because the breach was not a deliberate one by the employer and because of the poor financial state of the employer.

The employee was also entitled to compensation for the employer holding back their final pay upon resignation.  The starting point for compensation here was $7,000 but this was reduced by 50% to $3,500 because the employee retained property belonging to the employer and said they would only return it when they were paid their outstanding wages.  The ERA was clear that the employer could not withhold payment of the final pay on the basis that the employee was refusing to return company property and equally clear that the employee could not retain company property on the basis that the employer was withholding final pay.

Any retention of monies owed to an employee by an employer can only be with consent of the employee and a general consent in an employment agreement is not sufficient.  Consent must be given in each particular circumstance at the time of withholding the funds.

Alan Knowsley

Employment Lawyer Wellington