The Employment Court has held that a payment to the employer as part of an employment package was an unlawful premium in breach of the Wages Protection Act.

The claimant was an accountant who signed up to work for an accountancy group.  As part of the deal she paid $125,000 for the right to be a regional partner and work for the group.  She did not become a partner in the sense of an owner in the group, but was an employee.

The Court held that without paying the $125,000 entrance fee she had no right to work for the group and therefore the payment was a premium for employment and unlawful.  The accountancy group was ordered to repay the $125,000 immediately and also ordered to pay an $8,000 penalty to the plaintiff.

This situation of an employee paying for the right to work was contrasted by the Court with a situation where an employee pays to undertake some training to acquire qualifications before being employed.  In that case the qualification was of value to the employee and could be used by them to obtain employment at any other employer in the industry.

It is very important not to charge employees for offering employment and if an employer is contemplating making a charge for some reason, then it would be important to get advice from an experienced professional before doing so.

Alan Knowsley
Employment Lawyer Wellington