Big fine for recruitment company

CATHERINE HARRIS
Last updated 15:31 27/12/2013

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A recruitment company has been found to be a bad employer, leaving one of its consultants more than $20,000 out of pocket.

The Employment Relations Authority in Auckland has imposed maximum penalties against company owner Joanna Wilson and her business adviser, Stephen Ryan, for breaching the employment agreement of Chanelle Bryan.

Wilson's behaviour included under-reporting Bryan's gross earnings to Inland Revenue, underpaying her holiday pay, deducting but not remitting all her KiwiSaver employee contributions and underpaying her KiwiSaver employer contributions.

Ryan, who did most of the accounting, was also penalised for "inciting, instigating, aiding and/or abetting" some of those breaches.

However, the authority was particularly concerned with the way that the pair had failed to tell Bryan about a change in company structure, which left her unable to exercise her rights as a creditor.

Authority member Rachel Larmer said the pair's penalties were needed to deter other directors "who may be tempted to use money that their company owes to employees for their own financial benefit".

Bryan was hired as a recruitment consultant by The Ultimate Recruitment Corporation Ltd (TURCL) in February 2010.

She resigned in early 2013 after discovering discrepancies in her holiday pay, reported earnings to the IRD and KiwiSaver contributions.

Then she found TURCL had gone into liquidation in April 2012.

The authority determined that after that point, Bryan was working personally for Wilson.

In his submission, Bryan's lawyer, Michael Smyth, said Ryan and Wilson had deliberately used multiple legal entities since 2010 to avoid tax and comply with their employment obligations.

Shortly before going into liquidation, TURCL sold its major asset, its trading name, to Ultimate Ltd (UL), now also in liquidation. The trading name is now held by another Wilson-owned company.

However, over the time of Bryan's employment the same people remained in charge.

None of the staff at TURCL were informed that UL was now their employer and the TURCL liquidator was not informed of any employee obligations, so staff were not recognised as creditors.

As a result, Bryan lost more than $26,000 in holiday pay and other entitlements, the authority noted. She would recover only about $5000.

Larmer called the breaches of Bryan's employment agreement "deliberate, serious and sustained".

The sale of TURCL's major asset shortly before its liquidation, and Wilson and Ryan's failure to inform the liquidator about Bryan's existence, meant "she had no opportunity to recover what she was owed".

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The authority rejected Wilson and Ryan's claim that Bryan had voluntarily resigned for a new job, and found she had been constructively and unjustifiably dismissed.

Wilson was ordered to pay Bryan $2691.84 lost remuneration and $5288.23 in unpaid holiday pay and KiwiSaver contributions.

In addition, Wilson and Ryan were each penalised $20,000, of which $15,000 would go directly to Bryan and $5000 to the Crown.

- Fairfax Media

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