You may have heard about the plight of Jamal Zaytoun which has been in the news recently.
OPINION: Zaytoun worked for BIT Technology Ltd. The company owned several stores that provide computer repair services. Zaytoun worked in the Newtown, Wellington, store for several years before he eventually left due to not being properly paid.
Unsurprisingly, Zaytoun brought a claim in the Employment Relations Authority against his employer and its director, Mohammad Mustafa Khan. He sought unpaid wages and compensation for distress.
The claim was successful and Zaytoun was awarded $83,000 of unpaid wages and $15,000 compensation. He is, however, unlikely to see a cent as BIT Technology has recently ceased trading and apparently has no assets.
Zaytoun's situation is not limited to employment law but applies to many people who are owed money, be it as a result of a court order or otherwise.
When a legal entity goes broke those owed money recover very little. The aggrieved are left feeling angry because the people behind the entity often have significant assets. The Jamal Zaytouns of the world are often left with deep sense of injustice because it is difficult to hold those who profited from their unfair treatment accountable.
When an employee brings a claim against the employer, the key thing they need to establish is who the employer actually is. An employer could be an individual, company, partnership, trust or some other entity. Usually this is straightforward.
When the employer is a company or something similar, then it is the company that bears the cost of any claims, rather than management or shareholders personally. It is very difficult to sue someone else to recover money that the employer actually owes.
When the identity of the employer is unclear, workers may be able to claim against representatives of their purported employer - as a case involving volunteer workers in Whanganui shows.
SANDS Wanganui is a group of people organised to provide voluntary help and support. The group provides support and resources to bereaved parents, families and whanau in the region following the death of a child.
SANDS was an unincorporated body when the matters in this case arose; however, it did have a committee and a number of written rules which governed how it should run.
Amanda Weck-Clunie was employed with the group as an events and programme co-ordinator. Catherine Bronnimann offered her the job.
Bronnimann was a SANDS committee member, but she made the offer of employment without full authority from the committee.
Sadly, as sometimes happens, the parties fell out and Weck-Clunie left the organisation. She brought a claim in the Employment Relations Authority for wages and other remedies.
The key question for the authority was, who was the employer?
The authority determined that because SANDS was unincorporated and Bronnimann had made the offer of employment without full authority from the committee, she had personally engaged Weck-Clunie as an employee.
Weck-Clunie's wages claim was successful. Accordingly, she was able to recover the outstanding wages that the authority found were owing from Bronnimann herself.
The lesson for employers is that if you want the protection of, say, a company, the company needs to predate the employment relationship and be recorded as the employer in the employment agreement.
The lesson for workers is that sometimes the employer may not be who it appears to be. It is therefore important that employees bringing claims clearly identify who the employer is and pursue that employer.
Peter Cullen is a partner at Cullen - the Employment Law Firm. He can be contacted at email@example.com.