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Harjit Singh and his business, Nekita Enterprises Limited, have been fined a combined $125,000 by the Employment Relations Authority after it was discovered Singh's business was operating a dual payroll system, which paid some employees with less than minimum wage.
Nekita Enterprises, established in 2002, came to the attention of the Labour Inspectorate when a former employee told it the employer paid less than the minimum wage and failed to keep accurate employment records.
The inspectorate found the dual payroll system recorded only some of four employees' hours. In total Nekita Enterprises failed to pay four staff nearly $20,000 in minimum wage payments, as well as more than $1500 in holiday pay.
In total Nekita Enterprises failed to pay four staff nearly $20,000 in minimum wage payments, as well as more than $1500 in holiday pay.
The dual payment system paid the employees for a set number of hours at the correct rate through the payroll system but additional hours were paid in cash at a lower rate.
An Employment Relations Authority (ERA) investigation found the breaches were deliberate and systemic, and involved vulnerable migrant employees who relied on their employer not only for their income but their right to reside in New Zealand.
ERA member Peter van Keulen said the breaches did not reflect an "actual loss" for the employees, as they were still paid about the equivalent of what they would have received after tax. However, they probably lost "significant" holiday entitlements.
"So, in some respects the $19,805.89 is a windfall for the employees," he said.
Singh maintained he did not know the dual system was operating, but the ERA was unconvinced.
It ordered Nekita Enterprises Limited to pay $90,000 in penalties for breaching employment laws. Singh has to personally pay a further $35,000 as a person responsible for the breaches.
The penalties are on top of $21,390 Nekita Enterprises has already paid out to the four former employees wage and holiday pay entitlements.
The decision showed exploiting workers was not a "sustainable business model" and could leave perpetrators with thousands of dollars in personal fines, said retail sector strategy lead Loua Ward.
"The individual responsible for the exploitation will be liable for penalties even if they close their business," she said.
"In addition to the financial costs of breaching the law, employers should think of the reputational damage to their brand."
The Labour Inspectorate was "disappointed by non-compliance in the liquor retail sector", and was working with franchisors and liquor licencing authorities, Ward said.
Singh operated various liquor stores including 10 Super Liquor franchises.
"We're pleased that Super Liquor has exited the stores run by Nekita Enterprises from their brand and taken steps to better monitor compliance within their franchise network."
The inspectorate also sought penalties against Singh's wife, Shereen Singh, but the ERA accepted she had no involvement with the day-to-day running of the business and had no knowledge of the breaches.
Nekita Enterprises asked that ERA's investigation not be published but the ERA declined the request.
"The Inspectorate believes it is in the public interest to know when employers knowingly exploit their employees, so that workers, consumers and suppliers can make an informed decision when dealing with such businesses."
The Labour Inspectorate encourages anyone concerned about their own or someone else's employment situation to phone the Ministry of Business Innovation and Employment's service centre on 0800 20 90 20.