Workforce Development: Tertiary staff resort to foodbank after provider refuses to pay them for seven weeks, then closes

Workforce Development Ltd in Onekawa. The company was told to return hundreds of thousands of dollars of funding to the Tertiary Education Commission. Photo / Warren Buckland

Staff of a longstanding Hawke’s Bay-based tertiary education training provider resorted to a foodbank after being left without wages for seven weeks, before being told they will lose their jobs.

A routine audit of Workforce Development Ltd in 2021 that turned into an investigation by the Tertiary Education Commission found it needed to return hundreds of thousands of dollars of taxpayer funding due to invalid claiming of funding.

The investigation found inaccurate reporting of learner enrolments, with 74 per cent of students recorded as having started on the wrong date.

It also found incorrect reporting of learner withdrawals, incorrect enrolment documents, invalid awarding of qualifications, and invalid claiming of Fees Free funding for 120 learners totalling more than $300,000.

1News reported the amount of taxpayer money the company now owes could be more than $1 million.

The company, run by Napier man Aaron Smith and father Michael, of Tauranga, runs across Hawke’s Bay, Dannevirke and Auckland and has 22 staff.

One of those staff members is teacher Stewart Whyte, who has taken on the role of spokesman for those out of their jobs.

He says the majority of staff had kept working, despite not being paid, because of their feelings of obligation to their students.

But, on four weeks’ notice, their employment was terminated on Friday, and as of Wednesday they had still yet to be paid.

Whyte said staff had hired a lawyer and were lodging a complaint with the Employment Relations Authority on behalf of all 22 staff about their treatment.

He told Hawke’s Bay Today the company, which has more than 30 years in the industry and was sold to new owners in 2017, had hit dire financial straits when it was unable to secure further contracts.

Director Michael Smith said on Wednesday Workforce Development was now being wound up. He said it was a complex matter and he did not want to elaborate further on the specifics.

“These wages will be paid,” he told Hawke’s Bay Today. “We recognise that we owe them money and we will be able to clear it, we just need more time.

“Anything that you put in the media that is derogatory will make that harder.”

Michael Smith then rang back on Wednesday afternoon to say the wages would be paid to staff as early as Tuesday, April 9.

TEC chief executive Tim Fowler said the Commission stopped funding Workforce Development in June last year after an investigation showed it was not complying with funding conditions.

The TEC investigation had identified a funding recovery of $307,651 related to incorrectly claimed Fees Free funding.

“Subsequent remedial action by WDL showed that there was a significant amount of funding that would need to be recovered,” he said. “In addition to this, WDL had also received funding that was greater than the delivery (ie teaching) that had occurred.”

He said the factors “significantly increased the TEC’s concerns about WDL’s solvency,” and stopping funding was necessary to “ensure the prudent use of public funds, and to protect the interest of future learners, and reputation of the tertiary education sector.”

“We recognised that stopping funding would impact learners,” he said.

“TEC offered support to WDL to transition those learners to alternative providers if required, however this was not taken up by WDL’s management. WDL is responsible for the pastoral care of students. This includes keeping students informed of events that might affect the learning they are paying for.”

He said since August, TEC’s engagement with WDL had mostly been around recovering debts owed.

The Commission said the company had been co-operative with the inquiry, and staff say they had spent much of their time working on matters in the inquiry.

Whyte says there was a cordial relationship with the company ownership and management until late last year, when there was a delayed pay cycle in the run-up to Christmas.

When pay was not received as scheduled on February 6, Whyte says they were told initially it was because of a delay caused by the Public holiday (Waitangi Day), but staff have not been paid since then.

Initially acting individually or in small groups, staff eventually collaborated, and engaged an employment lawyer using financial contributions from the affected staff and families.

Michael Smith said Aaron Smith was currently in the US. Aaron did not respond to a request for comment.

Eve McMahon, NZQA deputy chief executive, quality assurance, said Workforce Development’s registration had now lapsed because of unpaid invoices due on March 13, 2024.

“WDL stopped teaching on 22 March 2024. All qualifications and credits awarded to WDL’s learners remain valid.

“Around 40 people were enrolled with WDL when they stopped teaching.

“Half of the learners were due to finish their studies on 22 March 2024. The other half will need to transfer to another provider if they decide to complete their study. We are communicating with learners to support them with this transition.”