KEY POINTS:
Q: I run a cafe business. Two of my employees approached me recently and told me that their work permits have expired. I am quite sympathetic towards their situation as they have families to support. Will I be liable under law if I allow them to continue working for me?
A: It is an offence under the Immigration Act to allow or continue to allow any person to undertake employment knowing that the person is not entitled to undertake employment under the Immigration Act. As an employer you could be subject to a penalty not exceeding $50,000 if you breach this restriction.
It is also an offence for an employer without reasonable excuse to allow a person who is not entitled to work in New Zealand to undertake employment with them. The penalty is a fine not exceeding $10,000.
A reasonable excuse is if the employer did not know that the person was not entitled to work in New Zealand and the employer had obtained a signed tax code declaration from the employee (before they started employment) that states that they are entitled to work in New Zealand.
Employers also have obligations under the Employment Relations Act 2000.
Once an employer is aware that an employee is no longer entitled to work in New Zealand the employer can, after a fair investigation, give the employee notice that their employment will end because of their ineligibility under the Immigration Act.
An alternative for you may be to suspend the employees by mutual agreement until their immigration status is sorted out and they are again eligible to work legally in New Zealand.
Q: The company we are working for is winding up. What happens to our employment during this process?
A: All employment agreements terminate when a company is wound up - because there is neither an employer nor work for the employees.
A liquidator may carry on some or all of the business during the winding-up process, and may ask some or all of the employees to continue to work during this time.
To avoid personal liability, liquidators will usually ensure that an employment agreement is formed to cover this extended work.
There is some protection for employees in a winding-up situation.
Under the Companies Act 1993 (section 312), once liquidation costs have been paid, preference is given to outstanding wages and salaries, including holiday pay, to a limit of $15,000 per individual.
Wages, salaries and holiday pay rank fourth in an insolvency under the Insolvency Act 1967 (section 104), again with a limit of $15,000.
* If you require further assistance please contact an employment law specialist/lawyer.
