Owner of failed Auckland restaurant Hua ordered to pay $95,000 following employment breaches

The business, which traded as Hua Restaurant, was liquidated in 2022.

A failed restaurant owner must cough up almost $95,000 following an employment dispute with a “vulnerable” former chef, years after the eatery closed its doors.

Shen Yuan, the sole director of BDIT Ltd, which traded as Hua Restaurant, has been sanctioned by the Employment Relations Authority (ERA) for multiple breaches of minimum employment standards.

He operated two restaurants in Auckland - one in Newmarket and the other in Albany.

However, the business was liquidated in 2022 after the Newmarket restaurant stopped trading in October 2019, and the Albany restaurant in September 2020.

Before the liquidation process began in October 2020, Honglu Shao was employed by Yuan as a chef, working mostly at the Albany restaurant, and briefly at Newmarket, from September 2019 to September 2020.

The work visa held by Shao, a Chinese national, tied him to working only for Yuan.

In the recently released ERA decision, authority member Robin Arthur said because Shao was a visa-dependent worker, he was vulnerable to exploitation.

He was charged by Yuan, who is not a stranger to the ERA, for his employment and then suffered extended periods where he did not receive the pay he was entitled to.

Yuan accepted he received a premium of about $21,000 from Shao to secure the job but claimed to have repaid it shortly before Shao resigned.

Yuan disputed Labour Inspector Natasha Cevenska Georgieva’s calculations of shortfalls in paying at least the minimum wage and entitlements for annual leave and public holidays.

But he accepted if there were breaches in employment standards, he was “a person involved in those breaches” through his role as company director.

Yuan could not provide complete wage and leave records for Shao’s employment, claiming the records were left in the Newmarket premises which he could not access because the landlord had locked him out due to unpaid rent, and an iPad, on which he said he subsequently kept employee records, was stolen from his Albany premises.

While Yuan, whose business had struggled after the Covid-19 lockdown, provided some handwritten notes of the hours worked by each employee, so did Shao, and his account of hours was preferred.

Yuan was ordered to pay Shao $43,943.42 in wage arrears and $21,000 as repayment for the premium, after the ERA found his claim he had already repaid it was “not sufficiently credible”.

He was also ordered to pay $20,000 in penalties.

Yuan’s wife, Linlin Sun, who worked as a manager in his restaurant business, was jointly and severally liable for payment of the wage arrears and was ordered to pay $10,000 in penalties for her role in the breaches.

Sun had denied she was involved, telling the ERA her role in the business was limited.

The couple must pay interest on the arrears and Yuan must also pay interest on the premium repayment.

Shao would receive $9000 of the penalties due by Yuan and his wife.

This is the second time the ERA has sanctioned Yuan and his former business.

In 2020, he was ordered to pay their head chef $11,999.98 for outstanding wages.

In a Ministry of Business, Innovation and Employment (MBIE) statement, Labour Inspectorate head Simon Humphries said today the ruling showed that even if a business had been liquidated, the owners could still be held liable for breaches committed while it was trading.

“Business owners and employers who have exploited vulnerable workers cannot hide behind the fact that the business where breaches of minimum employment standards were committed no longer exists,” he said in the statement.

“The Labour Inspectorate will vigorously clamp down on those who exploit vulnerable workers, even if they no longer own the business where the exploitation took place.”

Humphries said the fact this was the second time Yuan had appeared before the ERA for similar breaches was concerning.

“We would have hoped he had learnt that not complying with minimum employment standards can have serious consequences.”

Humphries said the Labour Inspectorate would continue to closely monitor for potential migrant worker exploitation and take enforcement action when necessary.

“However, where we can and the breaches are minimal and unintentional, we work with the employers and employees to educate or resolve a complaint.”

Tara Shaskey joined NZME in 2022 as a news director and Open Justice reporter. She has been a reporter since 2014 and previously worked at Stuff where she covered crime and justice, arts and entertainment, and Māori issues.