25 May 2024

Exploitative employer loses appeal for employment law breach fine

Shalini Limited has lost its challenge in the Employment Court against penalties of $100,000 imposed by the Employment Relations Authority (ERA) for migrant exploitation.

The Employment Court dismissed the challenges and found that the penalties were appropriate given Shalini Ltd derived financial benefit from depriving vulnerable workers of their legal entitlements over a number of years.

Shalini Ltd was taken to ERA by the Labour Inspectorate following employment standards breaches against seven migrant employees who worked as retail assistants at two liquor stores – Grafton Liquor Spot and Bottle-O Parakai, and one dairy, Lifeline Dairy, owned by the business. In June 2019, ERA ordered the company, whose sole owner and director is Venu Mohan Reddy, to pay $100,000 in penalties after a 2017 investigation by the Labour Inspectorate. 

Liqour operators fined for breach of Employment Law
Shalini Ltd has lost its appeal in Employment Court

The company challenged the determination on three grounds. They claimed that the ERA suggested that Shalini’s director, Reddy, was also a landlord, when in fact they were only a “go-between” the workers and the landlord, that ERA interpreted the company’s financial position and ability to pay incorrectly, and that the ERA did not give considerable weight to the fact that Shalini has separately agreed to repay nearly $97,000 in minimum wage and holiday pay arrears to seven workers.

“Many business and workers are finding themselves in difficult circumstances due to the effects of COVID-19. However, worker exploitation can never be justified,” says Labour Inspectorate Regional Manager, Loua Ward.

“Not only does exploitation violate worker’s rights and their personal dignity, it also allows some businesses to gain a commercial advantage over employers who are committed to doing the right thing by their people and meeting their legal obligations. It also undermines New Zealand’s reputation as a good place to work and to trade with.

“The Inspectorate is concerned about non-compliance in the liquor retail industry and is working with sector leaders such as franchisors who need to audit and monitor their franchisees to uphold compliance with the law from the top down. The Inspectorate is also engaging with licencing authorities and liquor suppliers about their ongoing role to prevent exploitation within the industry,” Ward says.

Labour Inspectorate’s investigation in 2017 found the migrants regularly worked long hours without pay. The company has reportedly already paid the arrears of the affected workers.

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