Owner of liquidated Auckland restaurant ordered to pay former chef $100,000

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The former owner of an Auckland restaurant has been ordered to pay their former chef almost $100,000 for multiple breaches to minimum employment standards.  

The Employment Relations Authority (ERA) fined Shen Yuan, the sole director of BDIT Limited which traded as Hua's restaurant, even though the business was liquidated in 2022.  

In total Yuan had to pay the former chef $43,943.42 in wages arrears, $21,000 as repayment for a premium demanded from him and $20,000 in penalties. 

Yuan's wife Linlin Sun, who worked as a manager in his restaurant business, is 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 which occurred between September 2019 and September 2020. 

The ERA said Yuan and Sun must pay interest on the arrears.  Yuan must also pay interest on the premium repayment. 

The total amount the couple must pay in wages arrears, the premium repayment and penalties is $94,943. 

Authority member Robin Arthur said the former chef, a Chinese national, must receive $9000 of the penalties due by Yuan and his wife. 

BDIT Ltd formerly operated two restaurants in Auckland - one in Newmarket and the other in Albany. The Newmarket restaurant stopped trading in October 2019 and the Albany restaurant in September 2020. 

This is the second time Yuan and his former restaurant business have been sanctioned by the ERA. 

In 2020 Yuan and BDIT Ltd, trading as Hua's restaurant, were ordered to pay their head chef $11,999.98 for outstanding wages. 

The repayment order was made after Yuan failed to keep up the payments, as agreed in a record of settlement, following mediation in November 2019. Yuan had undertaken to repay the former employee $16,000 in weekly instalments of $666,67. However, he only paid $4000.02 leaving $11,999.98 outstanding. 

Latest ERA determination 

Simon Humphries, Head of Labour Inspectorate, said the fact Yuan had been ordered to repay the wages arrears and the penalties in the latest ERA determination, showed that even if a business has been liquidated the owners can still be held liable for breaches committed while the business 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. 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." 

He 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." 

Authority member Robin Arthur said while the breaches committed related to one employee over a relatively short period, (the chef) was a visa-dependent worker and thereby vulnerable to exploitation by such breaches. 

"He also suffered extended periods where he did not receive the pay he was entitled to receive."