Owner of failed Auckland restaurant ordered to pay $95k following employment breaches

Tara Shaskey, Open Justice multimedia journalist, Taranaki of

By Tara Shaskey, Open Justice multimedia journalist, Taranaki of

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.

Labour Inspectorate head Simon Humphries said today the ruling showed 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 a Ministry of Business, Innovation and Employment (MBIE) statement made after the determination.

"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."

Yuan, who is not a stranger to the ERA, has been ordered to pay his former chef, a Chinese citizen, $43,943.42 in wage arrears and $21,000 as repayment for a premium he demanded. Yuan was also ordered to pay $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 couple must pay interest on the arrears and Yuan must also pay interest on the premium repayment.

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

As a visa-dependent worker, he was vulnerable to exploitation by such breaches and had suffered extended periods where he did not receive the pay to which he was entitled, MBIE said in its statement, referring to comments made by the ERA.

This is the second time the ERA has sanctioned Yuan and his former business, according to MBIE.

In 2020, he was 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 paid only $4000.02, leaving $11,999.98 outstanding.

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."

* This story originally appeared in the New Zealand Herald.