A Southland dairy farm and its owner have lost an appeal against $215,000 in penalties imposed last year by the Employment Relations Authority over the exploitation of vulnerable workers.
In July this year, the business and owner was also hit with an additional $15,000 in penalties over being found to have obstructed employment authority investigations.
During the original investigation last April, Rural Practice Limited and its owner, Reza Abdul-Jabbar, was found to have breached multiple minimum employment standards involving three workers who arrived from Indonesia to work on the farm between December 2017 and February 2022.
The breaches included failing to pay workers minimum wage; not paying holiday and leave pay appropriately; making unlawful deductions from wages; requiring workers to pay premiums; and failing to keep accurate employment records.
The investigation was launched in December 2020 after one of the workers contacted the Ministry of Business, Innovation and Employment's contact centre to complain he had not been paid the salary recorded in his employment agreement or given the number of days off he was owed each fortnight.
He also complained that his employer had taken possession of his passport and ID and kept them even though he asked for them back.
A Labour Inspectorate investigation found that each employee had been given two versions of their individual employment agreements — one stating a higher salary which the employer provided to Immigration New Zealand (INZ) during work visa applications, and the other, provided to the Labour Inspector, stating a lower amount. None of the employees were paid the correct wages due to them.
It was also found amounts had been deducted from one of the worker's wages, purportedly to pay for the services of a recruitment company in Indonesia.
According to MBIE, Abdul-Jabbar was an imam in his community, and was a religious adviser for at least one of three workers he was found to have exploited.
During Abdul-Jabbar’s appeal, it was argued the vulnerability of the employees was overstated, some of the breaches did not result in financial loss to employees, and the ERA failed to recognise support in place for workers – such as accommodation and immigration assistance.
It was also argued the penalties imposed were excessive, and a larger reduction should have been given due to his financial situation.
In response to the arguments, Judge Joanna Holden found the financial point was open to the ERA; Abdul-Jabbar’s financial incapacity was not established; the support given to employees was not a mitigating factor; and the employees were vulnerable.
“The Authority found that there was a clear imbalance of power between the employees and Mr Abdul-Jabbar and the plaintiffs took advantage of the employees as new immigrants from Indonesia, who lacked knowledge of local law and employment requirements in New Zealand.
“The Authority also noted some other matters that disadvantaged the employees; they were vulnerable workers.”
Judge Holden said the level of penalties were proportionate having regard to the “multiple, systemic and intentional breaches found by the Authority, as well as the financial impact of those breaches”.
Labour Inspectorate compliance manager for the southern region, Brendon Strieker, welcomed the court’s decision.
“It reinforces that employers cannot hide behind complexity or goodwill when they fail to meet basic obligations.”
Strieker added the penalties imposed by the ERA last year reflected the serious nature of the breaches and sent a clear message to employers.
“There will be consequences for those who choose to exploit their workers for financial gain.”
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