Coupon cleaning firm ordered to pay workers $123k
An Auckland cleaning company that operated through coupon schemes claimed it had to underpay staff to make a profit, with one worker missing out on more than $70,000.
New Zealand Clean Master 2013 Ltd’s business model was based on two commerciallyoperated coupon schemes – Groupon and Grab One – offering a fixed price and getting subcontracts to carry out work for other cleaning companies.
The company’s sole director, Bhumika Kohli, told the Employment Relations Authority (ERA) the business would not have been profitable if she had paid staff correctly.
Palav Brahmbhatt, Hardik Gediya, Maninder Singh and Hemant Dhamija worked for Kohli for various periods between April 2016 and March 2018.
All four were underpaid, endured illegal wage deductions, and were exploited by Kohli during their employment.
Kohli moved to New Zealand in 2010 to study and started working full-time in the information technology industry in 2012.
About six years ago she and her husband started a weekend job as cleaners at a district health board.
Although Companies Office records show NZ Clean Master was set up in 2013, Kohli began operating her own domestic cleaning service in 2015 and hired Gediya.
Kohli said she hired workers on a ‘‘zero-hour contract’’, then moved to a normal wages agreement before she realised this was not a sustainable business model.
Kohli would send two cleaners to a job and pay them each for one hour, even though both workers worked together for two hours.
NZ Clean Master sold coupons offering three hours of cleaning for $69, which was supposed to cover the workers’ wages and a commission to the business that ran the coupon scheme.
Two workers each spending three hours at a job should have been paid $91.50 (using the minimum wage of $15.25 from April 1, 2016) – well over the amount NZ Clean Master charged customers.
The ERA said it was clearly ‘‘not a viable and lawful business proposition’’.
‘‘It would not cover operating costs or generate any profit, unless the workers were paid less than their statutory entitlements or were paid for only some of the hours they worked.’’
NZ Clean Master failed to keep correct time and wage records, and excluded travelling time between jobs as part of the hours worked from its records.
Workers were sometimes required to redo a job without pay if there had been a complaint from a customer.
NZ Clean Master claimed Gediya and Dhamija were independent contractors and not employees but the ERA found they were employees as they could not decline work or choose what work they did.
Both had signed employee contracts but they were forced to sign new contractor agreements.
‘‘The degree of control of their work remained consistent with that of an employee.
‘‘They continued to wear the company uniform and, by and large, take whatever work was offered.
‘‘They were required to use their own vehicles and meet running costs but that indicated no real independence,’’ the ERA said.
Kohli argued Brahmbhatt was an intern but the ERA found she was an employee and should have been paid as the business was gaining economic benefit from her work rather than simply offering work experience.
As Brahmbhatt’s visa was tied to NZ Clean Master, she could not work anywhere else.
Kohli also made unlawful deductions of $500 from Singh for damage to a work car, and Gediya to buy carpet cleaning equipment.
The ERA said NZ Clean Master relied on exploiting the workers’ vulnerability.
NZ Clean Master 2013 must pay Brahmbhatt $70,908 and Dhamija $4284 in unpaid wages, annual leave and holiday pay.
Meanwhile, Gediya will get $12,933 and Singh $5634 for unpaid wages, holiday pay and reimbursement of unlawful deductions.
The company and Kohli have also been ordered to pay a penalty of $30,000 for breaching workers’ employment agreements.
While costs were reserved, the authority said the starting point would likely be $10,500.