Owner of failed restaurant business told to pay $90,000

The former owner of a liquidated Auckland restaurant has been told to pay more than $90,000 for breaches of employment law.

Honglu Shao worked as a chef on a visa that tied him to working for BDIT, which traded as Hua Restaurant, with branches in Newmarket and Albany. The business went into liquidation in 2020.

But Labour Inspector Natasha Cevenska Georgieva said Shen Yuan, the director of BDIT and his wife, Linlin Sun, should be held personally liable for wages and leave entitlements the company owed Shao, and penalties for breaches of employment standards during his employment.

Yuan disputed her claim that there had been shortfalls in paying the minimum wage and entitlements for annual leave and public holidays.

But there were concerns about the business’s records – Yuan said some physical records were stuck in the Newmarket premises which he could not access because the landlord had locked him out due to unpaid rent, and he said an iPad was stolen from his Albany premises.

The authenticity of handwritten records that were offered from April 2020 were questioned.

Yuan accepted he received a “premium” of about $21,000 from Shao to secure the job but said he repaid it to Shao shortly before he resigned.

He said the business had struggled after the Covid-19 lockdown with fewer customers and reduced opening hours.

The Employment Relations Authority told Yuan he must pay the chef $43,943.42 in wages arrears, $21,000 as repayment for the premium and $20,000 in penalties.

Sun 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.

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.

Employment Relations Authority member Robin Arthur said Shao must receive $9000 of the penalties due by Yuan and his wife.

It is the second time Yuan and his former restaurant business have been sanctioned by the authority.

In 2020 Yuan and BDIT were ordered to pay their head chef $11,999.98 for outstanding wages.

Simon Humphries, head of the Labour Inspectorate, said the fact Yuan had been ordered to repay the wages arrears and the penalties in the latest authority determination, showed that even if a business has been liquidated the owners could 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 authority 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.”

Arthur said while the breaches committed related to one employee over a relatively short period, the chef was a visadependent 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.”