A Lewis Pass motor inn and cafe has been ordered to pay more than $19,000 in penalties and arrears after deliberately failing to pay a migrant worker minimum wage and holiday pay.

The Employment Relations Authority ordered Alpine Motor Inn & Cafe to pay the employee $6836.02 in minimum wage and holiday pay arrears, as well as a $5000 penalty for taking advantage of a vulnerable migrant worker.

An additional $7500 in penalties was also imposed on the business for its failure to maintain records, or pay minimum wage.

Owner Jerry Hohneck argued the worker was a volunteer and not an employee during the three month period, but the authority found this was not the case.

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The authority said differing accounts provided by Hohneck for why the employee was not entitled to be paid for their work suggested that he knew his actions were in breach of the Minimum Wage Act.

The employee began working and living at the motor inn on November 17, 2014 but did not receive their first pay of $1289.39 until March 1, 2015.

When the employee resigned on March 22, 2015 they had only been paid a total of $2541.03, with the 552 hours they had worked in the first three months going unrecognised by their employer.

"This kind of deliberate failure to pay an employee wages for work carried out is exploitation, and this is very serious," labour inspectorate regional manager David Milne said.

"We are aware there is an issue in some sectors where businesses are recruiting and treating people as volunteers, even though legally their work arrangements mean they are employees."

"Anyone employed in New Zealand must be paid at least the minimum wage for their work - there is no excuse for failing to do so."

Milne acknowledged migrant workers were less likely to be aware of their rights and entitlements than New Zealand workers.

"Attempts like this to avoid providing people working in New Zealand with minimum employment entitlements will not be tolerated.

"It's unfair to employees and it disadvantages businesses which do comply with all their employment obligations."

MBIE encourages anyone in this situation, or who knows of anyone in this situation, to call its contact centre on 0800 20 90 20 where their concerns will be handled in a safe environment.