The boss of an Auckland car wash ordered to pay $241,450 for employment law breaches says underpaying staff was a mistake.

Manukau Auto Valet was investigated by a Ministry of Business, Innovation and Employment (MBIE) Labour Inspectorate and found to have been underpaying 221 employees.

"For six years or more Manukau Auto Valet Limited deprived some 221 employees of their most basic employment entitlements, failing to pay at least a minimum wage, or holiday pay to employees leaving the company," Labour Inspectorate regional manager Loua Ward said.

"The Labour Inspectorate takes these kinds of breaches very seriously as not only did the employer breach the rights of the people working for them, they also attempted to gain an unfair advantage over their law-abiding competitors."


The company has paid $96,451 in arrears to MBIE for the 221 affected employees, and has been ordered to pay a further $145,000 in penalties after the Inspectorate successfully took the case to the Employment Relations Authority (ERA).

Manukau Auto Valet director and major shareholder Dharmesh Kumar pleaded ignorance, however, the ERA agreed with the Labour Inspectorate's position that this was not a mitigating factor.

This was reinforced by ERA authority member Vicky Campbell saying it is the obligation of all employers to understand and adhere to the law.

"The Labour Inspectorate will not hesitate to pursue employers who fail to provide such long standing requirements of New Zealand law for penalties which reflect the seriousness of their failures," Ward said.

Kumar described the situation as a "mistake" and was down to the system the company had used to pay employees.

Manukau Auto Valet was paying staff $25 for cleaning most vehicles, which meant that if workers weren't completing a job within an hour and a half, they would not have earned minimum wage, he said.

"I wasn't aware they supposed to do it within minimum wage time frame, so my understanding was 'I'm paying $25 per car, they can take their time and if they want to do it within half an hour that's fine, if they take two and a half hours that's fine as long the car was done and they were paid'," Kumar said.

He said the company changed its systems immediately after dealing with the Labour Inspectorate and was now pay workers an hourly rate.

He said he believed the company could afford to pay the penalty.

"I'm working on it ... [MBIE] will track down the employees and probably pay them. It's going back probably seven years from now," he said.