Kiwifruit boss bankrupt with $200k still owing

A kiwifruit company which didn't properly pay employees or meet employment obligations has only paid $28,000 of the $226,000 it owed and its director has now declared himself bankrupt. Photo / File

A kiwifruit company that didn't properly pay employees or meet employment obligations has only paid $28,000 of the $226,000 it owed and the boss has now declared himself bankrupt.

Freemind Enterprize Limited and its director Gurmail Lally were in June last year ordered by the Employment Relations Authority (ERA) to pay $161,343.67 for money owed to workers and $65,000 in penalties for breaching employment law.

This followed a Ministry of Business, Innovation and Employment (MBIE) investigation that revealed the company did not have written employment agreements, wage, time or holiday records for 121 employees that were hired to harvest kiwifruit in the Bay of Plenty between 2009 and 2013.

The company further failed to provide these workers with holiday pay or time-and-a-half pay for working a public holiday. One employee was paid less than the minimum wage.

In a further ERA determination, delivered on March 31 but publicly released this week, the authority said the company had paid $28,000 in to the Crown's bank account as of March 27. At the time the decision was released, the company was still registered.

However, the Companies Office has since removed the firm from its register while Lally declared himself on May 26, according to the Insolvency Trustee Service.

The latest ERA decision said the Land Information New Zealand register showed that Lally owned two properties along with other family members.

Lally told the ERA that he had sold his house last year and after payment of his mortgage
and all other costs was left with $49,270.

"No documents have been provided to the authority to support Mr Lally's statement that he sold either of his two properties although a transfer of ownership was made," the decision said.

ERA member Vicki Campbell ordered Freemind and Lally to comply with the authority's previous order within 14 days.

"The authority's order may be the subject of a further application for compliance in the Employment Court which is empowered to impose penalties for continuing non-compliance which include imprisonment, fines and the sequestration of property," she said.

MBIE's Labour Inspectorate general manager George Mason said there had been no further payment above the $28,000 following the sale of a house he owned.

"Following further pursuit of the outstanding arrears by MBIE's legal team ... [Lally] has put himself into voluntary bankruptcy.

"As a bankrupt, Mr Lally cannot be the director of a limited liability company, or take part in the management or control of any business without the permission of the Official Assignee."

Mason added that employers who could not meet their basic legal obligations should not be employers and the organisation would not hesitate to pursue those who tried to avoid paying their employees what they are owed.

Labour Inspectorate regional manager Natalie Gardiner said after last year's determination that it was likely that a number of the affected employees were temporary migrants who may have already left New Zealand.

"The Inspectorate recognises that migrants are a particularly vulnerable section of the workforce and may often be reluctant to take action against their employer," she said.

"This case makes it clear that failure by employers to provide such workers with all entitlements will not be tolerated."

- Reported in conjunction with Bay of Plenty Times