The Lone Star Tauranga restaurant has been put into liquidation, with former staff saying they are owed thousands in unpaid holiday pay. Photo / Sandra Conchie
Former staff of a Tauranga CBD restaurant say they are owed thousands of dollars in holiday pay, as the franchise owner goes into liquidation.
Lone Star Tauranga franchise owner Rycorlin Limited has entered voluntary liquidation, Lone Star New Zealand national operations manager Paul Steiner confirmed.
Steiner said the restaurant would stay open and was in the process of being sold to a new franchisee.
BWA Insolvency had been appointed to manage the liquidation of Rycorlin Limited, whose sole director is Jaqui Donaghy. She and husband Trevor Donaghy are shareholders.
The Bay of Plenty Times contacted Lone Star after being approached by a former staff member who claimed her former boss had withheld her and five former colleagues’ holiday pay from their final pay.
She said it was “unfair” for the business to withhold holiday pay entitlements.
“Our employer refuses to pay us what we are owed.”
She wanted to highlight the situation to warn others and “hopefully prompt the business owners to do the right thing”.
The Bay of Plenty Times agreed not to name the former staff, who left over six months for various reasons.
They claimed they were collectively owed at least $16,000 in holiday pay, and that numerous attempts to engage with their former boss had been “ignored”.
The complainants said they learned, in a letter from the Donaghys, that the business would be offered for sale.
One complainant said she was handed the letter two weeks after resigning.
“I felt very confused, blindsided. Jaqui never mentioned there would be any difficulty paying me what I’m owed. And she ignored my repeated requests to sit down with her to sort the situation out.”
The letter laid out how “difficult” trading recently had “taken a heavy toll” on company resources, prompting shareholders to decide to sell.
The letter said an administrator would be involved and the Donaghys had advice that employee entitlements – largely unpaid holiday pay – would need to be dealt with by the administrator.
The employees were second on the list of preferential creditors. If a sale progressed, “the ability to be paid out” would be part of the administrator’s process.
“We are sorry that we cannot be more definite about this aspect of matters ... we are appointing an administrator [to] ensure the affairs of the company are conducted in strict compliance with the law.”
Two other complainants, who claimed they were each owed $5000, said they were “extremely disappointed” by how they were treated after being “loyal employees” of several years.
Another former employee, who moved to Auckland for other work, said he was owed about $1000 in annual leave.
“It makes me feel quite angry, because when I left, I had a little bit of money saved up to tide me over, but now it’s almost all gone.”
Three of the group complained to Employment New Zealand, but were advised their employer stated they did not have the financial means to pay their “entitled final holiday pay” at this stage.
Employment NZ advised the complainants that if they wanted to pursue the matter formally, they could do so through the Government’s free mediation service or via the Employment Relations Authority.
However, the complainants said they believed mediation would be a “waste of time” as earlier attempts to engage with the Donaghys failed.
“Now we are faced with having to hire a lawyer to try and get our own money back. It’s gutting.”
Lone Star first opened in Tauranga in 1999 and is located on The Strand and the corner of Harington Street.
The Donaghys have owned and operated the Tauranga branch since about 2011.
Steiner said the Lone Star brand was proud to have a home in Tauranga and looked forward to continuing to serve locals and visitors.
“The restaurant will remain open throughout the transition, with continued support from Lone Star’s national team to ensure a seamless handover.”
He hoped the sale could be unconditional by the end of this week.
“It’s important the community knows we’re not closing our doors. We’re committed to maintaining business as usual and the transition to new ownership is already under way.”
He said that all staff would be retained as part of the transition.
“We are working closely with BWA Insolvency and the purchasers to ensure continuity of employment and that staff receive their entitlements.”
Taahare Begum, Employment New Zealand labour inspectorate investigation manager, said two complaints relating to Lone Star Tauranga were investigated.
“Both matters have been closed and currently there is no active investigation into the business.”
Begum said all employees must be paid holiday pay in accordance with the Holidays Act.
“Employers may not withhold final pay or holiday pay at the end of an employment relationship.”
The Ministry of Business, Innovation and Employment encouraged anyone who believed they were unfairly treated in the workplace to contact its service centre.
Bryan Williams, from BWA Insolvency, who was appointed the liquidator for Rycorlin Ltd on September 2, said he had not previously acted for the company nor provided any professional services.
″My pre-appointment involvement has been to consider the insolvent circumstances of the company and to provide information to the shareholders and the director as to how the company should deal with its circumstances through a formal state of insolvency".
He said options available to the company, at an earlier time, included the appointment of an administrator pursuant to the Voluntary Administration regime.
“During the liquidation, all known creditors, including ex-employees with unpaid entitlements, will be contacted as part of the liquidation process and provided with the documentation required for them to claim to the extent of their entitlements.”
Jaqui Donaghy was approached for comment.
Sandra Conchie has been a senior journalist at the Bay of Plenty Times and the Rotorua Daily Post for 25 years. She mainly covers police, court and other justice stories, as well as general news. She has been a Canon Media Awards regional/community reporter of the year.