Danielle Lendich was chief executive of Wendy's NZ before it was sold to Flynn Group. Photo / Supplied
The former owners of fast-food chain Wendy’s NZ, the Lendich family, have lost a bid in the Employment Relations Authority to overturn an improvement notice which breached the Holidays Act.
But the business’ former chief executive Danielle Lendich has hit back, arguing the decision has wider implications for all employers.
The breaches, which go back six years, involved a failure to pay employees for public holidays that were not worked but were otherwise working days, failure to correctly calculate and pay time-and-a-half for public holidays worked, failure to provide alternative holidays for employees who worked on public holidays, and incorrect calculation of annual holiday pay.
The Labour Inspectorate began investigating Lendco in June 2023 after Unite Union took Lendco to the Employment Relations Authority (ERA) for alleged breaches of a collective agreement.
Unite Union also raised concerns during the process about holiday entitlements affecting 33 union members, alleging Lendco was failing to pay employees for unworked public holidays when those days fell on otherwise working days.
Two main areas of dispute were the focus of the ERA hearing, including the requirement for an employee to “volunteer” to work on a public holiday to be eligible for payment, and the issue of whether Christmas Day could be an otherwise working day for any employee.
Lendco’s payroll system required employees to “volunteer” for public holiday shifts through its rostering system before those days could be considered “otherwise working days”.
Lendco argued that because Wendy’s restaurants were closed on Christmas Day, no employee could have an expectation of working that day, and therefore it was not an “otherwise working day”.
But ERA member Jeremy Lynch rejected the arguments, and said Lendco had effectively excluded employees from their statutory entitlement to paid public holidays.
“Under Lendco’s approach, the only way an affected employee can get a paid day off for a public holiday, is to first volunteer to work on the public holiday and then hope they will not be rostered to work the particular public holiday. The illogical nature of this approach is obvious,” Lynch said.
Labour Inspectorate investigation manager Katriona Ikenasio said the ERA’s ruling sends a strong signal to employers that they need to ensure they get the basics right regarding public holidays.
“Employers who look for loopholes in the system to avoid their statutory obligations need to know there are consequences,” Ikenasio said.
“Failure to comply with employment law may not only result in improvement notices – it could also lead to financial penalties and reputational damage.”
Lynch directed Lendco and the Labour Inspectorate to attend mediation to resolve other issues Lendco has raised relating to the improvement notice.
Danielle Lendich, daughter of Wendy’s NZ founders Danny and Dianne Lendich and former chief executive of the fast-food chain, said she was disappointed by the ERA’s determination.
Lendich said the business had received formal sign-off from the Labour Inspector in 2020 confirming its compliance with the Holidays Act following a significant remediation process.
She said the decision had wider implications for all employers.
“It highlights how changing interpretations of the Holidays Act by the Labour Inspectorate can result in repeated and costly re-remediation, even for organisations that have already met the then required standards,” Lendich said.
“Our intention has always been to provide flexibility for our people. By giving employees full control over their rosters, we believed we were offering a meaningful benefit that removed any expectation to work on public holidays – or on any particular day – unless they chose to do so."
Responding to Lendich’s assertion Jeanie Borsboom, head of the Labour Inspectorate, said it had taken action to require Lendco to remediate new breaches that have occurred since the previous enforcement.
“The ERA found that Lendco had structured its system to exclude employees from statutory entitlements to paid public holiday,” Borsboom said.
“Employers are responsible for ensuring they meet their obligations under the Holidays Act and this obligation continues following the completion of remediation.”
Lendich said the determination also raised serious issues for employers operating variable roster systems across a seven-day week.
That would include employers in hospitality, tourism, retail, healthcare, aged care, security and the gig economy.
She said that under the interpretation, any day of the week could be classified as an “otherwise working day”.
This could “potentially require additional payments for a sixth or even seventh day in weeks containing a public holiday, despite employees typically working only five days or less”.
“We question whether this outcome reflects Parliament’s original intent when drafting the Holidays Act, or whether it signals a growing misalignment between the law and the realities of an increasingly diverse and flexible workforce.”
It’s not the first time the Labour Inspectorate has dealt with Lendco.
In 2015 the company was issued an improvement notice for failing to calculate alternative holidays correctly, which Lendco subsequently complied with in 2017.
In 2016, Lendco entered into an enforceable undertaking for failing to provide entitlement and payment for annual holidays, both of which enforcement actions were complied with.
In May 2024 Wendy’s NZ was bought by American franchise operator Flynn Group for an undisclosed sum.
Tom Raynel is a multimedia business journalist for the Herald, covering small business, retail and tourism.