The former directors of a Dunedin based taxi company have been found personally liable for the outstanding $100,000 owed to its drivers.

The Employment Relations Authority (ERA) has ruled that Ronald and Maureen Grant are personally liable to pay four former employees a combined $97,735 in minimum wages and holiday pay arrears who were found by the authority to have been employees of the business but treated as contractors.

The couple claim they did not know they had breached employment law when they failed to provide the taxi drivers working for Southern Taxis with the correct employment entitlements. An ERA member described this as "wilful blindness".

An earlier ERA determination ordered Southern Taxis, which previously held contracts for Southern District Health Board and Dunedin Airport taxi services, liable for the wages however the business has since changed hands and the company is no longer responsible to pay the areas.

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Labour Inspectorate regional manager Jeanie Borsboom said the Grants knew the difference between contractors and employees.

"They provided the four drivers with vehicles, payslips, deducted PAYE and treated them differently from other contractor drivers employed by the business. At the same time, they failed to keep accurate records, pay at least the minimum wage and holiday pay entitlements and made unlawful deductions," Borsboom said.

"This decision shows that employers cannot claim lack of knowledge in circumstances where they should have turned their minds to potential breaches and that company directors cannot hide behind the corporate veil to reduce their liability."

Borsboom said the Inspectorate saw evidence of employees being treated as contractors across a number of sectors, including in labour-on-hire, construction, and with courier, delivery and taxi drivers.

"Unlawful use of contracting is increasingly a focus area for the Inspectorate. Where breaches are identified the Inspectorate will be holding employers to account and seeking penalties for all of the shortcomings in minimum employment standards," he said.

"There are just no excuses for employers to get this wrong or, worse, intentionally rort employees of their rights."

The Herald has been unable to make contact with Ronald and Maureen Grant.