A single mother with two children has been awarded compensation after being unfairly dismissed by the owners of a cafe.

The Employment Relations Authority (ERA) found that Mary-Lou Alleda was not adequately consulted in the lead-up to being dismissed as the head chef at Pepper N Rocks Café, owned by Sai Mandir Limited (SML), on August 6, 2018.

After joining the business on May 21 last year, Alleda noticed it seemed to be struggling financially.

Alleda told the ERA she first became aware there were problems at the business because suppliers would come in asking about overdue payments. She also had to buy cafe items out of her own money.

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Alleda was informed by her employer that although the cafe would close on August 6, 2018, it would reopen after three weeks.

To ensure that Alleda did not search for another job, her employer offered to pay her $150 per week until the cafe reopened.

The cafe did not reopen and Alleda received only two weekly payments of $150 before these stopped.

The ERA found that while SML was experiencing financial difficulties and had a legitimate reason to end Alleda's employment, the company did not fulfil its employment obligations to provide her with information and nor was she given an opportunity to comment before the closure of the cafe.

The ERA also found that SML did not comply with any of the procedural tests that are required for a fair dismissal.

As a result, ERA member Rachel Larmer noted that Alleda's decision was "procedurally unfair".

"SML failed to follow a fair or proper process, and did not adequately consult with Ms Alleda before she was dismissed."

Larmer also noted that the company's approach left Alleda in a difficult position.

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"SML effectively left Ms Alleda to fend for herself and speculate about her employment status," Larmer said.

"It dangled the offer of weekly payments to her and then unilaterally stopped them after making only two payments. It suggested she would have ongoing employment because the cafe would reopen soon, but that didn't occur."

The ERA ultimately ordered SML to pay Alleda $15,325, consisting of $10,000 for distress compensation, $4095 pay in lieu of notice, $1159 for holiday par arrears and $71.56 to reimburse her filing fee.