Businessman to pay $250K for mistreating staff

Flaxmere employees have been awarded about $250,000 after working in conditions they claim verged on slavery. Photo File

A Hastings businessman has been ordered to pay $250,000 for keeping migrant workers in conditions they say "verged on slavery".

An Employment Relations Authority decision released this week showed Pegasus Energy Ltd, which formerly operated as BP2Go on Swansea Rd in Flaxmere, has been ordered to pay about $132,000 in arrears to two ex-staff members, and $120,000 in penalties, following a Labour Inspectorate investigation into company director Jag Rawat.

In evidence given to the labour inspector, the employees said they were subjected to working conditions that verged on slavery, Labour Inspectorate regional manager Loua Ward said.

"These employees were not paid the minimum wage, or holiday pay by sole director Jag Rawat.

"They were subjected to unlawful premiums being deducted from their pay and were at times working up to 16-hour shifts, with lesser hours falsely recorded in the business's records.

"The pair was made to live in accommodation provided by the employer and pay excessive amounts in rent, despite poor living conditions where they were required to sleep on the floor.

"The employees continuously received threats from Mr Rawat saying that he would cancel their visas and they'd be forced to leave New Zealand if they spoke up about the mistreatment.

"Mr Rawat also threatened trouble in the employees' home countries on return."

The seriousness of the breaches resulted in Rawat being personally liable for a further $24,000 in penalties.

It was "alarming" to see someone operating under such a well-established brand mistreat and underpay their staff, she said.

"Whether a company is a small business or a larger one such as this, the Labour Inspectorate will hold employers to account.

"We are always disappointed to find such blatant abuses of employment and immigration law in franchises such as this, and surprised these businesses aren't doing more to protect their brands", Ms Ward said.

"Underpaying and mistreating staff can reflect poorly on a business's brand for years to come.

"Franchisers must take a stronger approach in ensuring those who they lend their company name to are paying their staff behind the counter what they are entitled to under New Zealand employment law.

"Migrant workers are vulnerable in New Zealand and may not always be aware of their rights, or may be taken advantage of, which we've seen in this case. Mr Rawat saw himself in a position of power, and used this to his employees' detriment."

Rawat last year pleaded guilty to immigration and exploitation-related charges at Napier District Court.

A spokeswoman for BP told Hawke's Bay Today Rawat was no longer operating under the brand.

"An important point to note is that BP does not operate a franchise model – the BP 2go network is made up of independently owned and operated businesses.

"Having said that, BP takes compliance with the law extremely seriously and took action as soon as we became aware of this.

"The individual in question is no longer a BP dealer, and the BP2Go network has a strong understanding of BP's expectations."

Rawat was sentenced to five months' home detention in March last year, after pleading guilty to four charges of providing false or misleading information, and two charges of exploitation earlier this year.

Pegasus Energy Ltd was convicted and discharged of two other exploitation charges two months previously, after Rawat admitted the offences.