Banned Company Director Ordered To Pay $48,000 In Penalties For Employment Standards Breaches

A Hawke’s Bay horticulture company and its owner, who is banned from acting as a director or manager of any company until 2028, have been ordered to pay penalties of $48,000 by the Employment Relations Authority (ERA) for breaching various minimum employment standards.

The company, Alam Horticulture (2017) Limited, was ordered to pay $32,000 and the business owner, Morshed Alam, a further $16,000 in penalties.

Authority Member Shane Kinley also ordered that the company and Alam pay four employees a total of $2,565 in wages arrears. However, this amount could increase as Mr Kinley ordered the Labour Inspectorate to re-calculate the arrears owed to one of the employees.

It was determined that the company and Alam had breached the Employment Relations Act 2000 and the Holidays Act 2003 by:

• not keeping sufficient wage and time records
• not keeping sufficient holidays and leave records
• not paying employees for not working on a public holiday which was otherwise a working day
• not paying employees at least time and a half for working on a public holiday.

The hearing followed a Labour Inspectorate investigation in the Hawke’s Bay area in 2021 during which a Labour Inspector identified potential breaches of the Employment Relations Act at Alam Horticulture (2017) Ltd.

It was also noted in the inspector’s report that Alam was banned from the directorship and management of any business yet was a part owner of Alam Horticulture (2017) Ltd and appeared to be involved in the day to day running and operations of the business.

The Labour Inspector said when they visited Alam Horticulture (2017) Ltd’s premises it was Alam who answered questions and he was the person who replied to emails on behalf of the business.

During the investigation into the company the Labour Inspectorate on numerous occasions asked for the employment records of the group of workers they were monitoring but these were not provided.

In his determination, Mr Kinley found that Alam was a person involved in breaches of employment standards “by virtue of the role he played as an officer of Alam Horticulture (2017) Ltd, where he had significant influence over the management and administration of Alam Horticulture (2017) Ltd.”

Simon Humphries, Head of Labour Inspectorate, said that although the arrears involved were for relatively small amounts, failure to pay the four workers what they were owed was a flagrant abuse of their rights.

“The amount is not relevant. Not paying employees what they are legally entitled to is unacceptable no matter whether the amount involved is $100 or $10,000.”

He said that although the breaches identified appeared to be systemic in nature, poor record keeping meant these could not be fully investigated. “Record keeping is a fundamental requirement for all employers, and the Labour Inspectorate takes failure to keep complete records seriously. As has happened in this case, employers who fail to keep complete records are liable for penalties.”

• MBIE encourages anyone who thinks they or someone else has been treated unfairly in the workplace to contact our 0800 20 90 20 contact centre number where their concerns will be handled in a safe environment.

Note:

In December 2023 Alam was sentenced to six months’ community detention after appearing at the Hastings District Court for contravening the Companies Act 1993 by breaching a prohibition on being a director of a “phoenix company” and failing to comply with a prohibition on managing a company.

A phoenix company is a commercial entity which has emerged from the collapse of another through insolvency.

Prior to the sentencing:

• In February 2016 Alam’s business DP Alam Horticulture Ltd went into liquidation. The next month he changed the name of another company of which he was the sole director to Alam Horticulture Ltd.
• Alam Horticulture Ltd bought all the assets and business of DP Alam Horticulture Ltd, effectively carrying on the business of DP Alam Horticulture Ltd.
• In June 2017 Alam Horticulture Ltd went into liquidation. The next day Alam Horticulture (2017) Ltd was incorporated with Alam being the sole director. He continued doing business under the altered company name.
• On 7 May 2019 Alam was disqualified from being a director for a period of five and a half years. This disqualification prohibited him from taking part in the management of a company.
• On 16 May 2019 an associate of Alam replaced him as director of Alam Horticulture (2017) Ltd but Alam continued to manage the company.
• During an interview in June 2021 Alam confirmed that day-to-day management of the company was his responsibility.
• Alam pleaded guilty in the Hastings District Court to two charges of contravening the Companies Act 1993 on 6 September 2023.

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