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Money doesn't talk, it swears*

By Claire Mansell - 14 Feb 2013

Employees agree to work for some kind of payment - be it wages, salary, or commission. This year's Waitangi Day repeat of the on-going Novopay saga shows how serious, and potentially devastating, not getting paid can be.  So what should you do if your pay fails to arrive?

When and how wages should be paid

Employers must ensure that their employees are fully, and fairly, paid. Employees must be paid on the day, and in the intervals, agreed with the employer in the employment agreement.

Legally, employers are required to pay wages in cash unless some other form of payment is agreed to in the employment agreement (which it usually is - the most common being payment by direct credit).

What if your wages are not paid?

The first step for employees who have not been paid should be to raise the issue with their employer as soon as possible. This is going to be the quickest and easiest solution, especially if the default is the result of an oversight or technical error.

If the employer fails to remedy the situation then a Labour Inspector from the Department of Labour can help. Labour Inspectors investigate complaints about possible breaches of minimum entitlements and can issue demand notices requiring an employer to comply with their legal obligations in relation to payments to employees.

Alternatively, employees may seek mediation of the problem in the Employment Relations Authority. Mediation is free, confidential and available to any employee or employer with an employment relations problem.

To be referred to a Labour Inspector, or to seek mediation, go to the Department of Labour's website ( or call 0800 20 90 20.

If the matter doesn't resolve at mediation, the Authority has the discretion to order not only payment of any money owed but also interest and legal costs. If the breach is deliberate or sustained, a penalty not exceeding $10,000 (if the employer is an individual) or $20,000 (if the employer is a company) may also be awarded.

A penalty is unlikely to be imposed if the default is inadvertent or a technical error.

Third party problems

Many employers now use outside payroll systems to take care of paying their employees. If something goes wrong with the payroll then the above position is unlikely to be any different.

This is because the responsibility to pay employees stays with the employer notwithstanding the fact they may have delegated the actual task to the payroll system.

The employer may be able to recover damages from the payroll system provider, but their obligation to pay their employees remains the same.

*Bob Dylan, It's Alright Ma (I'm Only Bleeding)


Claire Mansell


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