Cleaning companies penalised $55,000

Two Timaru cleaning businesses have been penalised for treating permanent staff as casuals following a Labour Inspectorate investigation.

Two Timaru cleaning businesses and their owners have been penalised $55,000 for treating permanent staff as casuals following a Labour Inspectorate investigation.

Cleantime Solutions and ‘Busy Bees’ employed 53 employees and misclassified 29 of them as casuals when their working arrangement meant they were, in fact, permanent employees and entitled to all of the associated benefits. 

By misclassifying their workers, they failed to provide basic minimum entitlements such as paid sick and bereavement leave and payment for public holidays.  The businesses were able to secure an unfair cost advantage over their competitors as a result of their non-compliance.

Even though Cleantime had paid the casual workers an eight per cent loading to reflect annual holiday pay, their misclassification means they must pay these amounts again, in the form of proper annual leave entitlements. The two businesses owed nearly $15,000 in arrears to these employees.

As well as having to repay and remediate their workers, Cleantime has been penalised $40,000. Its owners, Binesh Shukul and Ranjana Reddy, were individually penalised $10,000 and $5,000 respectively.

The penalties follow an ERA determination in November 2018, which found Shukul and Reddy breached the Holidays Act 186 times, involving non and incorrect payments, with arrears owed to 29 employees, and inaccurate record keeping relating to 53 employees.

Labour Inspectorate regional manager Jeanie Borsboom said the ERA penalties send a clear message that misclassification of workers to avoid minimum standards will cost employers significantly more than treating workers correctly and paying the right amount in the first place.

The determination calls for franchises to be mindful to assure employment standards exist throughout their franchisees. Though Ms Reddy has since sold Busy Bees, any business exploiting their workers can have a damaging effect on the entire brand name,” said Borsboom.

“Customers can make an active stand against worker exploitation by choosing not to buy from businesses which breach employment standards.

Employment Services has guidance for both employers and employees on employment rights and obligations, and guidance notes on Holidays Act payroll compliance here.

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