Mr and Mrs B. resigned from their employment after a couple of months giving two weeks notice in accordance with their employment agreement. At the end of the notice period Mr B. said that he was owed three days wages owed plus holiday pay.
Arrears of Wages
Mr B. claimed he never received wages for three days adding up to $248.57 and holiday pay of $330.00. The employer said Mr B. actually owed him $111.69 for telephone rental and toll calls together with other deductions which amounted to $461.94.
At the investigation meeting Mr and Mrs B. acknowledged that they owed $111.69 telephone rental and toll calls but denied that they owed the other amount from which deductions had been made. The employer had deducted a paid sick day taken during employment to which no entitlement had arisen.
The employment agreement allowed for paid sick leave to be taken in advance. Sick leave, however, only becomes an entitlement after six months employment. Because Mr and Mrs B.’s employment lasted only two months they did not become entitled to any sick leave. Therefore because there was an employment agreement that provided for deductions the employer was able to deduct from the final pay the one day sick leave taken in advance.
The employer was ordered to pay three days wages less the toll calls and sick day taken in advance.
Two lessons:
An employee is not entitled to pay sick leave until they have worked for six months. An employer can chose to pay this in advance but if an employee leaves before six months they owe that back to the employer.
An employer can only make deductions from a final pay or holiday pay if this is set out in an employment agreement. If there is no employment agreement and an employee leaves owing money that becomes a debt and the employer has to recover that debt in the normal way – they have no legal right to simply deduct it from holiday pay or the final pay.
If you needed any more reasons to have employment agreements – I have just given you another one.
This article originally appeared in the Southland Times Work To Rule column. Mary-Jane Thomas is head of Preston Russell's employment law team. Contact her by clicking here
