The bills continue to climb for a small painting and decorating business whose sub-standard employment practices and refusal to abide by orders have been in the spotlight since 2022.

KCR Boutique Painters and Decorators has now been hit with an order to comply with an improvement notice issued in late 2023, plus a $3000 penalty for failing to abide by it.

The company said in a limited response outlined in a decision this week by the Employment Relations Authority, that it had been unable to comply with the notice because it no longer had employees.

It also said records were held on business management software it no longer had access to and compliance would require an accountant.

Authority member Helen van Druten said in her findings, after an investigation into whether there were reasonable grounds to issue the earlier improvement notice, she did not accept that argument.

Trouble for the business began in September 2022 when the Labour Inspectorate received a complaint from a former worker alleging non-payment of annual holiday pay owed. Photo/123rf

Among a list of reasons why, she said having no employees would make it easier to comply because there would be no recent records to review.

Company director Katherine Courtenay-Roe (also known as Kate McLaren) did not respond to the recent investigation.

Trouble brews after worker’s complaint

Trouble for the business, whose address was registered to an empty lot in Hamilton, began in September 2022 when the Labour Inspectorate received a complaint from a former worker alleging non-payment of annual holiday pay owed when the job ended.

The ERA finding this week also revealed a Hamilton residential address was allegedly falsely used to register businesses operated by Courtenay-Roe, who managed a number of other legal entities, including Simply Girls Painters and Decorators.

Van Druten said the ERA was provided with a copy of a complaint to the Companies Office from residents at the Hamilton address claiming it was falsely used to register the businesses.

‘Close to breaking point’

NZME reported in September 2022 that Courtenay-Roe was facing financial penalties for poor workplace practices.

On top of an order for $22,000 to one of several workers she had sacked, she was hit with another bill for legal costs.

She told NZME at the time she was “close to breaking point” as her efforts to set up in business, primarily to employ young women, were crumbling around her.

Efforts to contact her this time have yielded no result, with phone calls going to an answer machine and she has not responded to emails.

Investigation expands to include ‘sampled’ workers

The Labour Inspectorate enforces and monitors compliance with minimum employment standards, as a division of the Ministry of Business, Innovation and Employment (MBIE).

In February 2023, KCR was told by the inspectorate an investigation had started into compliance with minimum employment standards.

Van Druten said in her decision released publicly on Tuesday that the investigation expanded to include four other “sampled employees”.

They were employees under the age of 20 and on minimum wage.

In March 2023, a notice requiring supply of employment records for the past six years was sent to KCR, followed by a request for wage and time records, holiday and leave records and employment agreements from July 2022 to March 2023 for five employees.

Employment agreements and wage and leave records were eventually provided and in November 2023, KCR was issued the improvement notice, requiring it to pay wage arrears and holiday pay, and maintain accurate wage, time and leave records in future.

Van Druten said KCR did not file an objection to the notice, and to date, there was no evidence of compliance with the notice and the money owed to the named employees remained outstanding.

She had relied heavily on the investigation report and corroborating evidence provided in making her decision after not receiving a submission from KCR.

Workers lose money

Van Druten said from the evidence presented, there was monetary loss by at least two employees.

She said errors identified in the sampled employees’ pay, plus indications in text messages that hours paid did not always match those worked in a spreadsheet provided, showed a “lack of systematic recording” of days and hours of work.

“I consider that the Labour Inspectorate had reasonable grounds to believe there was an issue of non-compliance in relation to multiple relevant acts and this warranted an improvement notice,” van Druten said.

In deciding if a penalty was warranted, she said no breach may have occurred but KCR failed to undertake the checks required by the improvement notice and therefore failed to assure officials it was compliant.

“KCR intentionally ignored attempts to communicate with it [the inspectorate] unless absolutely necessary,” she said.

Van Druten said the notice was issued after “multiple attempts” to engage following a legitimate complaint.

She said public confidence in the inspectorate would be undermined if it was perceived that parties could choose not to comply with an improvement notice.

On that basis and looking at similar cases, she considered a penalty of $3000 was appropriate.

Company ‘insolvent’

KCR told the ERA the company had not been trading since about September 2022 and was insolvent.

Van Druten said action had started to remove the company from the companies register.

Courtenay-Roe could not be held personally liable, even though she was found to be a person involved in each of the breaches of employment standards, because she had not been named as a third party and she was therefore not included as a respondent.

Van Druten said if the inspector wanted to seek to recover wages or money owed to one or more employees then a separate application needed to be made naming her personally.

An MBIE spokesperson told NZME that where a party failed to comply with an ERA order, a labour inspector could apply to the Employment Court for sanctions, which included a fine up to $40,000, seizure of property or imprisonment of up to three months.

Tracy Neal is a Nelson-based Open Justice reporter at NZME. She was previously RNZ’s regional reporter in Nelson-Marlborough and has covered general news, including court and local government for the Nelson Mail.