Construction company busted for unlawful wage deductions

Construction company busted for unlawful wage deductions

Tiger Construction NZ Ltd (trading as Tiger Scaffolds) has been ordered to pay $21,000 in penalties and a further $21,692 in employee reimbursements, for making illegal deductions from three migrant workers’ wages.

The Employment Relations Authority found Tiger Scaffolds in breach of employment agreements, after receiving complaints from the Philippines embassy on behalf of the workers.

In addition to the penalties, Tiger is now on the Immigration NZ stand-down list, which prevents companies from hiring new migrant workers.

What happened

In September 2018, Tiger Scaffolds recruited Filipino workers Medgar Lumuglas, Jesus Ng and Sugarray as employees, through an immigration advisory and recruitment agency.

On 28 February 2019, the Philippines embassy notified the Labour Inspectorate of allegations made by the workers that the company was making deductions from their wages without consultation or written consent. Plus, workers claimed they had not been offered the contracted hours, and were not paid for the hours they had worked.

The authority was able to find that the employees’ employment contracts contained general deductions causes, reading: “You authorise us to make deductions from any money we pay you, including any final pay for any money you owe to us.”

According to the payslips, as early as September 2018, each of the workers owed Tiger between $15,689 and $17,702, and weekly deductions were made for accommodation and training that they had never attended, ranging from $301 to $387 per week.

The authority came to the conclusion that Tiger Scaffolds had made a number of unauthorised and improper wage deductions.

On his part, Tiger’s sole director and majority shareholder, Hayden Davis, refused to participate in the process, stating he had ‘other things to do.’

Are wage deductions ever acceptable?

Interviewed by, Labour Inspectorate’s construction sector strategy lead Jeanie Borsboom explained that having a deductions clause in the employment agreement is not sufficient. Wage deductions must be reasonable and agreed to by the worker. Importantly, “employers cannot charge employees for operational costs that should be covered by the business.”

Are you experiencing employment issues?

According to Borsboom, the Filipino workers did the right thing by getting their embassy involved. She pointed out that “migrants are entitled to the same rights as New Zealand workers,” and the inspectorate works closely with embassies to ensure migrant workers are treated fairly.

If your employment issues cannot be resolved in mediation, the next step is to contact the Employment Relations Authority: click here to learn more about the steps in the Authority process.