A globetrotting business mentor's firm has been fined $20,000 after a labour investigation found 33 employment law breaches.
An entrepreneur says he was "completely unaware" his events company was breaching employment law after a labour investigation found its workers were underpaid, and not given compliant contracts, correct holiday pay or sick pay.
Logan Elliott, who according to his social media is currently in the United States, is the sole director and majority shareholder of Christchurch-based entertainment business Highly Flammable Ltd.
He's been profiled by the University of Otago's Business School as an alumnus, pictured with Virgin founder Richard Branson and talking about the success of his business in growing to employ 100 casual workers.
On his own website, the business mentor says he coaches a small group of people through Zoom sessions to help budding entrepreneurs develop their businesses by offering advice including avoiding common mistakes.
But this month, Highly Flammable was fined $20,000 by the Employment Relations Authority for 33 breaches of employment law that affected six workers.
The business supplies jugglers, fire breathers and stilt walkers for events across the country and mainly hires workers on casual contracts. The workers were paid lump sums for their performances rather than each hour they worked.
One worker's wages were also halved for five months by the company with the intention of repaying her when the business was solvent.
The Labour Inspectorate concluded an investigation following the workers' complaints in early 2019, finding Highly Flammable had failed to provide compliant employment agreements to keeping correct records and paying staff what they were legally owed.
The inspectorate sought penalties of $70,000 from the company and also sought penalties from Elliott.
However, the authority decided soon after the parties had provided submissions on the issue about Elliott’s liability, the Court of Appeal granted leave in another, separate case to determine the level of knowledge required to establish liability under section 142W of the Employment Relations Act.
As the Court’s judgment may impact on the claim against Elliott, the authority adjourned the matter until that question is decided.
As a result the Employment Relations Authority only fined the company in its decision this month.
The maximum penalty for each of the 33 breaches was $20,000 and Highly Flammable could have been liable to pay $660,000 in penalties.
However, the penalty was reduced to $20,000 because Elliott engaged with the inspectorate's investigation and also paid the workers $19,500 in arrears.
The authority noted almost two thirds of this sum was paid before the Labour Inspectorate lodged legal proceedings.
It also took into account Highly Flammable had been running at a loss and deemed "technically insolvent" during the level 4 lockdown last year and the pandemic had further impacted its core business activity.
Elliott told Newsroom there were some “honest mistakes” made by the company and he was “completely unaware” it had been breaching employment law.
“As soon as we were made aware, we immediately took actions to resolve them, as we realised we had misunderstood some of the legalities around employment,” he said.
“As an entrepreneur it is crucial to learn from your mistakes and correct them with integrity – which is what my team and I have done throughout the process, as reflected in the ERA statement." – Logan Elliott, Highly Flammable
Highly Flammable’s breaches stemmed from its business set-up, leading to systemic underpayments, the Labour Inspectorate said.
Employees were paid a fixed rate depending on their role in the event and weren't paid for rehearsals, training, setting up or packing up an event. Workers travelling out of town were also not remunerated.
Highly Flammable said it was not aware the way it remunerated staff did not comply with the law until the Labour Inspector gave the company a draft report of its investigation.
Authority member Michele Ryan found that while there was insufficient evidence to conclude the firm intended to breach its statutory obligations, its failings could not be fairly characterised as inadvertent either.
Elliott’s evidence left an impression that Highly Flammable was inattentive to its obligations as an employer.
“Ignorance of the law does not provide Highly Flammable with a defence against the imposition of penalties and Highly Flammable must take responsibility the breaches that flowed as a consequence result,” Ryan ruled.
Elliott said the business would not be appealing the authority's decision.
“As an entrepreneur it is crucial to learn from your mistakes and correct them with integrity – which is what my team and I have done throughout the process, as reflected in the ERA statement.
“Overall we are happy that everything is finally wrapped up with this decision, as it allows our team to move on with providing great entertainment to bring smiles to peoples faces across New Zealand.”
*This article has been corrected to reflect that the Court of Appeal case is unrelated to Elliott.
