What happens if I ignore a Record of Settlement or Employment Relations Authority determination?

Times are tough for many small businesses, and we understand that sometimes there just isn’t the cash flow available to make large settlement or Authority-ordered payments all in one lump sum.  However, what happens if you, as an employer, decide not to comply with a Record of Settlement or a determination of the Authority?  The Authority has been dealing with a spate of such cases recently, and while it can be a frustrating process for the unpaid employees, one thing is clear: these matters do not go away if you ignore them. 

The Authority has made a compliance order in Satija v Epiphany Donuts Newtown Ltd [2025] NZERA 383, where the employer had entered into a Record of Settlement, and then failed to make payments on time.  In Satija, the Authority had issued a determination ordering the employer to pay the employee in accordance with the Record of Settlement, plus an award of costs in October 2024.  When this still wasn’t complied with by the time the matter returned to the Authority in May 2025, the Authority issued a compliance order, for both the employer and the director of the company to make payment within 14 days of the determination.  While the director had “indicated there are issues in terms of the availability of funds to make payment of the sums due”, the Authority had not received sufficiently detailed evidence to impose a payment plan. 

In Durgesh v Pro-Auto Cars Refinishing Ltd [2025] NZERA 379 and Jones v Install Pro Ltd [2025] NZERA 378, the employers had been ordered by previous Authority determinations to make payments for unpaid wages to the employees, and had failed to do so.  In both matters, the employers failed to fully engage in the Authority’s process, and in the absence of any defence, the Authority issued compliance orders.  In Durgesh, the compliance order was issued against the director of the employer company personally, as the company had failed to pay.  In Jones, the Authority noted that the employee may seek payment from the director of the employer company if the company continued to fail to pay. 

What is important to note from these cases, is that these cases do not disappear, and the Authority has powers to award compliance orders from people “involved” in a breach, which will usually include the directors of the employer company.  

The next steps here would be for the employees, if they are not paid following these compliance orders, to bring a claim in the Employment Court or the District Court. As the Authority pointed out in Durgesh, the Employment Court has powers to impose fines of up to $40,000, order property to be sequestered, or impose a sentence of imprisonment of up to 3 months.  In short, while ignoring these matters may buy you more time, it will not make the claim go away or reduce the amount you are ordered to pay.  Interest on unpaid wages continues to accrue until payment is made, you may need to pay costs on additional claims made against you, and far more serious consequences can appear down the line if you continue to fail to comply with Authority orders, including imprisonment. 

Instead, we recommend that you reach out to a legal adviser, who can assist you with engaging constructively with the Authority, and setting out the difficulties you have with making payment.  The Authority has the power to order payments be made in installments, which will allow the business to make payments in a way that it can afford, without being in breach of an Authority determination.  

Edwards Sluiters are Employment Lawyers based in Auckland who focus on getting practical outcomes for clients, employers and employees alike.