Selected cases

Employment Court of New Zealand · [2026] NZEmpC 133

Chen v Wei

However, liability does not extend to compensation for hurt and humiliation or legal costs from personal grievances.

Employment Court of New Zealand29 June 2026

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Quick read

  • Company directors must ensure their businesses comply with employment standards, including paying employees their full entitlements.
  • Chen v Wei [2026] NZEmpC 133 clarifies the personal liability of company directors for unpaid wages and entitlements under the Employment Relations Act 2000.

Use this to check

  • Company directors can be personally liable for unpaid wages and entitlements if the company defaults due to breaches of employment standards.
  • Personal liability does not extend to compensation for hurt and humiliation or legal costs from personal grievances.
  • Directors should ensure their businesses comply with all employment laws to avoid personal liability.

Decision snapshot

  1. What happened

    • In this case, Ms Wenting (Wendy) Wei was employed by Lanquan Ltd in two separate periods during 2023 and 2024.
    • The Employment Relations Authority (ERA) found that her dismissal was substantively justified but procedurally unfair.
    • Lanquan Ltd was ordered to pay Ms Wei $12,966.01, which included wage arrears, notice pay, interest, a penalty for breaching the Wages Protection Act 1983, distress compensation, and a contribution to her legal costs.
    • Lanquan Ltd, however, had sold its business in September 2024 and appeared to have no income or assets.

  2. What the court had to decide

    • The legal issue in this case was whether Ms Chen, as a director of Lanquan Ltd, could be held personally liable for unpaid wages, holiday pay, notice pay, distress compensation, and legal costs owed to Ms Wei under section 142Y of the Employment Relations Act 2000.
    • The Court needed to determine which types of payments fell within the scope of personal liability for directors involved in breaches of employment standards.

  3. What the court decided

    • The Employment Court ruled that Ms Chen could be held personally liable for unpaid wages, holiday pay, and notice pay owed to Ms Wei, as these arose from breaches of employment standards.
    • However, the Court clarified that Ms Chen was not personally liable for distress compensation or legal costs, as these payments did not result from breaches of employment standards under section 142Y of the Employment Relations Act.

Practical impact

Practical read

  • Company directors must ensure their businesses comply with employment standards, including paying employees their full entitlements.
  • If a company cannot meet its obligations, directors may be personally liable for unpaid wages and entitlements.
  • However, compensation for hurt and humiliation or legal costs from personal grievances generally remain the company's responsibility.

Useful next steps

  • Company directors can be personally liable for unpaid wages and entitlements if the company defaults due to breaches of employment standards.
  • Personal liability does not extend to compensation for hurt and humiliation or legal costs from personal grievances.
  • Directors should ensure their businesses comply with all employment laws to avoid personal liability.
  • Regular compliance checks and accurate payroll systems are essential for meeting employment obligations.
  • Seek legal advice early if your business is struggling to meet its obligations to employees.

What the Court decided

In this case, the Employment Court clarified the scope of personal liability for company directors under section 142Y of the Employment Relations Act 2000. The Court determined that directors could be personally liable for unpaid wages, holiday pay, and notice pay if these arose from breaches of employment standards. However, directors are not liable for compensation for hurt and humiliation or for legal costs awarded in personal grievance cases.

The Court's decision reinforces the importance of directors ensuring compliance with employment standards, as personal liability can arise if the company defaults on its obligations.

What employers should learn

For small business owners and directors, this case highlights the risks of personal liability when employment standards are breached. If your business cannot meet its obligations to employees, you may be personally responsible for unpaid wages and entitlements. This can occur even if the company is no longer trading or has been removed from the Companies Register.

To avoid these risks, ensure your business complies with all employment laws, including paying employees their full entitlements on time. Regularly review payroll systems, seek advice if you're unsure about compliance, and address any issues promptly.

Practical sense check

  • Ensure payroll systems are accurate and compliant with employment laws.
  • Pay all wages, holiday pay, and notice pay on time.
  • Address any employee complaints or disputes promptly.
  • Seek legal advice if you're unsure about your obligations.
  • Keep accurate records of all employment agreements and payments.

Practical checks for directors

To minimise the risk of personal liability, directors should take proactive steps to ensure compliance with employment standards. This includes understanding the legal requirements for paying wages, holiday pay, and notice pay, and ensuring these are met consistently.

Directors should also monitor the financial health of the business to ensure it can meet its obligations to employees. If the business is struggling, seek advice early to explore options for resolving issues without breaching employment standards.

Sense check

  • Understand your obligations under the Employment Relations Act 2000.
  • Ensure your business has sufficient funds to meet employee entitlements.
  • Implement regular compliance checks for payroll and employment practices.
  • Seek advice if your business is facing financial difficulties.
  • Maintain clear communication with employees about their entitlements.

Common questions

When can company directors be held personally liable for unpaid employee entitlements?

Directors can be personally liable for unpaid wages, holiday pay, and other minimum entitlements if the company defaults and they are found to have been involved in breaches of employment standards.

Are directors personally liable for compensation or legal costs from personal grievances?

No, directors are not personally liable for compensation for hurt and humiliation or for legal costs awarded in personal grievance cases. These remain the company's responsibility.

What steps can directors take to avoid personal liability for employment breaches?

The company must comply with all minimum employment standards, including paying wages, holiday pay, and notice pay. Directors should ensure strong payroll systems and compliance checks are in place.

Can employees recover unpaid wages from directors if the company has no assets?

Yes, if the company defaults on payments due to breaches of employment standards, employees can recover unpaid entitlements directly from directors deemed involved in the breaches.

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