Former restaurateur ordered to pay wife $24,000 after closure

Friday, 8 November 2019

Alfonso Mayorga was ordered to pay his wife $24,000 in damages after his Auckland restaurant went bust.

The Employment Relations Authority (ERA) has awarded the wife of a former Auckland restaurant owner $24,000 for lost wages, holiday pay and contractual damages.

Maria Varela applied to the authority seeking compensation for unjustified dismissal, unpaid wages, unpaid notice period and unpaid holiday pay entitlements she claimed her husband's restaurant owed her after it closed in March 2018.

Alfonso Mayorga's restaurant Alfonso Restaurants Limited (ARL) was established in September 2014, and employed between 14 and 20 staff, including Varela.

Varela's employment as executive manager commenced in April 2015. She was responsible for operations, book-keeping and payroll. Mayorga was the chef.

The business stuck financial difficulties in 2015 and took on a second, minority shareholder, Alistair Hutchison of Federal Pacific Group Limited (FPGL).

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However, Mayorga's representative at the ERA investigation, accountant Mahmood Raza, said Mayorga and Varela continued to have operational control after Hutchinson came on board.

Raza had been instructed to work with the couple by Hutchison to help them lift the performance of the restaurant.

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Due to cash flow problems Varela said she and Mayorga paid employee wages from their personal funds but Varela did not pay herself.

However, she continued to record the relevant wage amount due to her and paid the appropriate PAYE on the amount she would have received.

On March 8, 2018, Mayorga told Varela that ARL would cease trading and her last working day would be March 11.

Varela said she had been aware the restaurant would probably close due it its poor performance, despite trying new ideas suggested by Raza, which had failed to turn the business around.

A meeting held between FPGL and ARL, which Varela attended on March 13, established that the company shares were of no financial value.

Mayorga resigned as director of ARL and transferred his shares to Hutchison.

Raza said that it was agreed at the meeting that an all inclusive goodwill payment of $30,000 would be made to Varela and Mayorga, as well as their respective salaries up until the end of March.

Neither would have any claims against FPGL for salaries, holiday pay fees or anything else.

But Varela said she had only been a witness at the meeting and that the settlement of $30,000 only applied to her husband, not to her.

Mayorga confirmed the $30,000 had been paid as agreed. Varela said she did not receive any of it.

Authority member Eleanor Robinson, who investigated the application, determined that Varela was not unjustifiably dismissed, because she was aware of the financial difficulties the restaurant faced.

However, Robinson determined there were sufficient grounds to support Varela's claims of lost wages, for which she awarded $11,800.

According to the employment agreement between Varela and ARL, she was entitled to a two-month notice period to end the contract. Robinson awarded Varela $5400.

She was also awarded $7140 for unpaid holiday pay.