In New Zealand, scarcely a week goes by without news of workers who, due to the insolvency
of their employer, have lost their jobs and are owed sometimes thousands of dollars for unpaid
wages, holiday pay, redundancy payments or other bonuses. The focus of this article is the
mechanisms that exist in New Zealand law to ensure that such workers receive these unpaid
entitlements and the effectiveness of such mechanisms. The principal mechanisms discussed
are the treatment of unpaid employee entitlements as a preferential claim in the liquidation of
an insolvent company and the general powers in the Companies Act 1993 (NZ), which are
generally exercised by liquidators, to bring personal actions against directors and others for
misconduct on behalf of the creditors generally. The article concludes that New Zealand
workers are less protected than their counterparts in comparative jurisdictions, but argues that
any solution is unlikely to be found in insolvency law.
An analysis of the mechanism in New Zealand Law to protect employee entitlements in the event of employer insolvency and their effectiveness