A travel company that failed to get an employee’s written permission before cutting his wages and bonuses during the pandemic has been ordered to pay him more than $140,000.

Xiaoyu Kan worked at Worldwide Holidays Ltd (WHL), based in Auckland, as a marketing manager responsible for staff management, profitability and sustainability.

He’d previously worked for the company, which specialises in flights to China, between 2013 and 2016 before returning in 2017.

However, Kan’s latest tenure ended when he resigned on December 31, 2021, following a dispute with the company over his pay being cut.

Kan then turned to the Employment Relations Authority (ERA), claiming WHL twice reduced his salary without consultation and consent, didn’t pay his bonuses and used his annual leave entitlements to pay him while he was working.

The company rejected Kan’s claims.

According to the recently released ERA decision, in January 2020, the Covid pandemic forced the company to cancel several bookings, and two months later, when the country went into lockdown, WHL’s business was severely impacted.

As a result of the loss of income, WHL implemented cost-saving measures, which impacted employees' income.

The company told the ERA it had done this with the agreement of individual employees — a claim Kan denied.

In April 2020, his salary was reduced by 20% and in October it was reduced again by 50%.

Kan was paid bonuses until the end of 2020 but received none after.

The authority found WHL’s managing director Jing Jun Yu imposed the 20% reduction without consultation.

In relation to the later 50% reduction, Yu said all employees, including Kan, agreed to it.

But Kan’s evidence was that he had objected.

Yu claimed Kan consented to forgo his bonuses during a meeting in April 2020.

The decision noted that while the divisions Kan was responsible for had no work during the period, his contract included an agreement that if WHL did not make a profit, he would receive a bonus payment of $40,000.

The authority referred to an earlier Employment Court decision, which ruled the Government’s response to the pandemic did not suspend employee rights or employer obligations.

It found a deduction in wages could not be made without written consent from the employee.

Because WHL did not obtain written consent from Kan to any deduction, any reductions could only be made by variations to his employment agreement.

The authority was satisfied Kan did not agree with the proposal regarding the salary reductions and the non-payment of bonuses, nor did he agree to changes to his employment agreement.

“Whilst there may have been some discussion or communication as to WHL’s proposal, there is no written record of the terms and conditions of employment being varied, nor any other written record of the purported agreement,” the decision stated.

“The salary cuts and non-payment of bonuses were not implemented in a procedurally fair way and was not consistent with WHL’s good faith and contractual obligations.”

However, it was found Kan’s annual leave entitlements were correctly used to pay him when he was on three months leave.

Kan declined to comment, but Worldwide Holidays lawyer Garry Pollak told NZME in a statement that the amount awarded was a fraction of what was claimed.

“The arrears are wages during our lockdowns and border closures. The business is a travel business and the business pretty much closed as visitors could not come in or leave China.

“The employer thought it had agreement to reduce wages and temporarily forgo bonuses as the business was receiving almost no revenue. For this employee, it was not recorded in writing as it was for all other employees. It needed to be in writing.”

The authority ordered WHL to pay Kan $141,000 for unpaid wages, bonuses and holiday pay on the salary and bonus arrears.

Catherine Hutton is an Open Justice reporter, based in Wellington. She has worked as a journalist for 20 years, including at the Waikato Times and RNZ. Most recently she was working as a media adviser at the Ministry of Justice.