In New Zealand, I became the employer who could not pay wages… a lose–lose predicament under the work visa system

That day, for the first time, I failed to pay my employees on time. It was not that I did not want to pay them; I simply could not afford to. I sat in my office, staring at the company account on my computer screen, its balance almost zero. My finger rested on the mouse, but I could not bring myself to click ‘Send’.

Outside, the sun shone brightly and life on the street carried on as usual. Yet for the first time, I clearly realised that the company might truly be unable to survive. More painful than the business failing, though, was the thought of the employees whose work visas I sponsored, who had staked their lives on this company.

 

The warning signs were there long before we could no longer pay wages

 

Orders dwindled, payments came in more slowly, yet costs did not fall by a cent. Rent, tax, insurance, wages, materials…

Every expense was eating into cash flow. Banks began tightening lending, and investors pulled out to cut their losses. The company account balance went from ‘tight’ to ‘dangerous’, then to ‘almost empty’. I tried cutting costs, delaying payments, selling equipment and even using my own savings to keep things moving, all to make it to the next payday. But numbers do not yield to effort.

That night, I realised for the first time: it was not that I did not want to pay them; I truly could not afford to.

This was a structural crisis.

For them, wages mean more than income

 

I knew very well that, for my employees, wages were more than money. They paid for rent, utilities, transport and daily living. They also provided the ‘proof of stable income’ Immigration New Zealand required whenever they renewed their work visas. More immediately, many of them held New Zealand Accredited Employer Work Visas (AEWVs).

 

Under this system:

Employment ≈ lawful immigration status

Employer ≈ eligibility to stay

 

If the company ran into trouble, they stood to lose not just their jobs, but their entire chance of remaining in New Zealand.

 

Why are they afraid to report it?

My employees have the right to report me for unpaid wages. The law is on their side; there is no question about that.

But the reality is that once a report is made, the employer’s accreditation could be revoked. If the company loses its ability to sponsor them, the employees’ work visas will immediately become invalid, leaving them very little time to find new jobs and apply for new visas.

Failing to find work means leaving the country. This is not simply ‘changing jobs’, but a struggle for survival with their ability to stay at stake. For most, it is a path they dare not take lightly.

By day, they worked, attended meetings and answered emails as usual. Everything looked unchanged. At night, they calculated how much longer they could hold on, while I repeatedly refreshed the bank account, wondering whether we could stretch things another week. They did not pursue their unpaid wages because they could not afford to lose their chance to stay. I kept the doors open not out of wishful thinking, but to buy them more time. We understood each other’s difficulties, yet neither side had a way out.

 

We dare not end it

 

Many people will ask: if you cannot pay wages, why not simply end the employment relationship?

Because we know that once it ends, the workers will immediately lose their work visas. Under New Zealand’s employer-sponsored system, being dismissed means not only unemployment, but the instant loss of lawful immigration status.

For workers on work visas, this means having to find a new job and apply for a new visa within an extremely short time. If they cannot find work, they have no choice but to leave.

 

So even though the company is struggling desperately to survive, we still choose not to dismiss them.

 

We help them by:

Delaying the termination of their contracts

Maintaining the employment relationship as far as possible

Providing references

Helping connect them with other employers

Buying time for them to change their visas

 

We hope only that every extra day we hold on gives them a slightly better chance of staying. It is a choice the system has forced upon us.

 

But years later, things went to the opposite extreme

 

The harsher reality is that, years later, some workers began suing their employers, alleging that they had not been paid any wages for years.

Legally, wages must be paid as required by law, regardless of the company’s difficulties or whether the workers agreed.

The law looks only at outcomes, not motives. An intensely ironic situation then emerges: employers once chose to retain workers and keep struggling businesses alive so those workers would not lose their work visas. Years later, that history becomes the basis for enormous wage claims, litigation risks and company liquidation.

This is a choice with no right answer:

Dismiss the workers at the outset, and they immediately lose their visas, potentially changing the course of their lives.

Choose not to dismiss them, and the company carries a long-term risk of wage arrears, potentially facing legal claims and insolvency liquidation years later.

This is the structural dilemma created by the system’s design.

 

A structural tragedy

 

This is a classic lose–lose predicament under the current work visa system. Having reached this point, I finally understand that it is not a question of who is right or wrong.

Under the employer-sponsored system, business risks are transferred directly onto individuals’ futures.

A market downturn or a funding collapse does more than put a company in trouble: it pushes hundreds or thousands of families towards the brink at once. Employees are afraid to report the problem, employers cannot afford to pay, and both sides are trapped between the system and reality.

Under the work visa system, no one is truly a winner. This is neither a story about a heartless boss nor an accusation on behalf of victimised employees. It is the lived experience of ordinary people caught between the system, reality and survival, pulling against each other, understanding each other, yet powerless to help one another.

We stand on the same tightrope. If it slackens, no one escapes unscathed. If you are walking this tightrope, may reality treat you gently.

 

About the author

Sonny Lam

Senior immigration lawyer at Queen City Law

Former immigration officer at Immigration New Zealand

With 15 years of litigation experience and experience as a former Immigration New Zealand officer, he currently works as an immigration lawyer at Queen City Law. After leaving Immigration New Zealand in 2015, he began specialising in immigration, offering sound professional advice on specialist immigration and employment law matters from the perspectives of both applicants and the immigration officers assessing their cases.