A New Zealand medicinal cannabis company linked to Australian firm Altum International, the parent of Kind Medical, has been directed by a tribunal to pay its former technical officer NZ$240,000 following nearly two years during which he received no salary.
A tribunal found that Kariki Pharma failed to pay wages to Alexis Lopez in July 2020 and again from November 2020 through to his resignation in July 2022. The company also failed to meet its obligations for holiday pay and KiwiSaver contributions.
At an Employment Relations Authority judgment last week, Kariki was ordered to pay Lopez $193,153 in unpaid wages, $13,939 in holiday pay, $5,936 in KiwiSaver contributions and $20,000 as compensation for "hurt and humiliation".
The company was additionally directed to pay a $10,000 penalty, with 75% of that amount to be awarded to Lopez.
Should Kariki be unable to meet the payment, Lopez has been granted leave to pursue four named directors for the outstanding amounts. These include Altum chief executive Ean Alexander, alongside Alexandra Seton, Paul Seton and Andrew Steadson.
Altum International holds a 48% stake in Kariki through its wholly-owned entity NTHC.
The hearing established that Lopez was paid normally when he joined the company in late 2019, but as Kariki's finances deteriorated, he agreed to accept shares in place of his salary during August, September and October 2020. From that point on, he received no further payment until his departure in mid-2022.
The company's directors argued that Lopez, who had relocated his family from Vietnam to take up the position, had verbally agreed to defer his salary until Kariki received NZ$2.5m from a prospective investor with whom it was in negotiations.
They contended that Lopez never raised the matter during board meetings, and that his silence indicated he understood and accepted the arrangement.
Lopez disputed this account, maintaining that he had raised his non-payment on multiple occasions and had made unsuccessful attempts to formalise agreements about it.
He argued that references to Kariki's financial position and statements that "no further liabilities were being incurred" related to other creditors, not to his own wages.
Lopez told the hearing he had personally invested $140,000 in the business — with other family members also putting in money — but that he grew increasingly disillusioned, ultimately resigning shortly after the prospective investor died in 2022.
In her judgment, Claire English of the Employment Relations Authority found "no evidence" that Lopez had ever agreed to defer his salary.
She concluded that all four directors had been involved in a breach of employment standards and that Lopez had been constructively dismissed.
"Mr Lopez has personal grievances for unjustified dismissal and unjustified disadvantage," English said.
The tribunal did, however, reject Lopez's claim that he should also be compensated for the three months in 2020 during which he accepted shares in lieu of his salary.
English wrote in her ruling: "I do not agree that he should now be able to claim salary for those months simply because it has now become clear over time that this was a bad bargain."
Alexander said in a statement that Kariki Pharma was "considering its options" in relation to the tribunal's decision.
"It is a dispute arising in respect of payments to the sole employee of a company, in which Altum is a non-controlling shareholder," he said. "The company's view is that the employee agreed to defer payments contingent on a mandated fundraising, a transaction that ultimately failed due to the death of the investor.
"After taking advice, the company participated in a process in accordance with NZ law and, having received a determination, is considering its options."
Kind Medical was named Best Place to Work at the The Cannabis Observer Awards in May this year.
