Where is the Bill?

The Employment Relations Amendment Bill has been put before parliament.  However, it is still with the Select Committee after the first hearing, and they are not due to report on it until September 2018.  And then there are another 2 readings, before it finally gets Royal Assent (i.e. final approval).  And then there are another 4 months before any changes come into effect.   So, there is no need to panic, nothing is going to change for a while yet!

What are the proposed changes at this point?

Obviously, this is not law yet, however the proposed amendments, in summary are:

1. Trial periods will only apply if you have fewer than 20 employees
2. Rest and meal breaks will return to what they previously were
3. More rights for Unions (no surprises there with a Labour Government)

Are trial periods toothless?

Very sadly, the trial period legislation has proved to be exceedingly toothless, with the courts not strongly upholding the legislation as it is written.

The key bone of contention lies around the apparent removal of the “good faith” requirements of the employment relationship, i.e. apparently giving the Employer the right to fire at will and without risk of recourse within the first 90 days.  In general terms, the case law is showing that, whichever party is acting in bad faith, will lose.  So, if the employer gets to day 89 and says “thanks, but no thanks” without any prior discussions, then they will lose.  Equally, if the employee has been talked to regularly about issues and give a chance to improve within the 90 days, but they still try to push a personal grievance claim, then they will lose.

What we have long advised…

Because of this, our advice has always been to make sure you raise issues early, and, if you are considering a 90-day trial period termination, then do go through a formal process.  NB, we do have template trial period termination letters and invitation letters for our members, however these are deliberately not on the website as there is a high risk to you of incorrect use.  But if you do ever have need for them give us a call and we will talk over your risks and send you the templates if that is appropriate to your situation.

Yippee, Death to Trial Periods!!

But, I opened with the statement “Yippee, death to trial periods!”, surely, I was not serious??  Actually I am.

The Employment Relations Act has long held a provision for Probation Arrangements, and how these compare to trial periods are as follows:

1. Both have to be in writing in the employment agreement
2. Trial period is for a maximum of 90 days, but a probation period can be as long as you like
3. With the Trial period an employee is not supposed to be able to raise a Personal Grievance (but there is no mechanism to stop them doing so, it is only a legal defence), a probation period doesn’t hold any such protection
4. A probation period can specify a fast track performance management process which makes it very clear to everyone what is going to happen if they don’t come up to scratch.

The most common mistakes that employers make are:

1. Thinking they have a legal protection against a Personal grievance, whereas they only actually have a legal defence, and they still have to pay to defend themselves
2. Thinking that a new employee will get there “with a bit more time”, or “a bit more training”, but before they know it, they are at day 89 and they haven’t actually given the employee any direct or honest feedback
3. People raise grievance because they are angry, because they don’t understand what they have done wrong, and the employer has not articulated this well.

As such, Probation Periods (as opposed to trial periods) can be for longer periods, can provide a lot more clarity to both parties, and, though they don’t provide the legal protection against a Personal Grievance, the reality is that the Trial Period doesn’t provide much either!

So, where to now?

The current legislation still stands, until such time as the Employment Relations Amendment Bill is closer to completion, we will hold off making any significant changes to our templates until that time.  NB if you do download templates at this time, don’t worry, as part of our service to members we will send out a communication with any amendments you need to make to templates you have downloaded.  In the meantime, Probation Periods can be included in addition to Trial periods, and this may be something you wish to consider…. And our next HRtoolkit Service tips will be all about how to include them, so follow-us on facebook and/or watch out for our newsletters to find out more.

Call us to talk this through

Feel free to give us a call on 0800 HRtoolkit (0800 47 86 65), we don’t charge for those 10 minute queries, and often that is all it takes to solve your HR nightmares.

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Restraints of trade definitely have a bad reputation as being unenforceable, and I have heard many horror stories of salon operatives setting up shop in the immediate vicinity and nobbling your client base.  However, the good news is that they can be made to be enforceable.

What you can and can’t restrain

Legally you are allowed to restrict someone from stealing your clients.  However, you CAN’T prevent someone from earning a living.

Why do Restraint of Trades fail?

The most common mistake with Restraint of trade is putting in an unreasonable restraint such as “you shall not undertake work in competition within a 50 Km radius of the salon”.

Basically, this would restrict someone from earning a living in the same city as they are currently working.  This is considered unreasonable.  Unfortunately, if a restraint clause is found to be unreasonable then the whole restraint is found to be unenforceable, so you would not have a claim against them for setting up next door.

How do you make restraints enforceable?

For Salons a geographic restraint probably makes the best sense, so think about the area you want to limit.  For example:

“You shall not undertake work in the suburb in which the salon is based, nor in the immediate surrounding suburbs”

This would be appropriate for a Grey Lynn, Auckland salon as this would restrict someone from setting up in Ponsonby, but they could still set up in Parnell.  So, arguably, you are not limiting them from earning a living.

You also need to think about how long the restraint is for.  3 months may be too short a time period when you consider the cycle of your clients.  However, 12 months would probably be too long a restraint.  So, consider how often your clients visit you and base the restraint length on that.

Poaching Clients

The law is clear that you are not allowed to steal clients from an employer.  This is a matter of good faith and therefore a fundamental principle of employment and contract law.

As such I recommend that, in addition to the Restraint of Trade, you have a Non-competition clause, for example:

It is an important term of this contract that you must refer all business during the term of this contract that may relate to the business of the company, to the company and that after the termination of your contract, you will not for a period of six months from the date of termination approach or solicit business from any client, customer or contact of the company for the purpose of selling products or services in competition with the company.

In summary

Think carefully about what you want to restrict, and be reasonable in your restrictions, and put in place a non-competition clause.

Help is at hand

Call the HRtoolkit team on 0800 HRTOOLKIT (0800 47 86 65) for more help and advice, NB we don’t charge for the 10 minute issues, and in the vast majority of cases 10 minutes is all it will take our specialists to solve the issue with you.

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So, how can you, as an employer, be sure you’ve made a fair and reasonable decision? 

Here are some key questions to ask during your process; this advice is discussed in more detail in our DIY document library

• Did you investigate the issue?
• Did your employee understand the consequence of their actions?
• When you decided to undertake a formal disciplinary process did you supply the employee with:
  • a meeting date and time to prepare
  • all the information and potential consequences of their actions
  • the opportunity to have representation during the process
  • a clear outline of the allegations
  • a clear outline of the potential consequences and impact for the employee
• During the meeting:
  • Did you give your employee a reasonable opportunity to respond?
  • Did you genuinely listen and  consider what your employee had to say?
• After the meeting:
  • Did you consider the context, our disciplinary due consideration is a great form to use when weighing up the potential outcome of a disciplinary meeting
  • Did you communicate your decision clearly?
  • If the decision is to terminate an employee, it is always wise to issue a preliminary outcome, giving one more opportunity for feedback for the employee.

After the meeting, decide on a fair and reasonable outcome and advise your employee with written confirmation. Your employee may want to meet with you to discuss your decision. If so, be compassionate and discrete, think about what you would feel if you were in the same situation. If you are clear and confident, your employee will understand that you are making an informed and considered decision.

You will need to prepare yourself for the possibility of an emotional response from your employee, and it’s important that you remain calm and professional during this process.

A fair and reasonable process with compassionate communication will help you and your staff get through tricky situations, so take a deep breath and have a courageous conversation.

Subscribe to HRtoolkit for all the documents, legislation and advice you need to help you effectively manage your team.

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People raise personal grievances because they
are hurt, angry or upset, not because
they understand employment law.

Unfortunately some employees can be quick to threaten a personal grievance, and there are plenty of no-win-no-fee lawyers in New Zealand who make their money supporting these claims. The most important advice we can give you is not to panic, and not to ignore the claim.

So, what should you do if you are given a personal grievance letter?

Begin by assessing the case against you. If you have followed a clear and consistent employment and disciplinary process, there’s a good chance your employee will recognise this. However if you haven’t acted in good faith, it’s important to get expert advice on how to manage the risk associated with your choices.

• If your ex-employee has a solid case and you are in the wrong, we advise that you open a ‘without prejudice’ discussion. You are going to have to pay a personal grievance, so we suggest that you minimise your legal bill.
• If you have been fair, consistent, and have legally compliant tools in place, the claimant will have no grounds for a grievance. Write back to your ex-employee explaining why they don’t have a personal grievance claim. Often this will be the end of the matter.
• Occasionally a claimant will raise some good points, but be pushing their luck. In this case you can either consider having that ‘without prejudice’ discussion, or decide to write back and refute the allegation.

The average cost to lose a personal grievance claim at the Employment Court is $35,000, so it’s important to be aware that it may be less expensive to pay-out an ex-employee than to defend a claim. You have the right to negotiate a full-and-final settlement agreement at any time, which means both parties waive their rights to take further legal action against the other.

Don’t be nervous about grievance issues; just be fair, consistent and ensure you have all the legally compliant tools in place.

Can an employee bully a company?

The duty to act in good-faith in the employment relationship works both ways. No one is entitled to act in an intimidating manner in the workplace, and the principals of trust and good-faith also apply to employees. If a member of your team is actively undermining the business, we suggest you have some straight talks about what is, and what is not acceptable behaviour. If an employee then cries ‘bully’, initiate an independent investigation. A formal investigation will keep your decisions fair and reasonable, and people will be more likely to leave on good terms, minimising the risk of expensive repercussions.

Should I represent myself at the Employment Court?

This is one of those tricky situations where we don’t recommend doing it yourself. Give us a call on 0800 HRtoolkit  (0800 47 86 65) and we will talk you through the most cost effective ways to defend a personal grievance.

Learn more

Give us a call on on 0800 HRtoolkit (0800 47 86 65). We don’t charge for those quick questions, and often a few minutes with our experts is all you will need. Visit HRtookit.co.nz, our bills aren’t big but the cost of getting it wrong can be huge.

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CASE STUDY

You have engaged a new employee, the person has only been with your team for a couple of months but things aren’t looking good. Unfortunately the employment agreement wasn’t signed until after the employee started working with you, and you haven’t made time to give feedback on their performance.

The Employment Relations Act (black and white)

An employee cannot bring a personal grievance unless they can show an unjustifiable action by their employer, but this doesn’t define what an unjustifiable action could be.

• Section 67A (C) states “the employee is not entitled to bring a personal grievance”
• Section 67B (3) states “Neither this section, or a trial provision prevents an employee from bringing a personal grievance or legal proceedings on any of the grounds specified in Section 103 (1, B-G).
• Section 103 (1B) states “…affected to the employees disadvantage by some unjustifiable action by the employer”

So what are the grey areas in this situation?

Even though the law is clear that an employee can’t raise a personal grievance, there is no mechanism to prevent this from happening.

• The lack of feedback and performance management gives your employee very little time to rectify mistakes
• Failure to sign an employment agreement prior to starting work means that there is a defence that the the trial period is not valid because the employee has been previously employed (even if only for one hour)

How do you minimise the risk?

Quite simply, with empathy and understanding. People raise personal grievances because they are hurt, angry or upset, not because they understand employment law.

• Be clear before employment commences that the 90-day trial period will apply to their employment
• Make sure all employment agreements are signed before anyone starts work
• Talk to your team soon as concerns are raised about an employees performance – don’t put it off
• If your employees level of performance doesn’t improve, make it very clear that you are considering trial period termination
• Be sure that your trial period requires a shorter notice period than normal; more often than not you will pay-out your employee in lieu of notice
• Call in an expert to assess risk and review your processes

Employment law can be complex, but don’t resort to expensive lawyers, at HRtoolkit you can download plain English documents covering every aspect of your employment relationships. Subscribe to our Employment Toolkit here.

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The new CEO was a seriously high end practitioner with a great reputation. Unfortunately there was a high level of resistance to change, particularly from long-standing staff members.

To say that there was a clash of personalities would be an understatement. The new CEO tried to implement change and many staff either ignored instructions, or actively undermined them. And when pushed, the staff cried ‘Bully’.

Now, let’s be clear, no-one is entitled to act in an intimidating way in the workplace, but the principals of trust and good-faith apply to both employers and employees. It was obvious that staff weren’t being bullied. If anything, the staff members concerned were guilty of intimidating management, but allegations and counter allegations made it very difficult to identify the truth.

In response to the situation, our client’s CEO gave HRtoolkit a call. Within a couple of hours we had an expert consultant on-site ready to conduct an independent investigation. Our consultant quickly identified the facts, and the management team worked together with HRtoolkit to develop an action plan. This included coaching the CEO and having some straight talks with staff members about what is, and is not, acceptable behaviour.

The immediate issues were dealt with, but we also identified measures to prevent the recurrence of similar issues. Our client’s management team used the HRtoolkit document library to put in place an improved code of conduct and performance review systems which in turn improved patient care and staff satisfaction.

Don’t be nervous about discipline and grievance issues; just be fair, consistent and ensure you have legally compliant tools in place. And if you need expert support, our HR managers are only a phone call away.

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Many employment issues that have developed into serious employment problems, could have been avoided by taking a ‘no surprises’ approach to communicating with your team regularly. If things aren’t working out with a new employee, on a 90 day trial, you first need to speak to them about your concerns, confirm your expectations for the role and provide support.

If there is a performance “gap” you should meet regularly (fortnightly).  However if the employee is not grasping the role, It’s important that you have a courageous conversation long before you get to the point of ending the employment relationship. If you wait until day 89 of a 90 day trial period, your employee will be understandably upset and the risk of them raising a personal grievance will be significantly increased.

If do find yourself in the unfortunately position of needing to end an employment relationship under the trial period legislation, you need to:

• Ensure the relevant clause is in writing in their employment agreement
• Ensure the employment agreement is signed before the employee starts work

We have everything you need to help manage those tough decisions. Don’t be nervous about discipline and grievance issues. Just be fair, consistent and ensure you have legally compliant tools in place. Let HRtookit show you how.

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The problem our client faced, was that the intimidation had gone on for some time unreported, so the bully in question could have perceived that there was a level of acceptance of their behaviour. However, no-one is entitled to act this way in the workplace, and the principals of trust and good faith in an employment relationship apply to both employers and employees. Further to this, under our Health and Safety laws, everyone has a duty of care, to ensure that no action or inaction is harmful to another worker.

Using the HRtoolkit document library, our client invited their employee to a disciplinary meeting. As a result, he was given a written warning and put on a performance improvement plan. A condition of the warning was that the employee attended an employee assistance programme which involved personal coaching.

The employee was a big guy and had always used his size to bully and intimidate people. After coaching, there was such a huge turnaround in the his behaviour that within six months the employee was promoted.

HRtoolkit gave our client the confidence to stand up to a bully, helping them explain the impact of this behaviour on their team and business. It also gave them the courage to find a way to deal with the issue in a fair and reasonable manner. Our client lost at least four staff because they didn’t deal with this bully earlier, but with the help of HRtoolkit document library, they gained an effective and loyal employee.

At HRtoolkit we have everything you need to help manage those tough decisions. Let us show you how, click here.

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Invite your employee to a meeting
Let your employee know that you want to speak to them, this can take less than five minutes. Remember to tell your employe what you want to talk about, that their employment may be impacted as a result of the discussion, and that they can bring someone with them for support.

Discuss your concerns
Have a disciplinary meeting, explain the impact of their behaviour on the team and your business, then listen to what your employee has to say.

Make your decision
Decide on a fair and reasonable outcome, and advise your employee with written confirmation.

At HRtoolkit we have all the paperwork, legislation and advice you need to effectively manage your team. Let HRtookit show you how.

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But what are you legally required to do when you reach that point?

As with all dismissals, when dismissing for medical incapacity the employer is required to act reasonably and fairly and to meet the test of justification set out in the Employment Relations Act. This is a test of both the employer and employees actions. Were they fair and reasonable in all the circumstances at the time the dismissal occurred?

But what does this mean in reality? As an employer you must be able to justify your decision to dismiss an employee. You are required to give the employee a reasonable time to recover, and to enquire in a fair and open minded way about the employee’s prospects of returning to work.

So, what is a reasonable time to enquire about when your employee will return to work? There are no specific guidelines; however we would recommend that you follow up with an absent employee promptly and certainly no longer than within a month of their absence starting.   

There are a number of factors that you need to consider when dismissing an employee for medical incapacity including:

What does the medical evidence show?

What is the duration of the incapacity? Is there an imminent return to work date?

What alternatives do you have available to you?

What are the terms of their employment agreement?

How have you treated other employees in similar circumstances?

Was it a work place injury? As the ACC will pay the employee for absences after the first week, it is likely to reduce your ability to claim that financial cost is a relevant factor in determining whether the employee’s job can be held open.

What is the length of employment and probability of long term employment?

What alternative duties can be assigned to the person on a temporary basis? Please note, you do not have to create another job for the employee.

Under law you are entitled to be able to run your business, so take into account the following relevant business factors:

How easily can you cover the absence?  if the employee is critical to your business and their role is not easily covered by another person then you have a stronger argument to act promptly. 

How much does the absence disrupt your company? For small companies with only a few employees, one protracted absence can be critical, but for larger companies the impact will be significantly reduced.

What information do you need to obtain? It is essential you obtain all relevant medical evidence before making a decision. Unless you and/or your employee are medical experts then this information should come from a medical professional.

Before obtaining medical information, you will need to request consent from the employee for their medical information to be released to you. It is essential that you don’t do anything until you have received a medical report on your employee’s prognosis. Once you have considered the medical evidence, it’s important that you make a fair decision on the basis of that information. Once you have all the medical information it is critical that you give the employee an opportunity to respond.

If your employee refuses to give consent for release of the information, then you are entitled to act on the basis of your own knowledge and assumptions.   

If you believe the employee’s incapacity is likely to continue past a ‘reasonable’ date for return to work, then it is likely that the dismissal will be justified. However, it is also important that you consider alternatives and dismissal is your final option. 

Examples of other options to consider may be hiring temporary staff or allowing the employee to resume work on a part-time basis. You could allow your employee to perform light duties depending on their condition, but we suggest this is documented with a return to work programme which clearly outlines when and what duties they are reasonable able to do. This may be a service ACC are able to provide.

A good way to be prepared for these situations is to develop a sick leave policy which details how you deal with medical injuries and what the contractual entitlements are.

For companies who employ very few staff, it is even more important to have an engaged and productive work force and that sick leave and  injuries are kept at a minimum. If you only employee six people and one person is absent on sick leave, it can have a huge impact on your  productivity. With prolonged absences, staff morale becomes low and managers are faced with what to do with the employee, and how to replace them. 

Research suggests that a healthy workforce, improves company productivity by:

Attracting superior quality staff

Reducing the rate of absenteeism and time lost

Enhancing on-the-job time utilisation and decision making

Improving worker morale, which in turn lowers turnover

Download our Health and Wellness Policy and let HRtoolkit help you effectively manage your team.

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