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.

The post Yippee, death to Trial periods… and I bet you never thought you would hear me say that! appeared first on HRtoolkit.

Introducing a workplace code of conduct and clear policies on sick leave/reporting absence.  Policies outlining the company’s stand on such matters, will reduce frustration and assist employees to understand your workplace culture and work expectations.  Lets examine the business impacts of a couple of very common low-level skiving practices that we come across regularly.  There are more scenarios covered in the HRtoolkit Quick Guide to Sick Leave

Recently, I was visiting an apartment undergoing a re-clad in the two hours I was there I saw the worst presenteeism.  Three workers had 2 ciggie breaks, before their morning smoko, and another worker stood on the scaffolding, in front of me, having an argument on the phone with his girlfriend for 20 minutes.   I suspect the re-clad on that particular job will not come in on-time and to schedule.  Showing up to work is not enough!

What is your policy around smoking breaks? Cigarettes may take years off your life, but they can also easily steal 30 minutes or more of daily productivity from a few extra quick ‘ciggie’ breaks.

And what about the guy on the phone to his girlfriend? Mobile workers need smart technology, for productivity and safety reasons.  Technology is often criticised for encroaching on our personal time, with smartphones creating an always-on culture, but the opposite also holds true. We can literally sit at our desks and skive – sending personal emails, checking our bank balance, browsing social media, or chatting to our friends overtly or via text messaging/Facebook messenger or other apps.

As an employer it would not be a useful use of your time to be continually checking on workers and it’s simply not possible in the case of remote workers.  With all workers, there is a level of trust required, in addition you need to set the standards early in the employment relationship and formalise them in writing through good policies and a code of conduct).

A common misconception of employers to think they can just lead by example, and nothing else should need to be said.  However, people do not share all the same values, or motivations. Our cultural and family backgrounds vary, which all feed into shaping our understanding of work. Having a code of conduct, fleshes out the day to day issues that arise in the workplace and provides suitable guidelines on what the business expects.

The post ‘Skivitis’… beware it’s catchy appeared first on HRtoolkit.

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.

The post Do Restraints of Trade actually restrain? appeared first on HRtoolkit.

This assertion is one I hear frequently in the Salon industry, but it is a belief that is fraught with danger for two major reasons:

1. The Independent contractor claiming they are actually an employee and therefore due holiday pay etc.
2. The IRD claiming that they are actually an employee and therefore the employer is liable for their tax.

Sadly, in both cases, an employer will not realise they have a problem until there is already a significant financial liability accrued against them.

The claim that they are an employee

Whilst everyone is happy and getting along the chances of this type of claim arising are minimal.

However, in a recent case I dealt with, the employee had been on the wrong agreement for 10 years, but she was happy with the flexibility it afforded her.  Out of the blue she got a call from her boss saying “clear your desk, you’re out”.  After the initial shock she, unsurprisingly, decided to get her own back.  Item 1 on her claim was 10 years of back holiday pay… she won.

When the IRD wants to be paid

Death and taxes are the only two certainties in life, and whether we like it or not the IRD likes to get paid.   So if it gets to the end of the year and “employee/contractor” gets a tax demand from the IRD which they can’t pay, there is a significant risk to employers that they take the line that “I thought my employer had been paying my tax”.

Admittedly, it is certainly not so simple that the IRD will immediately turn to the employer for the tax payment.  The employee/contractor and the IRD both have an onus of proof, but if they can prove the case then the employer will be liable for the tax, and this will generally be calculated on the basis that what has been paid to the “employee/contractor” is NETT and therefore the tax liability is the grossed up amount of that value.

Myth Buster about Employee status

The tax rules are such that, if you get more than 80% of your revenue from one source then you pay tax based on the lower “Company” tax rates, you pay the same tax as the “employee” rates.  However, this does NOT mean the person is automatically an employee just because they do more than 80% for one company, the ONLY automatic change is to their tax status.

How do I protect myself?

Firstly, you need to review the current situation, and take action as necessary:

1. Do you have independant contractor agreements in place for all people you engage?
2. Are you 100% certain that everyone has the same understanding as you?

How to rectify the situation?

If you are in any doubt about the peoples understanding of their status then open discussions with them, and keep notes of those discussions.

If their response is “no, totally happy and fully understand that I am a contractor”, then make sure you have a written agreement in place, and ensure that you have, in writing (e-mail or in the cover letter of an agreement) that they have acknowledged their understanding of the status.  In the event of things going badly, this will be a very important piece of your defence if they try to say they genuinely believed they were an employee.

If their response is one of shock or uncertainty about the implications of being a contractor or employee, then give us a call on 0800 HRTOOLKIT (0800 47 86 65) to discuss how to proceed.  Often it can be resolved quite readily when everyone is talking but can cause huge issues if it comes up in a dispute.

Help is available

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.

NB, we also have a Salon specific H&S Kit to ensure you are compliant with the new H&S legislation

The post Are they really Independent Contractors? appeared first on HRtoolkit.

Visit http://www.hrtoolkit.co.nz/product-category/employment-agreements/ to download legally compliant employment agreements, and if you have any questions, give us a call on 09 302 9935. We don’t change for those 10 minute questions and often a few moments with our experts is all you need.

The post Employment law changes come into effect on 1 April appeared first on HRtoolkit.

The Act also outlines the legal process for resolving employment problems including a free mediation service, and avenues for employee’s to take a case to both the Employment Relations Authority and the Employment Court.

The aim of the Act is to help build productive employment relationships, and ‘good faith’ is central to this process. It requires employers, employees and unions to deal with each other openly, honestly and constructively.

Good faith

The good faith provisions require both employers and employees to actively and constructively participate in establishing and maintaining a productive employment relationship.

Good faith provisions are also enacted in the process of negotiating contracts, dealing with such matters as  employee misconduct, or when an employer is proposing changes that may impact the employee’s role for example when there is a potential restructure.

In these situations The Act outlines the obligations of each party to act in good faith during these processes, The Act aims to clarify what information employees are entitled to during these processes.

Good faith includes the following three elements

• Parties must not act in a misleading or deceptive way
• Parties must be responsive and communicative
• Before making a decision, which may result in employees losing their job, the employer must give the affected employees sufficient information to be able to understand the proposal and then give them a proper opportunity to comment

Good faith is also wider than this. It is more than just following the letter of the law. It involves treating others fairly using common sense. Broadly, good faith requires employers, employees and unions to:

• Act honestly, openly, and without hidden motives
• Raise issues in a fair and timely way
• Work constructively and positively together
• Give each other relevant information ahead of when it is needed and as soon as possible, all information given should be carefully considered
• Be fully honest with each other
• Raise concerns or issues as soon as possible and respond to these quickly
• Keep an open mind, listen to each other and be prepared to change opinion about a particular situation or behaviour
• Treat each other with respect

Flexible work

Flexible working arrangements aim to improve people’s participation in the labour market and to better reflect modern lifestyles. Flexible working arrangements have been broadened to include all workers, not just caregivers, in order to assist employees find the right work-life balance for them and their employer including:

• Extending the statutory right to all employees to request flexible working arrangements
• There is no limit on the number of requests an employee can make in a year
• The employer must respond in writing to a request for flexible working within 1 month, with an explanation of any refusal

Rest and meal breaks

Rest and meal break rules are also flexible to balance the importance of these breaks with the needs of business continuity. The Bill says employees are entitled to reasonable rest and meal breaks to rest, eat, drink and take care of personal matters. The Bill enables employers and employees to negotiate, in good faith, rest and meal breaks that meet legal requirements and allow the business to work.

The Act allows reasonable limits to be agreed or imposed as to when rest breaks and meal breaks can be taken and it gives employers the ability to dictate when breaks will be taken, if they cannot agree with employees. It gives employees the right to be reasonably compensated where the employer cannot reasonably give the employee rest and meal breaks, however the Act still:

• Requires employers to pay employees for rest breaks
• Stops people contracting out of legal rest and meal breaks or the requirement to give compensation instead of breaks
• Does not overrule any other law that makes an employee take rest and meal breaks in a certain way

Continuity of employment and protection of vulnerable workers

The Bill gives more certainty and clarity to employers while keeping key benefits for affected employees including:

• Exemptions to SMEs employing 19 or fewer employees from having to take on employees affected by the work changing hands
• Timeframes for employees to choose whether or not to move to a new employer (elect to transfer) during a restructure involving vulnerable workers
• The current employer must provide the new employer with detailed information on each employee that is transferring. It also introduces a mechanism for apportioning liabilities for service-related entitlements between employers where the parties are unable to agree between themselves
• Provides the new employer protection from unjustified increases in employee costs or changes to terms and conditions of employment

Collective bargaining

The structure for employers and unions to negotiate and enter into collective agreements is bound by the duty of good faith during collective bargaining but does not require parties to reach a collective agreement. The parties can ask the Authority to declare that bargaining has ended and negotiate individual agreements.

• Employers are allowed to opt out of a multi-employer collective agreement (MECA) bargaining from the start if they have decided not to be a party to that MECA
• Employers don’t have to offer new employees, who are not union members, the same terms and conditions of the collective agreement for their first 30 days of employment
• Proportionate pay reductions are allowed as a response to partial strikes
• Advanced written notice of any proposed strikes and lockouts must be given in all sectors

Mediation

Mediation is a free service from the Ministry of Business, Innovation and Employment (MIBE), where an independent person sits down with both parties and tries to help them resolve employment issues. Mediations are held in a semi-formal, confidential environment. If employment relationship problems can’t be resolved by a mediator, an employee may take their case to the Employment Relations Authority.

Employment Relations Authority

The Employment Relations Authority helps resolve employment relationship problems. It does this by looking into the facts and making a decision based on the merits of the case, not on technicalities. At an investigation meeting’s conclusion, the Authority must (where practical):

• Give an oral determination, and a written record of that determination within 1 month or give an oral indication of the Authority’s preliminary findings to the parties (unless extra evidence is provided) and deliver a written determination within 3 months of the investigation meeting or when extra evidence is provided, whichever is later
• The Authority can only reserve its determination if there are good reasons why it is not practical to give either an oral determination or indication of preliminary findings. A reserved determination must be delivered within 3 months of either the investigation meeting or any extra evidence being provided, whichever is later.
• The Authority can also decide matters without holding an investigation meeting. In these situations, the Authority must give a written determination within 3 months of receiving evidence from the parties.

 Employment Court

The Employment Court hears and determines cases relating to employment disputes. These include challenges to the determinations of the Employment Relations Authority, questions of interpretation of law, and disputes over strikes and lockouts. An employee may raise a personal grievance with an employer with the Employment Court.

Personal grievances – If you receive a personal grievance letter don’t ignore it

Begin the process by having a HR professional assist you in assessing the personal grievance against you. Questions asked may include:

• Is the grievance raised within 90 days of when the employment issue arose, or if the employee has been dismissed, they have 90 days from the date of the end of the employment to raise their personal grievance?
• Did you follow good legal process during your dispute and or upon termination?
• Did you act in good faith during your process?
• Were matters discussed and dealt with in a fair and reasonable manner?

Your HR advisor will assist you to weigh up the risk associated with the claim, and this will often determine whether an employer decides refute the claim, fight the claim or come to a settlement agreement – often referred to as a full and final settlement agreement between the two parties.

If an agreement cannot be reached a party may elect to use the MBIE free mediation service to help resolve the matter.

What happens at mediation?

• A date will be agreed by the parties and you will be allocated a morning or afternoon session (allow at least 4 hours)
• Both parties will arrive at the mediation department and will be put into separate rooms
• The mediator will brief both parties on the process and then bring them into the room together
• Without interruption both parties will state their case, the mediator will ask some questions, and questions can be asked across the table
• Once discussions are no longer being productive the mediator will break you back into separate rooms and go over the strengths and weaknesses of your cases and the possible liabilities. Most do this by going through your worst case and best case scenario.
• The mediator will attempt to negotiate a settlement between the parties. You don’t have to reach a settlement, but the reality is that in most cases you will end up paying over some money in order to make sure the personal grievance claim doesn’t go any further. The average award for an employee to win in court is three months pay plus $7,ooo for hurt and humiliation
• If no settlement is agreed the employee then has two years to decide to take the matter further with the Employment Court.

Call us on 0800 HRtoolkit and we will talk you through the most cost effective ways to defend a personal grievance.

The post The Employment Relations Act overview appeared first on HRtoolkit.

The Government has made key changes to employment Law in New Zealand and we have updated our entire Employment Toolkit to ensure you have legally compliant documents and templates covering all aspects of your employment relationship. You can download the new documents here.

The Employment Standards Legislation Bill introduces changes to zero-hour contracts and helps enforce minimum employment standards to help protect vulnerable workers. These include a new infringement notice regime, clearer record-keeping requirements and tougher sanctions for the most serious breaches.

These changes will help prevent unfair employment practices and strengthen minimum wage and holiday entitlements including:

• When hiring, employers must guarantee to give employee’s agreed hours of work
• Employers won’t be able to expect employee’s to be available to work with no guarantee of hours without paying reasonable compensation
• Employers won’t be able to cancel a shift without giving employee’s reasonable notice or compensation, both of which must be set out in an employment agreement
• Employers won’t be able to make unreasonable deductions from wages
• Employers won’t be able to unreasonably restrict an employee’s secondary employment
• Employers will be publicly named if the Employment Relations Authority or Employment Court finds they have breached minimum standards
• Individuals can be banned as a manager if they commit serious or persistent breaches of employment standards
• Directors, senior managers and legal advisors can also be held accountable for breaches of employment standards
• Labour inspectors can now share information with other regulators such as Immigration NZ, IRD and the Companies Office
• Labour inspectors can now request financial or bank records from employers

How much money will these changes cost me?

For most businesses there won’t be any increase in compliance costs with these changes in legislation, the focus is on businesses not currently meeting their obligations. These businesses need to become compliant or risk facing financial penalties.

For more information on compliance, give us a call 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.

What are the penalties for breaches of the new legislation?

• Businesses found guilty of moderate breaches will be fined $10,000 for an individual and $20,000 for a company

• Businesses found guilty of serious breaches will be fined up to $50,000 for an individual and up to $100,000 for a company

What records will I need to keep?

An important section of the new legislation deals with clearer record keeping requirements for wages, time, holidays and leave. Employers now need to keep a record of the hours each of  their employees work each day, and the pay they receive for those hours. Additional hours worked by employees on salaries doesn’t generally need to be recorded, but minimum employment entitlements still need to be met.

Learn more

For more information about these changes to employment Law, give us a call 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.

Changes to the document library include:

Fixed-term, full-time, salary (hours as required) employment agreement
Fixed-term, full-time, salary (overtime or time in lieu payable) employment agreement
Fixed-term, part-time, salary (overtime or time in lieu payable) employment agreement
Fixed-term, part-time (hourly paid) employment agreement
Fixed-term (hours variable week to week) employment agreement
Full-time, salary (hours as required) employment agreement
Independent contractor employment agreement
Lower guaranteed hours employment agreement
Permanent, full-time (hours variable week to week) employment agreement
Permanent, full-time, salary (overtime or time in lieu payable) employment agreement
Permanent, part-time (hourly paid) employment agreement
Permanent, part-time, salary (overtime or time in lieu payable) employment agreement
Offer cover letter
Quick guide to employment agreements
Universal casual employment agreement
Universal fixed-term employment agreement
Universal permanent employment agreement

You can download the new documents here, or chat with our experts on 0800 HRtoolkit (0800 47 86 65) during business hours.

The post More detail about employment law changes appeared first on HRtoolkit.

If one of your team-members is employed as an independent contractor, but fits the description of a permanent employee, they are entitled to extra benefits including holiday pay and Kiwi Saver over and above their hourly or daily rate.

You can protect yourself and your business by answering the following key questions, and addressing any issues that may arise:

Does your team-member work regular hours and are they able to be flexible with their working hours?
Yes. They are likely to be a contractor
No. Your team member may legally be considered an employee

Is your team-member able to work for other people?
Yes. They are likely to be a contractor
No. Your team member may legally be considered an employee

Do they earn less than 80% of their income from working for your organisation?
Yes. They are likely to be a contractor
No. Your team member may legally be considered an employee

 If your team-member can’t work, are they able to contract a third-party to work on their behalf?
Yes. They are likely to be a contractor
No. Your team member may legally be considered an employee

Can you discipline or terminate their contract if your team-member’s work isn’t of a high-enough standard?
Terminate. They are likely to be a contractor
Discipine. Your team-member may legally be considered an employee

How long has your team-member been working for you?
As a rule of thumb, if you anticipate that they will be working for you for more than 12 months (particularly if they are working full-time), then it may be worth considering an alternative arrangement. 

Is your team-member set up to take advantage of being a contractor? Are they registered for GST, or claiming home-office expenses?
There is a risk that Inland Revenue (IRD) may bring a claim against you if your team-member fails to pay their tax. If your team-member is claiming the advantages of being a contractor, they would be hard-pushed to argue that they did not understand tax law.

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.

The post Some things to consider before employing contractors appeared first on HRtoolkit.

Types of employment agreements

Employment relationships vary widely from one to another, however there are essentially three main types of agreements.

• Casual employment – on an ‘as and when required basis’ only
• Fixed term employment – for a clearly specified temporary period only
• Permanent employment – could be on a full-time or part-time basis

Flexibility

Although employment law was changed in April 2016, you can still build flexibility into employment arrangements if you have a genuine business reason. But you need to be aware of the following:

• You can’t require employees to be available outside normal hours without a genuine business reason
• You can’t have unreasonable expectations on the availability of employees compared to the amount of work you are offering
• You can’t cancel shifts at the last minute or send employees home without either payment for the hours they would have worked, or mutual agreement to work those hours at another time.

Quick tips

• Check to make sure that your team is rostered to be at work when your customers want to use the business
• Review your roster regularly and notify your team of when you want them to work on a weekly basis
• Use a mixture of employment contracts with your team to allow flexibility

HRtoolkit has legally compliant, plain English documents covering all aspects of your employment relationship, subscribe to our Employment toolkit here.

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