Do Restraints of Trade actually restrain?

Posted on September 26, 2017 - 4:48 pm by Lisa Mackay

NB this article is equally applicable to employees and Independent Contractors

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.

‘Skivitis’… beware it’s catchy

Posted on May 30, 2018 - 4:23 pm by Lisa Mackay

Skiving off work, can take many forms. There are the easily recognisable moments in a working day when you know employees are not technically working – often termed ‘ low level’ skiving. Then there is the more problematic ‘presenteeism,’ where people show up to work, but are not engaged and productive. Even more serious to the business bottom line is the practice of employees taking non-genuine sick leave. A small amount of ‘downtime’ has always been tolerated, for example a quick chat around the water-cooler, we are not robots after all. However skiving should not be overlooked, as it is can be a real cost to your business.

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.

Yippee, death to Trial periods… and I bet you never thought you would hear me say that!

Posted on July 16, 2018 - 12:36 pm by Lisa Mackay

January saw great headlines about the end to trial periods and return of the workers right. But since then there has been radio silence, so what is actually happening?

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:

Trial periods will only apply if you have fewer than 20 employees
Rest and meal breaks will return to what they previously were
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:

Both have to be in writing in the employment agreement
Trial period is for a maximum of 90 days, but a probation period can be as long as you like
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
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:

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
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
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.

Restrictions on the use of the 90-Day Trial Period from 6 May 2019

Posted on April 11, 2019 - 10:28 pm by Lisa Mackay

If you are a company with less than 20 employees – there is no change. You are able to continue using the 90 day trial period with confidence, with one note of censure – your 90 day trial period clause must be compliant with the latest legislation. Unfortunately, we have had several companies phone us wanting to enact a 90-day trial termination, but when we review their 90-day trial clause it is not legally compliant. Don’t get caught out, ensure you have a proper trial period clause.

Companies with MORE than 20 employees – If your trial period starts on or before 5 May 2019 it will continue to apply.

From 6 May 2019 if you have more than 20 employees – you are no longer able to use the 90-day trial clause. You will have to alter your employment contracts:

You will need to remove the 90-day trial clause from your employment contracts by 5 May 2019.

From the 6 May employers can use the probationary period clause in their employment contracts to assess new employee’s skills, fit and their skills and performance.

Under a probationary period, you will need to follow a fair process before potentially dismissing an employee. Unlike a trial period, an employee who is dismissed in accordance with a probationary period clause can raise a personal grievance or other legal proceedings in relation to the dismissal.

Therefore, employers need to actively manage the performance of their employees and ensure that any references to procedural elements contained within the employment agreement (such as a monthly review, or a review at the completion of the probationary period) are followed as agreed.

There is no fixed period for a probationary period and can be of any length but should not be too lengthy. A period of 3 months would be normal. The probationary period clause should be inserted in place of the trial period from 6 May 2019.

Need a probationary clause for your employment contract?

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 5-minute queries, and often that is all it takes to solve your HR nightmares.

Ensuring you have a robust recruitment process is essential to gaining the right staff for your business. Making the right recruitment decisions is critical. A wrong hire can cost you 6months wages plus the extra cost of recruitment and re-training a replacement staff member If you haven’t already, take a good look at the recruitment section of the HRtoolkit document library.

Enforced Rest and Meal Breaks – legislated from 6 May 2019

Posted on April 11, 2019 - 11:36 pm by Lisa Mackay

As of 6 May 2019, rest and meal breaks are to be more prescriptive. These are to be agreed between the employer and the employee. Where these rest and meal breaks cannot be agreed then the breaks will be in the middle of the work period (so long as it is reasonable and practical to do so).

The number and duration of rest and meal breaks depend on the length of the work period. Here is a helpful guide:

Between 2 hours and 4 hours One 10-minute paid rest break

Between 4 hours and 6 hours One 10-minute paid rest break and one 30- minute unpaid meal break

Between 6 hours and 8 hours Two 10-minute paid rest breaks and one 30- minute unpaid meal break

Over 8 hours Entitled to breaks as if the work period has started again; e.g. if they work more than 2 hours but not more than 4 hours on top of the 8 hours already worked (a twelve-hour shift), they get another 10-minute paid rest break

A work period is defined as the period beginning with the time the employee starts work (in accordance with their employment agreement) and ending with the time at which they finish work (in accordance with their employment agreement). It also includes the time where they are on an authorised break.

There are some exemptions: Some employers will be exempt from the requirement to provide rest and meal breaks as above if:

Those engaged in the protection of NZ’s national security
The employer is engaged in providing an essential service where continuity of service is critical to the public interest, including those services which affect public safety,
Where the continuity of service is critical to NZ’s national security
Where the employer would incur unreasonable costs in replacing the employee during the rest and meal breaks.

If an employer is exempt, they may agree with the employee that breaks are to be taken in a different manner. If they are unable to reach an agreement an employee is entitled to compensatory measures; for example, time off work at an alternative time during the work period and/or financial compensation.

What this means for employers:

The impact of this legislation will affect smaller business with just a few employees, to a greater degree. Cafe’s and sole operators in retail, will need to plan carefully as the burden is on the employer to ensure that the employee is able to take their rest and meal breaks.

Employers may need to adjust the way they currently work to allow for rest and meal breaks to be taken at specific times. There will likely be a settling in period in relation to getting things right, but long-term non-compliance may leave you open to the risks of personal grievance or disadvantage claims.

Employment agreement rest and meal break clauses should be checked and may need to be amended to be compliant. This may require a variation to agreement to be issued to any current employees. If you require a “Variation to Terms of Employment Letter” for this purpose click here

Do I need to pay people during the COVID resurgence ?

Posted on August 13, 2020 - 10:04 am by Lisa Mackay

Obviously, Auckland is back up to Level 3, and the rest of the country is at Level 2 as of midday today (12th August 2020). So the question being asked is do I have to pay people for the next 3 days?

To help you work this out you need to check a few things:

Does your employment agreement contain a Force Majeure clause? And if so, does it specifically reference Pandemics? If the answer to both questions is yes then you need to observe the requirements of that clause. For example, it may allow for unpaid leave or for employees to be required to take annual leave
Do you have a lower guaranteed hours clause in your employment agreements? If so then you need to observe the requirements of that clause. Take note of minimum payment requirements e.g. minimum 3 hours pay if a shift is cancelled later than 12 noon the previous day
Have you received the second subsidy, and are you still within that 8 week period? If so you will be governed by the minimum requirements of the subsidy declaration i.e. a minimum of 80% pay. NB that subsidy was for an 8 week period and applications opened on the 10^th June, so many will be just in the last few weeks of that subsidy period
What have you consulted with your staff about and what was the timeframe covered by that consultation period? If you consulted with your staff about changes to their terms of employment during lockdown then you may have a situation that you are still covered by the terms of that consultation. However, I would be careful of this approach as many of us thought lockdown was behind us.

If none of the above applies then what?

Simply put, the terms of your employment agreements apply, so if you contract states that (e.g.) you are paid 40 hours a week, or a salary of $XX,XXX in 52 equal instalments, then you need to honour those clauses.

There is nothing to prohibit you from asking your employees if they want to take leave, but unfortunately, you don’t have any rights to require them to take leave at short notice unless you have a contractual right as identified above.

Can I consult to change things?

At this stage the Level 3 restrictions are only in place for 3 days. I sincerely hope that they will not be extended, however, we are all in the wait and see phase at the moment. I will obviously be monitoring the situation and will provide more guidance if things extend.

However, if you are in the position that you do need to immediately consult with your staff then the Isolation Payments template letter published in April will help get you started on what you need to consult with your team.

Stay safe everyone, and shout out if you have any questions

Cheers

Lisa Mackay

Varying terms of employment and are they willing and able to work?

Posted on August 17, 2020 - 1:44 pm by Lisa Mackay

As of 12 noon on the 12^th August Auckland went back to Level 3 restrictions and the rest of NZ went to Level 2. Sadly, the reality is that the likelihood of further outbreaks in the future is high, and the level of government subsidy that will be available will not be unlimited. As business owners you do need to:

Consult with your staff about any changes to their terms of employment,
You do need to present strong business reasons for any changes that you are proposing
You do need to genuinely listen to your employees feedback about the proposals before making any final decisions.

Mechanisms to Build flexibility into agreements

The range of options about what you can propose (with justification) can range from 100% flexibility to take employees to zero pay without notice, through to giving a guaranteed level of income (e.g.) we won’t flex you below 50%.
The 2 main mechanisms by which you can build flexibility into your agreements to deal with the COVID situation are:

Introducing or varying your Unforeseen Event or Natural Disaster (Force Majeure) clause to ensure it specifically references Pandemics
Introducing a lower guaranteed hours clause into your employment agreements.

We recommend that you get us to do a quick review of your employment agreements to see if further changes need to be made to your employment agreements.

New Template to vary terms of employment

Experience has shown that the amount of notice that we will be given about restrictions coming into place is minimal, and certainly not sufficient time to execute a proper consultation process. As such, many employers are now looking at ways in which they can build further flexibility into their employment agreements.

I have developed a new template to deal with this consultation process which is now available by clicking on this link. This is free for members or can be purchased as an individual document for $79 + GST.

Are they willing and able to work?

Sadly the latest COVID 19 restrictions have also created the latest round of employees who are using this as an excuse not to come to work, or not to follow reasonable requests to work from home.

The law states that if someone is WILLING AND ABLE to work then the terms of their employment apply and must be met unless you consult to change those terms of employment.

The following tries to break down that phrase:

Are they willing to work?
This could be considered as relating to the employee’s choices in relation to the situation. So, if you have:

work available
which can be done in accordance with social distancing protocols
And there or no other barriers to them working

… but they refuse to work, then they may be considered as not WILLING to work

Are they able to work?
There are 2 key times when the ability to work will be restricted:

Due to the company being closed due to COVID 19 restrictions
Due to the individual requiring to isolate due to COVID 19 factors. NB the COVID-19 Leave Support Scheme is now available for all employees (not just essential workers) and information can be found at https://www.workandincome.govt.nz/covid-19/leave-support-scheme/index.html

Assessing the situation and what you can do

As a business owner, many of us are struggling to keep the business afloat, during a period of huge uncertainty. Government subsidies certainly help, but they by no means cover all the bills, and there is a large shortfall that business owners are having to self-fund. As such it can be easy to jump to the worst conclusions about your employee’s motivations for refusing available work. However, now more than ever, you need to ensure that you are making justified and fact-based decisions before you risk breaching someone’s terms of employment.

The following are some steps to help you assess if the concerns being cited are genuine, or if an employee is malingering:

Health and Safety concerns – do you have protocols in place for safe distancing etc? And, have you clearly communicated these to your employees?
Cross territory travel – if an employee needs to cross the boundary between restrictions zones (currently Auckland V’s non-Auckland) then have you provide them with a letter on company headed paper to assist them with making this “crossing” without having to justify their travel every day?
Refusal to do work from home? Doing paperwork, reviewing documents etc may not be part of their normal duties, but, provided this is within their skill set and they have the necessary facilities to do this (e.g. access to a computer) then this kind of request would not normally be considered unreasonable. So a refusal could be considered a disciplinary matter
I have “at-risk people” at home and don’t want to risk cross-contamination. The ministry of health guidelines layout those people who are at risk so this would be the first step to check if the claim is valid or not. If you are still unsure of the validity of the claim you may be able to ask for further medical information. Contact us if this is the case.

You are allowed to push back

Obviously, I have had quite a few calls about this issue, and the reality is that if you push back on those employees who already know that they are “exaggerating” their concerns, they will usually back down pretty quickly. And for those with genuine concerns then you are able to quickly get into a far more co-operative and honest discussion about how you can resolve issues. So don’t be afraid to push back, just do so with the understanding that the situation may well be genuine.

HR is NOT scary
Most business owners can get a little scared when approaching a situation like this but if you fully understand the process, then it’s not scary and it’s quite straight forward.

The HRtoolkit has over 88 specific guides and templates and $349 + GST gives you access to all the documents. You may also want to consider upgrading to our DIY expert package for $129 + GST per month (12 month term) which gives you access to the document library and unlimited phone and e-mail support.

We are here to help

If you have any questions then please call Lisa on 021 741 544

Minimum wage up 31%, how do you incentivise higher paid staff?

Posted on February 11, 2021 - 12:15 pm by Lisa Mackay

Minimum wage is increasing to $20 per hour with effect from 1 April 2021 which represents another 5.8% increase, or a 31.1% increase over the last 5 years. Unfortunately, this is about 3 times the rate of inflation over the same period, and this rate of increase is liable to continue until such time as the Minimum wage and the Living Wage are in alignment. Or, in other words, someone who was on minimum wage in April 2016 of $15.25, would now be being paid $16.42 if they had received CPI increases each year.
Whatever your political view-point on this, there are 2 key issues for employers:

Affording the increase in pay for those staff who you are paying minimum wage too
How to maintain the differential for those people who are already paid above minimum wage, but the differential is being eroded? I.e. a person who was paid $20 per hour in April 2016 and has had CPI increases each year since then, will currently be on $21.54. (Ref RBNZ Inflation Calculator)

Who gets paid minimum wage?
My experience is that most small business owners aim to pay above minimum wage wherever possible. However, for those employee who are unskilled, lack experience, or are poor performers it is tough to justify or afford higher pay. Further, even though the minimum wage has increased, the amount that you can charge clients for services provided has not kept pace with that increase so there is, for many, a limited ability to recoup those increased costs.

Is money a motivator?
No. People don’t work harder because they are paid more money, however, lack of money (or perceived lack of money) is very definitely a de-motivator. 5 years ago reaching the heady heights of (e.g.) Team leader on $20 an hour (or more than 31% over minimum wage) was pretty good. But 5 years later that team leader who has had CPI increases is now being paid $21.54 or only 7% above minimum wage is most likely feeling somewhat less valued.

How do you keep the value level, even if you can’t afford to pay more?
Meeting minimum wage requirements is a legal requirement, you can’t avoid that. But, awarding those same levels of percentage increase across the board is out of reach for most businesses. So, how else do you motivate people without it being cost-prohibitive?

Some things to consider are:

Are you robbing from Peter to pay Paul? I.e. are you failing to manage a poor performer, but obviously still paying their wages, at the expense of giving a deserved increase to a high performer?
And you recognising effort? A simple “well done” is a hugely motivationally tool, but all too often we get caught up in focusing on poor performance and forget to acknowledge our good performers
Job titles are important – flat organisational structures can be beneficial, however, they also often have the downside that the unofficial “senior” staff are not officially recognised as such
Are you “punishing” good performers by giving them more work? For example, a good performer may have finished all their work by midday on Friday, so you “punish” them by giving them more work to fill in their time until 5pm…. But alternatively, you could reward them by letting them knock off early
Are you paying for benefits that aren’t valued by the team? For example, private health insurance is something which some companies provide to all staff, but do all staff even know this is a benefit they have access too? and do they value it?

Free Webinar discussion
I will be hosting a free webinar discussion at 10am on February 25^th to talk through practical ways in which you can address this eroding differential, and ensure that you maintain motivation for those paid above minimum wage.
Click here to register for this webinar

Future free webinar schedule
I will be hosting monthly webinars on a range of topics, and the plan for the next 6 months is:

HR is Easy
Sign up for the HRtoolkit document library and get access to our huge range of user friendly, Human Resources templates and guidance for just $349 + GST per annum.

Looking forward to seeing you at the webinar

Cheers

Lisa Mackay
Managing Director

Yippee, its bonus time

Posted on March 22, 2021 - 10:48 am by Lisa Mackay

We all love a bonus, so they are a fantastic motivational tool. Often giving a far greater return on effort than is necessarily commensurate with the actual monetary value involved. I’ve seen people fight tooth and nail (not literally!) to win the prized Chocolate Fish 😊. However, they also drive the behaviour which will reap the rewards and that can create inadvertent issues. You also need to ensure that the rules of giving bonuses ensure that they aren’t paid out when they really can’t/shouldn’t be.

The HRtoolkit Bonus scheme template can be found at this link

Some key things to think about when creating your bonus scheme are:

Balanced bonus schemes

If you reward people based on “turnover generated” then you run the risk that they will discount the sales in order to achieve the bonus, but the net result is you don’t have any profit. Equally, if you just bonus on “profit” then you run the risk that they go past a high yield, but low profit margin job, because it is not giving enough profit for their bonus. So, for these scenarios, a bonus scheme would generally need to have achievement against profitability and turnover.

On a very somber note, bonus schemes can inadvertently have horrendous consequences. Pike river Mine is an example of this where, 4 months before the disaster, workers where offered at $13,000 bonus if they achieved production by a certain date, and this bonus value would reduce by each week they missed the target date.

Rewarding what creates the results you need

Turnover and profitability are obvious things that bonuses are paid on because they are easily measurable. However, you can bonus people on pretty much anything and at HRtoolkit we have an Assessment Criteria Matrix help you measure even soft competencies such as customer service. What you need to consider in your business is what will create the biggest impact on your business, and what might the ‘counter’ be for a balanced bonus e.g.:

Fantastic customer service creates loyalty… but if you spend so much time with one customer that you are actually using up all the profit margin in time then you may need to balance this against the number of customers dealt with in a day.
Work taking longer than planned may be an issue for your business, so getting work completed within the allocated time may be bonused. But you also need to balance this against work being rushed, so the balance is “on time” and “without rework”

Bonus schemes change over time

Bonus schemes should be reviewed regularly to ensure they are providing the results you need. And, they should also evolve with the age and stage of the business. For example, a hungry start up business may just want to build their client base quickly (at the expense of high profit margins), but an established business is more likely to be picky about wanting high profit margin and sustainable clients.

Bonus rules

Bonus schemes also need to include “rules” around payment, for example:

No bonus payable if company profit is less than X%
No bonus payable if you achieve less than X in any aspect of the overall bonus scheme
You need to be employed at the time the bonus is due for payment – NB if you make people redundant then waiving of this type of clause is often a point of negotiation if they are going to miss out on long-term bonus due to timing of payments

The Lehman Brothers collapse is often cited as one of the catalysts for the GFC, yet, post collapse they paid out tens of millions of dollars in bonuses … maybe they forgot to include the “no bonus if profit less than X%” clause?

HR is easy…

The HRtoolkit document library includes a bonus scheme template which can be found at this link.

You just need the right tools and documentation, so sign up for HRtoolkit for only $349 + GST per annum for all the tools and documentation you need, and access to the expert when you are not sure exactly what to do

Free Webinar Programme

I will be hosting monthly webinars on a range of topics, and the plan for the next 5 months is:

Looking forward to seeing you at the next webinar

Cheers

Lisa Mackay

Fact and Fiction about Employment law changes June 2021

Posted on June 18, 2021 - 4:05 pm by Lisa Mackay

Whatever your political views on the speed and extent of the changes in legislation currently being proposed there is quick a lot of mis-information about what is happening and what is actually only being talked about or proposed. So, this newsletter tries to lay out the current status and give a level of insight into what you need to be preparing for.

Sick leave increasing to 10 days
This Bill passed Royal assent (the final stage) on 24^th May 2021 and comes into effect 2 months after that, so on the 24^th July 2021.
This increases the entitlement to sick leave from 5 days to 10 days, though the maximum accrual remains at 20 days. For existing employees, the increase to 10 days will take effect from their next sick leave anniversary date. I.e. if they started work for you on the 1^st January 2021, their sick leave anniversary date will be 1 July 2021, when they will be entitled to 5 days sick leave and then on their next anniversary date of 1 July 2022 they will be entitled to an additional 10 days sick leave.

3 days Bereavement leave for Miscarriage or Stillborn.
On the 30^th March the Holidays Act was amended to allow for 3 days bereavement for the parents in the event of a miscarriage or stillborn child.

Matariki Day
A date for Matariki has been announced for 2022, however, as yet there is no Bill proposed to actually enact this change. It is interesting to note that it has previously been proposed to introduce a Bill to have a public holiday to mark Matariki, but this failed at the first reading in 2009.

Parent-Teacher Interview leave
There is currently a bill at first reading to introduce Parent-Teacher Interview leave to allow parents to take up to 4 hours per year of paid leave to attend Parent-Teacher Interviews. It is proposed that this entitlement would arise from the start of employment and that employees would need to give at least 3 days notice of the requirement to take this leave.

Changes to Holidays Act
A working party’s recommendations have been accepted by the Government in respect of other changes to the Holidays act. The exact details of what these changes are are not clear and there is no legislation as yet proposed. However, the headline proposed changes are:

Entitlement to Bereavement leave and Family Violence leave from day 1 of employment
Entitlement to sick leave from day 1 of employment (on a sliding scale)
Simplification of the rules around holiday pay entitlement post parental leave

Will this definitely ALL become law?
No, there is a process of consultation that needs to be gone through before things become law, and, it should be noted, that there is a significant amount of push-back on the government about the amount and speed of changes that are being enacted. As such, we can only watch this space, and make submissions on proposed changes as they happen.

The change in the Bereavement entitlement will probably have limited widespread impact if, for no other reason than most employers would have already have given a lot more than 3 days bereavement leave in this situation anyway.

The increase in sick leave, however, is liable to have a fiscal impact on companies with high sick leave usage and/or sick leave abuse. I recommend you have a read of our February newsletter Managing sick leave – Skivitis or Genuine, how do you deal with it? And/or watch the webinar on Managing sick leave

Our templates are being updated

The employment agreement templates are currently with the Lawyers for final review and the new templates, incorporating the changes will be uploaded in the next few weeks. However, the current templates are still valid and suitable for use and any changes (such as the increase in sick leave) will automatically over-ride any differences with your employment agreements.

Don’t forget to register for our monthly free webinars

10am 24^th June – Types of employment engagement
10am 29^th July – Induction – ensuring you make the right first impression
10am 26^th August – Managing flexible working arrangements
10am 30^th September – Setting KPI’s to truly drive your business
10am 28^th October – Successful performance reviews
10am 25^th November The Courageous Conversation
TBA once there is greater clarity on changes – Law change update

And hopefully, that is all clear as mud!
Cheers

Lisa Mackay
Managing Director

Category Archives: Employment Agreements