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Employment Commentary HR KNOWHOW WHAT’S NEW DECEMBER 2011
Christmas / New Year Closedown
In order that employers meet their requirement to provide 14 days’ notice of a closedown period, we wanted to advise you that where an employer is proposing to close down from 22 December, notice will need to be provided to employees no later than 8 December. We would advise that notice of a close down period be put in writing.
We have a template employee memorandum which can be used to provide notice to employees of a closedown. If you would like to receive a copy of this template, please contact us on (09) 377 9891 or via email to kh@knowhow.co.nz.
A copy of the information provided in our November Newsletter re the public holidays and annual leave is included below.
Christmas / New Year Public Holidays 2011/2012
Employees are entitled to payment for a public holiday where public holidays fall on days that would otherwise be working days for the employee. The 4 Public Holidays in this Christmas/New Year period will be observed as follows:
Christmas Day / New Year’s Day (Sunday) –
· on the Sunday for an employee who would normally work on a Sunday, or · on the following Tuesday for an employee who would not normally work on a Sunday.
Boxing Day / 2 January (Monday) –
· on the Monday for all employees.
As clarified by the amended Act, Public Holidays that fall during a closedown are treated as paid Public Holidays, and are not considered to be Annual Leave days.
Closedown Requirements
Where a Company closes down over the Christmas period an employer must provide 14 days’ notice of the closedown. Employers can require employees to take annual leave at this time.
An employee who is not entitled to annual leave as at the commencement of the closedown period must be paid 8% of their gross earnings from the date of commencement of employment up to the date of the beginning of the closedown period, less any amount that may have been paid in respect to annual leave taken in advance.
For those employees who do not have sufficient entitlement of annual leave to cover the whole of the closedown period, the employer and employee may agree that the employee may take some of the closedown period as annual leave in advance, or take some of the closedown period as unpaid leave.
Referrals
We are very grateful to our clients who provide us with referrals. If you know of an employer who needs support in managing employment matters, from difficult issues that arise with employees to recruitment or managing your legal obligations as an employer, please pass on our contact details or let us know and we will contact them to outline what we do.
Kind regards,
Sylvia Wood Director
HR KnowHow – (09) 377 9891 www.hrknowhow.co.nz The Employer’s Resource Employment Agreements, Company Policy and Procedures, Health and Safety Manuals/Systems Compliance, Restructuring, Redundancies, Managing Performance, Mediations, Dispute Resolution, Personal Grievances, Compliance, Termination Information contained herein does not constitute a definitive or complete statement of the law. ‘What’s New’ is designed to provide accurate and authoritative information on employment matters. ‘What’s New’ is not rendering legal, accounting or other expert advice. Because employment related matters must be dealt with on a case by case basis the information provided herein is not intended to supplant professional legal and other expert advice being sought in regard to a specific problem.
NOVEMBER 2011
In this edition:
- Maximum penalties increased from 1 July - Medical Certificate requirements - Bullying - Additions to the KnowHow team
Christmas / New Year Public Holidays 2011/2012
Employees are entitled to payment for a public holiday where public holidays fall on days that would otherwise be working days for the employee. The 4 Public Holidays in this Christmas/New Year period will be observed as follows:
Christmas Day / New Year’s Day (Sunday) –
· on the Sunday for an employee who would normally work on a Sunday, or · on the following Tuesday for an employee who would not normally work on a Sunday.
Boxing Day / 2 January (Monday) –
· on the Monday for all employees.
As clarified by the amended Act, Public Holidays that fall during a closedown are treated as paid Public Holidays, and are not considered to be Annual Leave days.
Closedown Requirements
Where a Company closes down over the Christmas period an employer must provide 14 days’ notice of the closedown. Employers can require employees to take annual leave at this time.
An employee who is not entitled to annual leave as at the commencement of the closedown period must be paid 8% of their gross earnings from the date of commencement of employment up to the date of the beginning of the closedown period, less any amount that may have been paid in respect to annual leave taken in advance.
For those employees who do not have sufficient entitlement of annual leave to cover the whole of the closedown period, the employer and employee may agree that the employee may take some of the closedown period as annual leave in advance, or take some of the closedown period as unpaid leave.
Transferring Public Holidays
From 1 April 2011, Employers and Employees may agree to transfer a public holiday to another working day to meet the operational requirements of the business or to meet the needs of the employee. This must be agreed by both parties in writing and may affect the payment of the day worked.
On Call Restrictions – Public Holidays
The Holidays Act states that if the on call conditions set out in the employee’s agreement restrict the freedom of action such that the employee has not had a whole day’s holiday, the employee is entitled to an alternative holiday.
In terms of what could be considered a restriction, it is a point for agreement between the employer and employee. If there is a disagreement concerning the nature of restriction between the employer and employee, KnowHow can assist you with this particular situation on a case by case basis.
Paying out of Annual Leave
There has been confusion over the paying out (“cashing out”) of an employee’s annual leave since the legislation took effect on 1 April.
Employees can make a request to pay out up to one week of their entitlement to annual leave. The request must be in writing and the employee may make a request on more than one occasion, however only up to a maximum of one week of the employees annual leave entitlement may be paid out. The employer must approve or decline the request in writing, but a reason is not necessary.
Annual leave can only be paid out once the employee becomes entitled from 1 April 2011 (entitled means the annual anniversary date of the annual leave year).
In other words, if the employee’s annual anniversary date is on or after 1 April 2011, he/she is entitled to request payment of up to one week’s annual leave.
Please note - Leave that an employee has an entitlement to from previous years does not come under this provision.
Holiday Pay calculations
We help many employers with holiday pay calculations and we can assist with the preparation of holiday pay calculations or cross checking your calculations.
Leave Application Form
A leave form is not only needed for administration and planning purposes, but also to ensure that employers comply with the record keeping requirements under the Holidays Act.
If you have any questions concerning the public holidays, closedown, paying out of annual leave or holiday pay, or you would like a Leave Application Form, please contact us on (09) 377 9891 or via email to kh@knowhow.co.nz.
Maximum penalties increased from 1 July 2011
The need for a written employment agreement came into law in 2000 but as some employers have yet to put written agreements in place the penalties have been increased to up to $20,000 from 1 July 2011. The increase in penalties also applies to the breach of any aspect of the employment agreement requirement and includes the retention of a copy of every individual employment agreement provided to the employees, whether signed or unsigned. Upon the employee’s request, the employer must also be able to provide a copy of the employment agreement, as soon as practicable.
In the case where the employment agreement has been breached, the labour inspector must provide the employer with a written notice and seven days to remedy the breach.
Many of you use our employment agreement service, if we can help further please contact us on (09) 377 9891 or via email to kh@knowhow.co.nz.
90 Day Trial Period – Employment Agreement must be signed before the employee starts work
A few organisations are finding it difficult to apply the 90 day trial period clause in the employment agreement. Extra caution must be taken in order to ensure the validity of the trial period. This includes the wording of the employment agreement, the date of the actual signing of the employment agreement and the timing of the notice of dismissal.
In the Court ruling of the Smith v Stokes Valley Pharmacy case, the employer dismissed the employee within the 90 days relying on this provision. It was found that the trial period clause was invalid because the employee had signed the employment agreement on her first day of work.
As far as the Court was concerned, Ms. Smith was already an employee of the company when she signed her employment agreement, therefore her personal grievance was upheld.
In addition to the above, and in accordance with section 67A of the Employment Relations Act, the trial period is only applicable to individuals who have not been previously employed by the employer.
Our advice is – don’t let a new employee cross the threshold until you have a signed agreement in your hand.
KnowHow has an extensive range of tried and proven employment agreements, specific clauses, policies and expertise available. Talk to us about any Human Resource matters in confidence and we will tailor solutions to suit your needs.
Medical Certificate requirements
Following amendments to the Holidays Act on 1 April, employers may request a medical certificate after one days’ absence due to illness or injury. In this case the employer is responsible for the costs in the employee obtaining the medical certificate.
However, where the employee has been absent for three or more consecutive calendar days, or at any time after the employee has exhausted his/her sick leave entitlement, the employer may require the employee to obtain a medical certificate, and in this instance the costs associated with obtaining the medical certificate would be met by the employee.
In circumstances where an employee suffers permanent or continuing illness or deterioration in health or impairment so that the employee is unable to carry out the duties required, the employer has the right after due process to dismiss the employee.
This is not a process that can be entered into after a short period of absence. A consultation process and a medical prognosis are required. Incapacity as grounds for termination can only apply where the employee has been unable to work for a significant period of time.
We recommend that you call us to deal with this.
In the past few months we have been dealing with allegations of bullying in the workplace. Bullying poses Health and Safety risks and employers are naturally concerned for the well-being of their employees.
While some allegations relate to employees not responding to direction from management, provided the direction is fair and reasonable this does not amount to bullying. However there are behaviours that Managers or colleagues employ that do constitute bullying.
There is no legal definition of workplace bullying. However it can be loosely defined as “unwanted and unwarranted behaviour that a person finds offensive, intimidating or humiliating and is repeated so as to have a detrimental effect upon a person’s dignity, safety and well-being”.
Colleagues and managers who exhibit bullying behaviour appear to do so when their position or authority is threatened, and/or the culture of an organisation permits hostile behaviour.
There are two types of bullying in the workplace - Situational and Chronic. Situational bullies generally resort to bullying behaviour in certain situations, usually when trying to establish dominance or they feel threatened. These types of bullies respond well to education and behavioural management. On the other hand, chronic bullies are less common but far more serious. Their behaviour is more predatory and patterned than a situational bully. Chronic bullies bully others not just in situations but as a matter of course. Their dysfunction is deeper and often related to ingrained personality problems and there is far less likelihood that they will rehabilitate or change.
By Co-workers
Bullying by an employee is normally a reaction to a sense of insecurity on the bully’s part and usually attempts to break down a target or expose his/her weaknesses in order to feel superior or make the bully feel more secure in his/her job position. Workplace bullying usually takes two forms. These are:
· Destroying the victim’s reputation. The bully may spread false rumours about another co-worker. He/she may make the victim appear incompetent in the eyes of the victim's managers.
· Verbal assaults. The bully may destroy the victim’s confidence and self-esteem using negative criticism, ridicule and insults.
By Management
Bullying by a manager may take the form of interfering with an employee’s work or workload e.g. with-holding information, unreasonable deadlines, ignoring work that has been produced to a demanding deadline or behaviours that constantly undermine the employee.
Bullying in the workplace has become a serious Health and Safety risk and has left employers open to litigation as a result of incidences of bullying that have been ignored within the workplace.
A case in Australia is considered relevant. In Victoria it was found that Brodie Panlock committed suicide after being subjected to extreme forms of workplace bullying that involved acts including abusing her, spitting on her, pouring beer over her and holding her down while her and her belongings were doused in cooking oil. The Court also found that when she first attempted suicide she was mocked for failing and offered rat poison.
As a result of these findings, the business owner was found guilty of failing to provide/maintain a safe working environment while Brodie’s former co-workers Smallwood, MacAlpine and Toomey were found guilty of failing to take reasonable care for the health and safety of persons within a workplace. The resulting ruling in the Courts was:
Map Foundation Pty Ltd trading as Café Vamp - convicted and fined $110,000 Marc Da Cruz, Director of Map Foundation Pty Ltd - convicted and fined $30,000 Nicholas Smallwood - convicted and fined $45,000 Rhys MacAlpine - convicted and fined $30,000 Gabriel Toomey - convicted and fined $10,000
Due to the nature and result of this particular incident, it appears that this Australian case will have an impact on New Zealand law in extremely serious cases of bullying.
If you are concerned about bullying in the workplace there are a number of approaches we can help you with including education, coaching and if dealing with a chronic bully, intervention by a clinical psychologist or addressing the behaviour formally as a breach of Health and Safety and as serious and unacceptable behaviour.
If you would like to talk to us about this, please call us on (09) 377 9891 or via email to kh@knowhow.co.nz, and we will be happy to help.
Ronnie Cheung Ronnie started at KnowHow at the beginning of August as an HR Consultant. She graduated from the University of Auckland with a conjoint Bachelor degree in Commerce and Arts, majoring in Employment Relations and Japanese. Ronnie has worked in Human Resources prior to joining us.
Matthew McCormick Matt has joined our team providing advisory support and undertaking projects. He is in the final stages of a Bachelor in Business degree, specialising in Human Resources and Management at the Auckland University of Technology.
Referrals
We are very grateful to our clients who provide us with referrals. If you know of an employer who needs support in managing employment matters, from difficult issues that arise with employees to recruitment or managing your legal obligations as an employer, please pass on our contact details or let us know and we will contact them to outline what we do.
Kind regards,
Sylvia Wood Director
HR KnowHow – (09) 377 9891 www.hrknowhow.co.nz The Employer’s Resource Employment Agreements, Company Policy and Procedures, Health and Safety Manuals/Systems Compliance, Restructuring, Redundancies, Managing Performance, Mediations, Dispute Resolution, Personal Grievances, Compliance, Termination Information contained herein does not constitute a definitive or complete statement of the law. ‘What’s New’ is designed to provide accurate and authoritative information on employment matters. ‘What’s New’ is not rendering legal, accounting or other expert advice. Because employment related matters must be dealt with on a case by case basis the information provided herein is not intended to supplant professional legal and other expert advice being sought in regard to a specific problem.
APRIL 2011
In this edition:
- Easter Public Holidays / ANZAC DAY - Shop Trading Hours
Easter Public Holidays / ANZAC DAY
This year, ANZAC Day and Easter Monday both fall on the same calendar day. This means that these two Public Holidays will be observed on the same day. Good Friday is also treated as a Public Holiday under the Holidays Act.
Employees who usually work on Good Friday and/or Easter Monday/ANZAC Day will be entitled to a paid day off. If required to work, employees will be entitled to time and a half for the hours worked, and an alternative holiday if the day is an otherwise working day for the employee.
Employees who are expected to work Monday 25 April will only be entitled to one Public Holiday, no automatic transfer of Public Holidays to another working day would apply.
For the purposes of clarity Easter Sunday is not considered a Public Holiday under the Holidays Act.
Shop Trading Hours
All shops are required to remain closed until 1.00 pm on Anzac Day and all day on Good Friday, Easter Sunday or Christmas Day.
While Easter Monday is not a restricted trading day, ANZAC Day is, which does mean a trading restriction until 1.00 pm on Monday 25 April.
The exceptions to the shop trading restrictions are shops such as dairies and service stations. The goods for sale need to be items that people can not put off buying until the next day and the quantity of goods for sale is no more than needed to meet the needs of people in the area.
Shops, such as takeaway bars, restaurants and cafes may also open provided they only sell prepared or cooked food ready to be eaten immediately in the form in which it is sold.
A shop providing services, rather than selling goods, such as a video rental store or a hairdresser may open as long as they only provide a service, such as renting videos or cutting hair and do not sell any goods, such as videos, or hair products.
Other shops which may also open on restricted trading days, are duty free stores, pharmacies, garden centres (only on Easter Sunday), shops selling only souvenirs and shops at any public transport terminal or station (selling books, magazines and newspapers, or duty free items/souvenirs, or food that has been cooked/prepared and is ready to be eaten). Shops in premises where an exhibition or show is taking place (including markets, craft shows and stalls) may also open provided certain criteria are met.
If you have any queries about Public Holidays entitlements / payments or restrictions on shop trading please contact KnowHow on 09 377 9891.
Kind regards
Sylvia Wood Director
HR KnowHow – (09) 377 9891 www.hrknowhow.co.nz The Employer’s Resource Employment Agreements, Company Policy and Procedures, Health and Safety Manuals/Systems Compliance, Restructuring, Redundancies, Managing Performance, Mediations, Dispute Resolution, Personal Grievances, Compliance, Termination Information contained herein does not constitute a definitive or complete statement of the law. ‘What’s New’ is designed to provide accurate and authoritative information on employment matters. ‘What’s New’ is not rendering legal, accounting or other expert advice. Because employment related matters must be dealt with on a case by case basis the information provided herein is not intended to supplant professional legal and other expert advice being sought in regard to a specific problem.
11 MARCH 2011
In this edition: - Canterbury Earthquake Commemoration Day - Public Holiday- Are you ready for the 90 Day Trial Period? - Annual Leave – Exchange for Payment
Canterbury Earthquake Commemoration Day - Public Holiday
Minister of Labour, Kate Wilkinson has announced the unanimous passing of the Canterbury Earthquake Commemoration Day. This legislation will provide for 18 March 2011 to be recognised as Public Holiday for the Christchurch earthquake commemoration.
The entitlement to the Canterbury Earthquake Commemoration Public Holiday will apply to employees in parts of Canterbury that observe Christchurch Show Day as Canterbury Anniversary Day. The Earthquake Commemoration Day will be treated as a one off Public Holiday for the purposes of the Holidays Act. Employees will be entitled to be paid at his/her relevant daily rate in accordance with the Holidays Act.
Are you ready for the 90 Day Trial Period?
In 21 days all other employers regardless of staff size will be able to use the 90 day trial period for new employees from 1 April.
While the “opposition” argues that employers will hire and fire at will– we and you know that what employers want is someone who can do the job and fits with the team and the organisation. So far we have seen the 90 day trial period working well. Employees have been given opportunities that they may not have otherwise been provided and in the case of termination, employers are carefully considering whether to terminate or not.
In our experience this decision is sometimes left until the 89th day and by this time it can be too late to determine whether an employee is performing and whether he/she fits with the organisation.
We have taken onboard this feedback and developed a concise and simple tool to assist you through the first 90 days in assessing your employee’s performance, skill level, interaction with the team, and the fit with your organisation. This 90 Day Review can be undertaken at the end of the first and second months and then prior to the end of the 90 days. The review meetings are aimed to be kept brief.
While you would not be required to undertake reviews as part of applying the 90 day trial legislation, this induction process will make it clear to new employees what is required of them, identify any training needs, as well as increase productivity.
The requirement to act in good faith is a key and important part in applying the 90 day trial period. Setting clear standards and reviewing these with your new employees is good faith.
To summarise the key criteria in applying the 90 Day Trial Period: - Agreed and included in the employee’s employment agreement. - Employment agreement must be signed before commencement of employment. - 90 days from the commencement of employment (instead of 3 months) - A reason must be provided if asked - Notice must be given before the expiry of the 90 days (although employment could continue beyond the 90 day period) - Act in good faith
Annual Leave Exchanged for Payment
From 1 April the parties can agree that 1 week of an employee’s annual leave entitlement can be exchanged for cash. As this will apply to an employee’s entitlement to annual leave, the payment can only be made where the employee becomes entitled to annual leave on 1 April 2011 or thereafter.
This will mean that employees who are entitled to 4 weeks leave in March 2011 will need to wait a year before the exchange can be made.
You do not have to agree to the exchange for payment.
If you are interested in discussing the 90 Day Review and would like our assistance with tailoring the review for your business or would like to discuss our March What’s New please contact Helen Ewan on 09 377 9891.
Sylvia Wood Director HR KnowHow – (09) 377 9891 www.hrknowhow.co.nz The Employer’s Resource Employment Agreements, Company Policy and Procedures, Health and Safety Manuals/Systems Compliance, Restructuring, Redundancies, Managing Performance, Mediations, Dispute Resolution, Personal Grievances, Compliance, Termination Information contained herein does not constitute a definitive or complete statement of the law. ‘What’s New’ is designed to provide accurate and authoritative information on employment matters. ‘What’s New’ is not rendering legal, accounting or other expert advice. Because employment related matters must be dealt with on a case by case basis the information provided herein is not intended to supplant professional legal and other expert advice being sought in regard to a specific problem.
FEBRUARY 2011
In this edition:
- Minimum Wage Increase – 1 April 2011 - Summary of Amendments to Employment Relations Act & Holidays Act - Tools / Templates re Amendments - Further legislation before Parliament
From April 1 2011 the minimum wage will increase from $12.75 to $13.00 an hour and the training and new entrants’ wage will increase from $10.20 to $10.40 an hour. A new entrant is an employee who is 16 or 17 years old except if they have:
Summary of Amendments to Employment Relations Act & Holidays Act
The reforms are welcome, particularly the 90 Day Trial being introduced for all businesses regardless of size and the shift to what a responsible employer “could” do in a disciplinary situation,
While the reforms do provide some needed balance it is important that employers do not relax about the processes required in a restructuring or disciplinary situation.
The reforms are clear about taking into consideration “minor” defects in process. What “minor means” will be determined by case law but it is fair to say that the fundamentals of good process will remain unchanged.
If a problem arises an employee is entitled to:
· Have the issue clearly defined so that he/she understands what the employer considers to be the problem · Have time to prepare his/her account or explanation · Be fully aware of the possible implications if disciplinary action is being considered · Have the right to representation at the investigation/consultation meeting/s
The employer is required to keep an open mind about the issues until he/she has heard from the employee and or the representative and has taken the time to consider all information relevant to the matter and to the employment relationship as a whole.
None of these requirements will change.
We have provided below some fairly technical information in this newsletter regarding the reforms. If this sends you into glazed eye territory or has you reaching for a wine to dull the pain – we are here to decode, interpret or handle the matter for you. Call us – we have been working through the changes and we will keep abreast of case law in the future.
Changes in employment legislation will take effect 1 April 2011.
In summary:
Employment Relations Act
- Trial period must be agreed and documented in the employee’s employment agreement. Both the parties must sign the employment agreement before the commencement of employment. - Failure to comply with these provisions will void the trial period provision - The law relating to good faith, disadvantage, discrimination, sexual or racial harassment still applies.
- In determining whether the employer’s actions were justified in the case of a dismissal, the test will be “whether the employer’s actions, and how the employer acted, were what a fair and reasonable employer could have done in all the circumstances at the time the dismissal or action occurred”.
The change from "would" to "could” will provide a range of options open to the employer, as opposed to the current test of “would”, which only allows for one reasonable action.
- The resources of the employer will be considered.
- Minor defects in the process will be taken into consideration. - The Authority and Court can dismiss frivolous or vexatious claims - Reinstatement as the primary remedy is repealed, but remains as a remedy. - Penalties for delaying behaviour at the Authority - Priority at the Authority for mediated cases - Ability to cross-examine witnesses
Holidays Act
The Employee: o Must request the payout o Can only be paid for annual leave that he/she is entitled to take (not accrued leave) o Can only be paid for up to 1 week in any 1 year.
The Employer: o Must consider the request, advise the employee in writing and respond in a reasonable timeframe o Can decline the request o Must calculate the payment at the greater of the employee’s ordinary or average weekly earnings (as if he/she were taking the leave) o Can have a policy ruling out payout requests o Excludes the amount of the payout from the employee’s gross earnings. o Record the portion of annual leave paid out, and the date and amount of payment
Relevant daily pay and average daily pay applies to the calculation for payment of Public Holidays, Alternative Holidays, Sick Leave or Bereavement Leave.
Where employees have variable hours or it is not possible or practicable to determine what the employee would have earned, employers must calculate the pay using the Average Daily Pay calculation.
Average Daily Pay is calculated over the preceding 52 weeks as opposed to the current 4 week calculation.
Average Daily Pay: a __
b
a = employee’s gross earnings for 52 calendar weeks before the end of the pay period immediately before the calculation is made
b = the number of whole or part days during which the employee earned those gross earnings, including any day on which the employee was on a paid holiday or paid leave; but excluding any other day on which the employee did not actually work
Currently – after 12 months of the entitlement arising and failing agreement, the employee can determine when the alternative leave is to be taken.
o Payment of amount that the employer is not bound to pay under the employment agreement, and excludes payment even though the amount of the payment is not specified in the employment agreement and the employer will determine the amount; and excludes;
o Payments where the employer is only required to make the payment if certain conditions are met, and is provided for in the employment agreement.
From 1 July 2011
· Individual Employment Agreements
Employers will be required to:
- Retain a signed copy of an employee’s agreement. - Retain a copy of any unsigned employment agreement which has been provided to an employee - Provide a copy of the employment agreement to the employee upon request, as soon as is reasonably practicable
To avoid doubt – an intended employment agreement must not be treated as the employee’s employment agreement if the employee has not signed the intended employment agreement or has not agreed to the terms and conditions of the intended agreement.
Tools / Templates re Amendments
90 Day Induction Programme
We have developed an Induction Review (in addition to our Induction Kit) to provide employers with the tools to assess and monitor an employee’s performance, skill level, interaction with the team and fit with the Organisation. This Induction Programme was developed in response to feedback we received regarding uncertainty around how employees were actually performing when it came to the 89th day.
The requirement of good faith is a key and important part in applying the 90 day trial period. While a couple of reviews throughout out the 90 days are not a requirement of the Act – we see significant value in discussing concerns and providing feedback to employees in the early stages of employment. Not only can this increase productivity but it will show that you have discussed your concerns and provided the employee with the opportunity to improve – as opposed to a surprise if the relationship is terminated.
Our Induction Review is concise and aimed at keeping the review meetings brief.
Annual Pay Out
We are developing templates to assist employers with recording annual leave payouts, responses to employees about approving/declining a leave payout, and a policy around payouts.
If you are interested in our new products we would be delighted to discuss tailoring these for your business. Please call Helen Ewan at HR KnowHow on 09 377-9891
Further legislation before Parliament
The Employment Relations (Rest Breaks and Meal Breaks) Amendment Bill is awaiting its second reading.
The Employment Relations (Secret Ballot for Strikes) Amendment Bill is awaiting its third reading.
Referrals
We are very grateful to our clients who provide us with referrals. If you know of an employer who needs support in managing employment matters or perhaps is in need of Employment Agreements or for these to be brought up to date please pass on our contact details or let us know and we will contact them to outline what we do.
Please do let us know if there is more we can do to assist you with your HR matters.
Sylvia Wood Director HR KnowHow – (09) 377 9891 www.hrknowhow.co.nz The Employer’s Resource Employment Agreements, Company Policy and Procedures, Health and Safety Manuals/Systems Compliance, Restructuring, Redundancies, Managing Performance, Mediations, Dispute Resolution, Personal Grievances, Compliance, Termination Information contained herein does not constitute a definitive or complete statement of the law. ‘What’s New’ is designed to provide accurate and authoritative information on employment matters. ‘What’s New’ is not rendering legal, accounting or other expert advice. Because employment related matters must be dealt with on a case by case basis the information provided herein is not intended to supplant professional legal and other expert advice being sought in regard to a specific problem.
DECEMBER 2010
In this edition:
Welcomed Change is here for Employers
- Employment Law Reforms:
The amendments to the Employment Relations Act and Holidays Act were passed into law 23 November 2010. The amendments are significant and welcomed changes for employers.
Minister of Labour Kate Wilkinson has said that the changes will provide greater clarity increased flexibility and choice for both employers and employees.
In effect from 27 November 2010
The amended Act has confirmed employees’ entitlements to Public Holidays during a closedown and reversed a recent decision at the Employment Court.
Employees are entitled to be paid for Public Holidays, Alternative Leave, Sick Leave, or Bereavement Leave during a closedown period if the day would otherwise be a working day for the employee. In determining this, it must be considered as if the closedown were not in effect.
The purpose of a closedown period is to enable employers to manage business needs while balancing employees’ annual leave entitlements. It was not intended to have the effect that all days within the closedown period could be agreed to be treated as not otherwise working days.
In effect from 1 April 2011
The 90 day trial period for new employees is extended to all employers not just those with less than 20 staff. The 90 day trial must be agreed, documented in the employee’s employment agreement, and both parties signed the employment agreement before the commencement of employment. In the case of a dismissal within the trial period the law relating to good faith, disadvantage, discrimination, sexual or racial harassment applies.
Following on from our recent newsletter – a new employee is one that has signed the employment agreement before commencing employment. We suggest that the start date is amended to ensure you have the signed paperwork before letting the employee in the door.
The trial period clause needs to be carefully drafted, kept simple and in line with the legislation. A recent case has raised prickly issues as to the application of this provision.
We have developed tools to help you manage/assess during the first 90 days and to know exactly how the employee is performing. Please contact us 09 377 9891 if you would like to further discuss.
Test to determine whether an employer’s action is justified
In determining whether the employer’s actions were justified in the case of a dismissal – the test will now be “whether the employer’s actions, and how the employer acted, were what a fair and reasonable employer could have done in all the circumstances at the time the dismissal or action occurred”.
This will provide a range of options open to the employer, as opposed to the current test of “would do”, which only allows for one reasonable action.
There will be consideration of whether or not the process has been fair and reasonable, whether a proper investigation has been conducted, whether the matters at hand have been properly communicated to the employee, that there has been a reasonable opportunity for the employee to respond to the matters raised and the employer has considered the reasons given by the employee with an open mind.
Consideration of the resources of the employer
Importantly for small to medium businesses the resources of the employer will be considered in any decision. Currently it is a very blunt instrument with our largest companies facing the same level of penalty as our smallest.
Employment Relations Authority & Employment Court
The Authority or Court will not determine a dismissal or an action to be unjustifiable solely because of defects in the process, if the defects were minor and did not result in the employee being treated unfairly.
The Authority and Court will be given the explicit ability to dismiss frivolous or vexatious claims. Unfortunately claims can then be challenged in the Court within 28 days of the Authority’s decision.
Reinstatement as the primary remedy for an unjustified dismissal is repealed, yet remains available as a remedy.
Penalties for delaying behaviour at the Authority, including failure to attend without sufficient cause.
Promotion of mediation by ensuring that the Authority will offer priority to mediated cases.
An improvement to the way the Authority operates which would see a more “judicial mode operation” and allow parties the “right to cross-examine witnesses”.
Employers would be able to regulate union access to workplaces. Consent could be withheld, provided grounds are not unreasonable. Employers would be required to respond to a request for union access as soon as reasonably practicable but no later than the working day after the request is received. Failure to respond within 2 working days after the request is received will be treated as providing consent.
Employers would have the right to communicate directly with their staff while bargaining during collective negotiations, provided such communications are consistent with the duty of good faith.
Maximum penalties will double, increasing from $5,000 to $10,000 for individuals and from $10,000 to $20,000 for companies, both under the Employment Relations and Holidays Act; and
Labour Inspectors will have wider powers, and more flexibility to address both low level and ongoing non-compliance.
The increased penalties illustrate that the Courts are no longer willing to tolerate non-compliance and employers must adhere to the legislative standards.
Holidays Act
An employee and employer can agree for up to 1 week of an employee’s annual leave entitlement to be paid out, at the employee’s request.
Annual leave can only be paid out where an entitlement has arisen and therefore will not apply to accrued leave. Payment is capped at 1 week in any 1 entitlement year. The calculation of the payment of leave will be as if the employee were taking the leave. Payment can be made on 1 or more separate occasions until the 1 week cap is reached.
Employers will not need to agree to the request and do not need to provide a reason for declining the request. Where employers receive a request they must consider the request, advise the employee in writing as to whether the employer accepts or declines the request and respond in a reasonable timeframe.
Employers are entitled to have a policy that allows the employer to rule out all requests for a pay out. This could apply to the whole or part of the business. This is intended to reduce compliance costs for businesses where it is not financially practicable to pay out leave.
If an employer has incorrectly paid out a portion of the employee's annual leave i.e. which falls outside the 1 week’s leave in any 1 entitlement year and/or inaccurately calculated the amount of the annual leave, the paid out portion is restored to the employee’s annual leave balance, regardless of the payment being made.
It would be unlawful for employers to require employees’ leave to be paid out, even if the requirement is specified and agreed in the employment agreement. The payment for leave could not be raised in negotiations relating to salary or wages.
The ability for leave to be paid out will provide employees with the option if that is what they prefer while ensuring that they still have to take a decent break during the year.
Relevant daily pay and average daily pay applies to the calculation for payment of Public Holidays, Alternative Holidays, Sick Leave or Bereavement Leave.
Where employees have variable hours or it is not possible or practicable to determine what the employee would have earned, employers must calculate the leave over the preceding 52 weeks or whatever lesser period the employee has worked for that employer.
Average daily pay: a __
b
a = employee’s gross earnings for 52 calendar weeks before the end of the pay period immediately before the calculation is made
b = the number of whole or part days during which the employee earned those gross earnings, including any day on which the employee was on a paid holiday or paid leave; but excluding any other day on which the employee did not actually work
This is a significant change for employers who have peaks in their business pre Christmas and pay commission / incentives – as the average daily pay will remove the false inflation caused by averaging over 4 weeks, as is the case now.
Currently employer KiwiSaver contributions are excluded from relevant daily pay.
Employers will be able to request an employee to produce proof of sickness or injury after one day of sick leave, without the need for reasonable grounds to suspect that the sick leave is not genuine.
Employers will need to meet an employee’s reasonable expenses in obtaining the medical certificate, if the certificate is requested within 3 consecutive calendar days.
Currently, employers can only require a medical certificate after three or more consecutive calendar days, or within three days if there are reasonable grounds to suspect that the leave is not genuine.
This change will remove uncertainty around when employers have reasonable grounds to request proof. Employers will have the ability manage 1 day sickies particularly that repeated “Monday”.
The timing of all alternative leave will need to be agreed between the parties and failing agreement, the employer can determine the date on which the alternative leave will be taken, on at least 14 days notice.
Employers will be able to prevent any negative impact on business operations and productivity by having the final say on when alternative leave is taken and have control (like annual leave) with managing alternative leave balances
Currently, employees who wish to take alternative leave within 12 months of the entitlement arising and where the parties can not agree on the date that the leave is to be taken, the employee can determine the date that is convenient to him/her.
The parties can agree to transfer the observance of a Public Holiday to another working day. The agreement may be with 1 employee or a group of employees, and may relate to the transfer of 1 or more Public Holidays, and be in writing.
However an agreement must not reduce the total number of paid Public Holidays that an employee is otherwise entitled to in any year.
The definition of a discretionary payment is payment of an amount that the employer is not bound to pay under the employment agreement, and excludes payment even though the amount of the payment is not specified in the employment agreement and the employer will determine the amount.
Discretionary payments would also exclude payments where the employer is only required to make the payment if certain conditions are met, and is provided for in the employment agreement.
Our interpretation of this definition is that any reference to a bonus in an employment agreement could be excluded from qualifying as discretionary, and therefore attract 8% holiday pay.
Please call us on 09 377 9891 if you would like us to review your discretionary bonus / incentive clauses and/or would like to vary your employees’ agreements.
While allowances are included in employees’ gross earnings, it excludes allowances specifically relating to non taxable payments to reimburse an employee for actual costs related to the employee’s employment.
Annual leave exchanged for payment would also be excluded from an employee’s gross earnings.
Employers will be required to maintain additional records relating to the: - Portion, date and amount of annual leave paid out in each entitlement year - Day or part of any Public Holiday transferred to another part or whole day
From 1 July 2011
Employers will be required to:
- Retain a signed copy of an employee’s agreement. - Retain a copy of any unsigned employment agreement which has been provided to an employee - Provide a copy of the employment agreement to the employee upon request, as soon as is reasonably practicable
To avoid doubt – an intended employment agreement must not be treated as the employee’s employment agreement if the employee has not signed the intended employment agreement or has not agreed to the terms and conditions of the intended agreement.
Employers can be liable for penalties if they failure to comply with these requirements - from 1 April the maximum penalty will be $10,000.
Public Holidays
The 4 Public Holidays will fall on the weekend over this Christmas period and will be observed as follows:
Christmas Day / 1 January - - on the Saturday for an employee who would normally work on a Saturday, OR - on the following Monday for an employee who would normally not work on a Saturday
Boxing Day / 2 January - - on the Sunday for an employee who would normally work on a Sunday, OR - on the following Tuesday for an employee who would normally not work on a Tuesday
As clarified by the amended Act, Public Holidays that fall during a closedown are treated as paid Public Holidays, and not taken as an Annual Leave day.
Closedown Requirements
Where a Company closes down over the Christmas period an employer can require employees with sufficient annual leave entitlement to take annual leave at this time. Employers must give employees 14 days notice of such requirement and we advise that this should be in writing.
For those employees who do not have annual leave entitlement at the time of the closedown there are a couple of options for the treatment of leave during this period. If you would like to clarify the best practice for your employees in this instance, please contact HR KnowHow on 377 9891 or at kh@knowhow.co.nz.
Leave calculations
We are experts in leave calculations and are happy to prepare the calculations or cross check your calculations.
Leave Request Form
Please find attached the HR KnowHow Leave Request form. A leave form is not only needed for administration and planning purposes, but also to ensure that employers comply with the record keeping under the Holidays Act.
KnowHow Closedown
We will be closed for the Christmas and New Year period from 23 December with the office re-opening on Monday 10 January.
From Helen, Kerry and from me, we wish you a very happy Christmas and New Year to you and your families.
Thank you for all your support in 2010 and we look forward to working with you in 2011.
Referrals
We are very grateful to our clients who provide us with referrals. If you know of an employer who needs support in managing employment matters or perhaps needs employment agreements please pass on our contact details or let us know and we will contact them to outline what we do.
Please do let us know if there is more we can do to assist you with your HR matters.
Sylvia Wood Director
HR KnowHow – (09) 377 9891 www.hrknowhow.co.nz The Employer’s Resource Employment Agreements, Company Policy and Procedures, Health and Safety Manuals/Systems Compliance, Restructuring, Redundancies, Managing Performance, Mediations, Dispute Resolution, Personal Grievances, Compliance, Termination Information contained herein does not constitute a definitive or complete statement of the law. ‘What’s New’ is designed to provide accurate and authoritative information on employment matters. ‘What’s New’ is not rendering legal, accounting or other expert advice. Because employment related matters must be dealt with on a case by case basis the information provided herein is not intended to supplant professional legal and other expert advice being sought in regard to a specific problem.
NOVEMBER 2010
In this edition:
- 90 Trial Period – Employee Wins Case - The Employment Relations (Film Production Work) Amendment Act - Employment Relations Act / Holidays Act – Proposed Legislation
90 Trial Period – Employee Wins Case
In Smith v Stokes Village Pharmacy (2009) Ltd, Smith was dismissed under the 90 day trial period and successfully challenged her dismissal. The ruling from the Employment Court has tested how employers must apply the 90 day legislation.
While the parties had signed an employment agreement which included a 90 day trial period, the Employment Court ruled that because the employment agreement had been signed after the commencement of employment and the employee had already worked for the employer (albeit 1 day) Smith was no longer considered to be a ‘new employee’.
Stokes Village Pharmacy breached its notice obligations and did not provide 4 weeks notice as set out in the employment agreement. The trial period clause provided full training and encouragement to ensure the employee would be able to meet her targets and that regular appraisal meetings would be held. These did not occur and in the Courts view the employer had breached its own terms.
The Court determined that Smith had been disadvantaged in her employment because she was deprived of the opportunity to perform her employment to a standard which would have avoided her dismissal, i.e. had the employee been provided with training and regular appraisal meetings – Smith may not have been dismissed.
The Court revisited the intent of the trial period – to provide employers with some latitude in engaging and dismissing new employees in respect of whom there might be some risk of compatibility or other work performance issue. Because Stokes Village Pharmacy purchased the business from a previous owner whom Smith transferred to, the Court determined that there was no risk to Stokes Village Pharmacy because Smith had worked for the previous owner for a couple of years and had received good references from that previous owner.
Although the Act allows employers to refuse to provide a reason for dismissal, this case has highlighted the requirement to deal in good faith and communicate. We suggest that employers provide a reason.
The Court has made it clear that employers must have employment agreements signed prior to the employee starting employment and adhere to the trial period terms set in the employment agreement. Failure to comply and a breach of the employment agreement will create significant risk of an employee successfully challenging a dismissal under the 90 day trial period provision.
Proposed legislation is before Parliament for the 90 day trial period to be extended to all organisations. Because 90 days is long enough to know someone is patently unsuitable for a role, employers need to manage this time frame and ensure their induction is sound.
The Employment Relations (Film Production Work) Amendment Act
The Employment Relations (Film Production Work) Amendment Act 2010 passed into law on 29 October.
The Act amends the definition of an “employee” specifically in relation to a film production. No changes are made relating to programmes intended initially for broadcast on television or other sectors and industries.
Actors, crew members and other production personnel in the film industry that sign on as independent contractors will remain as independent contractors. If the film worker signs on as an employee, he/she is an employee.
Film workers who sign on as independent contractors will no longer be able to contest their legal status and seek employee rights.
To avoid doubt, these amendments do not affect an employment agreement entered into before 29 October.
Independent contractors that fall outside the film production work retain the ability to contest their legal status and essentially seek employee status.
Because of the hype in the media – we anticipate that more employees will challenge their employment status and seek to recover “lost” employee entitlements, i.e. holiday pay, sick leave….. It is essential that an independent contractor signs a Contract for Services which is reflective of a contractor engagement – not an employee. If challenged the nature of the relationship and all relevant matters are considered and would be based on common law tests.
We are very experienced in preparing and tailoring Contract for Services which set out the rules of engagement, but also understanding how the common law tests apply. Please contact us if you would like our assistance with preparing your Contract for Services, or if you would like to discuss the changes on 09 377 9891.
Employment Relations Act / Holidays Act – Proposed Legislation
The Select Committee has examined the Employment Relations and Holidays Act Amendment Bills and recommends that they are passed with amendments. The Bills are now at their second reading.
Referrals
We are very grateful to our clients who provide us with referrals and it is a key part of our business growth. If you know of a business owner or manager who needs expert HR advice we hope you will consider referring them to us.
Sylvia Wood Director
HR KnowHow – (09) 377 9891 www.hrknowhow.co.nz The Employer’s Resource Employment Agreements, Company Policy and Procedures, Health and Safety Manuals/Systems Compliance, Restructuring, Redundancies, Managing Performance, Mediations, Dispute Resolution, Personal Grievances, Compliance, Termination Information contained herein does not constitute a definitive or complete statement of the law. ‘What’s New’ is designed to provide accurate and authoritative information on employment matters. ‘What’s New’ is not rendering legal, accounting or other expert advice. Because employment related matters must be dealt with on a case by case basis the information provided herein is not intended to supplant professional legal and other expert advice being sought in regard to a specific problem.
28 OCTOBER 2010
The Hobbit Remains!
What is this Hobbit business really all about?
A 2005 Lord of the Rings related employment case (Bryson vs. Three Foot Six) reaffirmed common law tests in determining when an independent contractor is indeed an independent contractor or in fact an employee.
Through the employment and appeal courts Bryson changed status four times and finally, following the Supreme Court decision, was found to be an employee. As an employee, he was able to raise a personal grievance for an unjustified dismissal.
Under current legislation, a film worker who is engaged as a contractor can legally challenge his/her status seeking recognition as an employee.
The Australian Union (MEAA), with the help of some of our naďve minor celebrities and the CTU President managed to create a level of labour market uncertainty which created enormous risk to The Hobbit movies but also to the film industry in New Zealand.
It has been said the combination of The Hobbit x 2 + services + tourism would generate in excess of $2.5 billion and in this sluggish economy that sounds like a very good number.
Thank you John Key & Sir Peter Jackson
Fortunately we have a very highly skilled negotiator in John Key and we have the goodwill and enormous talent of Sir Peter Jackson. The two of them have succeeded in clinching the deal with Warner Brothers and yes it has meant more financial incentives but John Key has leveraged off the deal to create strategic tourism and profile opportunities that are said to be worth millions for New Zealand.
Labour Law Changes
The labour law changes which will go through the House today will provide certainty around the independent contractor status of film workers on movie productions – it will not apply to television actors. This is not unlike legislation that has been in place for many years relating to real estate agents and share milkers. The ability to contest the independent contractor status and seek employee rights will be removed under this change to the law. There is the predictable outpouring of anger from the Unions but it seems the vast bulk of Kiwi’s are highly supportive of the result.
John Key has said "It was a commercial reality that without this [law] change, these movies would not be made in New Zealand”.
We will keep you informed of the details of the labour law changes once it has passed into law.
Sylvia Wood Director
HR KnowHow – (09) 377 9891 www.hrknowhow.co.nz The Employer’s Resource Employment Agreements, Company Policy and Procedures, Health and Safety Manuals/Systems Compliance, Restructuring, Redundancies, Managing Performance, Mediations, Dispute Resolution, Personal Grievances, Compliance, Termination Information contained herein does not constitute a definitive or complete statement of the law. ‘What’s New’ is designed to provide accurate and authoritative information on employment matters. ‘What’s New’ is not rendering legal, accounting or other expert advice. Because employment related matters must be dealt with on a case by case basis the information provided herein is not intended to supplant professional legal and other expert advice being sought in regard to a specific problem.
OCTOBER 2010 In this edition:
Change is on the horizon for employers - Employment Law Reforms:
The Minister of Labour has introduced to Parliament two Bills that propose changes to the Employment Relations Act 2000 and Holidays Act 2003. The proposed changes are aimed at increasing productivity and reducing the red tape. Prime Minister John Key has said that the proposed changes will resolve employment problems quicker, discourage poor practices, reduce costs and improve confidence in the system through increased knowledge of employment requirements.
We are pleased to see that National is listening to employers and is intent on providing employers with greater flexibility, practicable solutions and more clarity in applying employment legislation. As anticipated the Council of Trade Unions are beating up a flurry of noise.
The proposed changes under the Employment Relations Act are:
90 Day Trial – extension to all workplaces
The proposed changes are to extend the 90 day rule for new employees to all workplaces not just those with less than 20 staff. If the change becomes law the current provisions for smaller businesses are likely to apply, the 90 day trial will need to be agreed prior to the employee commencing employment with the employer, and documented in the employee’s employment agreement. In the case of a dismissal within the trial period the law relating to good faith, discrimination, sexual or racial harassment applies.
There are the predictable comments about the 90 day trial heralding abuse and mayhem but most employers, at some stage, have experienced employees who simply do not work out and 90 days is long enough to know someone is patently unsuitable for a role. The key for employers is that they need to manage this time frame and ensure their paperwork is in good order.
A recent Department of Labour survey of employers showed that 40% would not, or were not likely to, have hired a new person without the trial period in the agreement. The Survey results also showed that three quarters of those employed on trial were taken on permanently.
Dispute Resolution
The welcomed changes will promote quicker resolution of problems and remove the pedantic scrutiny that is currently given to employers’ processes.
Test to determine whether an employer’s action is justified
In our view the most far reaching change is the proposed change to the test to determine whether the employer’s actions were justified in the case of dismissal.
Currently the test is what a reasonable employer “would" do. This test only allows for one reasonable action open to the employer.
The proposed reforms will change the test to what a reasonable employer "could" do which will provide a range of options open to the employer.
There will be consideration of whether or not the process has been fair and reasonable, whether a proper investigation has been conducted, whether the matters at hand have been properly communicated to the employee, that there has been a reasonable opportunity for the employee to respond to the matters raised and the employer has considered the reasons given by the employee with an open mind.
Consideration of the resources of the employer
Importantly for small to medium businesses the resources of the employer will be considered in any decision. Currently it is a very blunt instrument with our largest companies facing the same level of penalty as our smallest.
Employment Relations Authority & Employment Court
The Authority and Court will be given the explicit ability to dismiss frivolous or vexatious claims.
Penalties will be introduced for delaying behaviour at the Authority, including failure to attend without good cause.
An improvement to the way the Authority operates which would see a more “judicial mode operation” and allow parties the “right to cross-examine witnesses”.
Reinstatement as the primary remedy for an unjustified dismissal will be repealed, yet will remain available as a remedy.
Promotion of mediation by ensuring that The Authority will offer priority to mediated cases.
While we respect employees’ right to raise a personal grievance – it is particularly frustrating for employers where they have followed their legal obligations yet are still taken on. Currently even where there is no breach of the requirements employers may be faced with paying a sum of money because it is commercially sensible to resolve the matter and the costs of going to the Employment Relations Authority are prohibitive. We hope the needs of employers are better represented under this legislation.
Comparison with other countries
In the United Kingdom, employees must complete 12 months current continuous service before they can raise a grievance for an unjustified dismissal
Similarly in Australia, employees must complete 12 months current continuous service if employed in a business with less than 15 employees, or 6 months current continuous service for 16 or more staff before they can raise a grievance.
So the union noise here is questionable.
Union access / Communication
Employers would be able to regulate union access to workplaces. Consent could be withheld, provided grounds are not unreasonable. Employers would be required to respond to a request for union access within two working days. Failure to respond will be presumed to have given consent.
Employers would have right to communicate directly with their staff while bargaining during collective negotiations, including discussing settlement terms.
Increased penalties for non compliance
Employers would face penalties if they do not retain copies of signed employment agreements, effective 1 July 2011; and
Maximum penalties would double, increasing from $5,000 to $10,000 for individuals and from $10,000 to $20,000 for companies, both under the Employment Relations and Holidays Act; and
Labour Inspectors would be given wider powers, and more flexibility to address both low level and ongoing non-compliance.
The increased penalties illustrate that the Courts are no longer willing to tolerate non-compliance and employers must adhere to the legislative standards.
The proposed changes seek to provide more options for employers and employees, make the Act easier to understand and comply with, and improve the balance of fairness between employees and employers.
This Bill follows the review of the Holidays Act by a Ministerial Advisory group of employer and union representatives.
The proposed changes under the Holidays Act are:
1 week’s annual leave exchanged for payment
An employee and employer will be able to agree that an employer can pay out up to 1 week of an employee’s annual leave entitlement, at the employee’s request.
Annual leave can only be paid out where an entitlement has arisen and therefore will not apply to accrued leave. Excessive leave balances will still require the leave to be taken as the payment is capped at 1 week in any 1 entitlement year. The calculation of the payment of leave will be as if the employee were taking the leave.
Employers will not need to agree to the request and do not need to provide a reason for declining the request. Where employers receive a request they must consider the request, advise the employee in writing as to whether the employer accepts or declines the request and respond in a reasonable timeframe.
Employers are entitled to have a policy that allows the employer to rule out all requests for a pay out. This could apply to the whole or part of the business. This is intended to reduce compliance costs for businesses where it is not financially practicable to pay out leave.
The Bill also provides that if an employer has incorrectly paid out a portion of the employee's annual leave i.e. which falls outside the 1 week’s leave in any 1 entitlement year, the paid out portion is restored to the employee’s annual leave balance, regardless of the payment being made.
It would be unlawful for employers to require employees’ leave to be paid out, even if the requirement is specified and agreed in the employment agreement. The payment for leave could not be raised in negotiations relating to salary or wages.
The ability for leave to be paid out will provide employees with the option if that is what they prefer while ensuring that they still have to take a decent break during the year. It is refreshing that employers retain the control given that the wages bill could potentially double in a pay cycle.
Relevant daily pay – amended calculation (public holidays, alternative holidays, sick leave, and bereavement leave)
The meaning of relevant daily pay would remain unchanged (that is, paying employees what they would have earned had they worked on the day).
However the key amendment is that where employees have variable hours or it is not possible or practicable to determine what the employee would have earned, the leave will be calculated over the preceding 52 weeks or whatever lesser period the employee has worked for that employer.
An average daily pay over 52 weeks will avoid the higher and lower payments that can be caused by averaging over 4 weeks, as is the case currently. We see this as a much fairer calculation for employers.
Medical Certificates
Employers will be able to request an employee to produce proof of sickness or injury after one day of sick leave. Employers will need to meet employees’ reasonable expenses in obtaining the medical certificate. An employer will no longer need to have reasonable grounds to suspect that the sick leave being taken is not genuine before requesting proof.
Currently, employers can only require a medical certificate after three or more consecutive calendar days, or within the three days if there are reasonable grounds to suspect that the leave is not genuine.
This change will remove uncertainty around when employers have reasonable grounds to request proof. Employers will have the ability manage 1 day sickies particularly that repeated “Monday”.
Alternative Leave
Employers will have control over managing alternative leave balances and failing agreement with the employee will be able to determine when the alternative leave is to be taken. There will no longer be the requirement to wait 12 months since the leave arose to direct an employee to take the alternative leave.
Employers will be required to provide employees with at least 14 days’ notice of the date on which the employer requires the alternative holiday to be taken.
Employers will be able to prevent any negative impact on business operations and productivity by having the final say on when alternative leave is taken.
Currently, employees who wish to take alternative leave within 12 months of the entitlement arising and where the parties can not agree on the date that the leave is to be taken the employee can determine the date that is convenient to him/her.
Clarifying employees' entitlements during a closedown period on days that would otherwise be working days for the employee and the tests
The Bill clarifies that an employee is entitled to be paid for public holidays, an alternative holiday, sick leave, or bereavement leave falling during a closedown period if the day would otherwise be a working day for the employee.
This change is to reverse a recent decision at the Employment Court which ruled that employees are not legally entitled to public holidays falling within a Christmas closedown period, unless provided for in the employment agreement.
The Bill states that the purpose of providing for closedown periods is to enable employers to manage business needs while balancing employees’ annual leave entitlements. It was not intended to have the effect that all days within the closedown period could be agreed to be treated as not otherwise working days.
In light of the ambiguity and timeframe before this Bill could be passed, the Department of Labour will be advising on employers re employees’ entitlements in the upcoming Christmas / New Year Public Holidays.
Upon release of advice from the Department of Labour we will be in touch to confirm employees’ entitlements.
Public Holidays transfer to another working day
The parties can agree to transfer the observance of a public holiday to another working day. The agreement may be with 1 employee or a group of employees, and may relate to the transfer of 1 or more public holidays.
Including a definition of discretionary payments in the principal Act
The proposed definition of a discretionary payment is payment of an amount that the employer is not bound to pay under the employment agreement, but does not include payment of an amount where the amount to be paid is discretionary, even though the payment itself is provided for in the employment agreement.
Our interpretation of this definition is that where the amount / value of the payment is specified in the employment agreement as this would not be considered a discretionary payment, regardless of the payment itself still being at the employer’s discretion.
Under this Bill, discretionary bonus clauses would need to be carefully drafted to reflect the intent and avoid the 8% holiday pay that payments attract that are not discretionary.
Please call us on 09 377 9891 if you would like us to review your discretionary bonus / incentive clauses.
Clarifying the meaning of allowances in the definition of gross earnings
Allowances would exclude non taxable payments to reimburse an employee for actual costs related to the employee’s employment
Timing to Introduction
The Employment Relations Act and Holidays Act are before the Select Committee, with reports due 5 November 2010. The amendments to the Employment Relations Act and Holidays Act are scheduled to come into force on 1 April next year, excepting the requirement for all employers to have signed employment agreements on 1 July 2011.
We are very experienced in preparing and tailoring employment agreements which meet all compliance needs and importantly the specific needs of your business. Please contact us if you would like our assistance with preparing your employment agreements, or if you would like to discuss the proposed changes on 09 377 9891.
Referrals
We are very grateful to our clients who provide us with referrals. If you know of an employer who needs support in managing employment matters or perhaps needs employment agreements brought up to date please pass on our contact details or let us know and we will contact them to outline what we do.
Please do let us know if there is more we can do to assist you with your HR matters.
Sylvia Wood Director
HR KnowHow – (09) 377 9891 www.hrknowhow.co.nz The Employer’s Resource Employment Agreements, Company Policy and Procedures, Health and Safety Manuals/Systems Compliance, Restructuring, Redundancies, Managing Performance, Mediations, Dispute Resolution, Personal Grievances, Compliance, Termination Information contained herein does not constitute a definitive or complete statement of the law. ‘What’s New’ is designed to provide accurate and authoritative information on employment matters. ‘What’s New’ is not rendering legal, accounting or other expert advice. Because employment related matters must be dealt with on a case by case basis the information provided herein is not intended to supplant professional legal and other expert advice being sought in regard to a specific problem.
JUNE 2010
In this edition:
- Statutory Holidays falling on Weekends - Parental Leave Payment Boost - Employers should seek Professional Advice - Health and Safety in Employment Act – Electrical Tools, Machinery and Appliances
Statutory Holidays and Mondays The question of Mondayising Anzac Day and Waitangi has reared its head again with the Engineering, Printing and Manufacturing Union looking to seek more pay for workers if statutory holidays fall on a weekend. When Anzac Day was declared a public holiday, it was specified that everything had to be shut, and in 1949 legislation was passed forbidding the Mondayising of the day. The notion was that it would be wrong to treat such a solemn occasion as just another holiday. If such were the case, it could lose some of its significance. The view persists in some quarters today. The Returned and Services Association National Executive has just revisited the issue, having noted that six of the eight Australian States except Tasmania and Victoria have Mondayised Anzac Day. Employees have benefited from a reasonably recent annual leave increase from 3 to 4 weeks at a considerable cost to employers. Moreover, the country is still feeling the effects of the recession with many businesses having exhausted their financial reserves. While we all would like the long weekends, it does not make sense to increase costs to employers at this time.
(as reported National Business Review June 9 Edition)
“Parental leave for families with new babies will be increased next month, says Minister of Labour Kate Wilkinson.
From July 1 the maximum parental leave payment will increase from $429.74 per week to $441.62 per week. The minimum payment for self-employed parents will increase from $125 to $127.50 per week.
“Any increase in financial support for new parents is helpful,” Ms Wilkinson says. “The number of New Zealand parents receiving parental leave payments continues to steadily increase, with well over 25,000 families getting assistance each year.”
The maximum rate of paid parental leave is adjusted every year to account for any increase in average weekly earnings.
Parents eligible for the scheme are entitled to up to 14 weeks paid leave at a rate calculated on the basis of their average weekly earnings”.
This payment is not a cost to the employer but is a Government subsidised benefit.
Seek Professional Advice on Employment Issues
Disciplinary action involving warnings or terminations requires a robust procedure which protects an employee from unlawful action by an employer. A good example of an employer getting it wrong is the case of GEOS New Zealand/David Page. David Page, who was head of a multi-national English language school in Auckland was awarded $190,000 after the Employment Authority dismissed claims he was used to being treated ‘the Japanese way’. Page was demoted from the position of Regional Director at a conference in 2008 and made head of the company’s Auckland language centre. In April last year, he was fired by email after being given "one last chance" to make the school profitable. The company claimed that Page "accepted understanding of the 'Japanese way' of doing business". They went on to say he was used to Kusunoki "ranting", "berating" and "humiliating" people "so this was nothing new". But the Employment Relations Authority said the company's failings were "fundamental and profound". Member Denis Asher said the final warning was "an unscrupulous exploitation of the earlier, unlawful demotion". Asher also said "an entirely unfair, unilateral process was applied" by the company in the decision to dismiss Page. Page was awarded $55,000 for loss of income, $21,000 for hurt and humiliation, and $31,849.99 for long service leave. The total amount, including superannuation, under-payment of salary, holiday pay and bonuses came to more than $190,000. We are very experienced in managing disciplinary matters and can assist employers who are concerned with either performance or behavior. The financial risks of getting it wrong are severe. If you need help please contact me on (09) 377 9891 or sw@knowhow.co.nz
Health and Safety in Employment Act – Electrical Tools, Machinery and Appliances The Health and Safety in Employment Act requires employers to provide and maintain a safe working environment for their employees. Employers are required to take ‘all practicable steps’ to ensure the health and safety of their employees and others while at work by taking practical and reasonable actions to eliminate, isolate or minimise hazards within the workplace. The Electrical Regulations 2010 states that tools can be considered safe where they have been “tag tested” or “the tool is supplied with electricity through a circuit protected by an electrically safe RCD (Residual Current Device) that provides protection from electric shock”. RCD’s are often known as “safety switches”. We have been advised that RCDs are more commonplace in new office buildings. The frequency of the testing varies across industries and environments. The frequency of testing for an office environment is every 5 years. A visible inspection of tools and equipment can also serve as a means of hazard inspection. In the event of an electrical tool causing harm to an employee, and the employer has not undertaken steps to ensure the safety of the equipment in the workplace, the employer may be in beach of The Health and Safety in Employment Act and may face penalties under the Act. Tag testing and visible inspection of tools and equipment are two ways employers can show they have taken practicable steps to maintain the safety of their employees and the workplace. If you do wish to tag test your electrical equipment please contact Beth or Kerry at KnowHow on 09 377 9891 for details of our preferred supplier.
Wood & Associates – Recruitment
Wood & Associates provide recruitment services on the same basis as our HR Knowhow services. In large part, we will rely on our knowledge of you and your business and we will work hard to find people who are the right fit.
We will provide you with fee estimates for an assignment and we provide a significantly longer guarantee than is the norm.
If you would like to know more about our recruitment services, how we operate and the fee structure please call me, or my recruitment business manager, James Cozens on 09 358 2838 or contact us at James@woodandassociates.co.nz.
Referrals
We are very grateful to our clients who provide us with referrals. If you know of an employer who needs support in managing employment matters or perhaps needs Employment Agreements brought up to date please pass on our contact details or let us know and we will contact them to outline what we do.
Please do let us know if there is more we can do to assist you with your HR matters.
Sylvia Wood Director
HR KnowHow – (09) 377 9891 www.hrknowhow.co.nz The Employer’s Resource Employment Agreements, Company Policy and Procedures, Health and Safety Manuals/Systems Compliance, Restructuring, Redundancies, Managing Performance, Mediations, Dispute Resolution, Personal Grievances, Compliance, Termination Information contained herein does not constitute a definitive or complete statement of the law. ‘What’s New’ is designed to provide accurate and authoritative information on employment matters. ‘What’s New’ is not rendering legal, accounting or other expert advice. Because employment related matters must be dealt with on a case by case basis the information provided herein is not intended to supplant professional legal and other expert advice being sought in regard to a specific problem.
May 2010
In this edition: - Vacancies on the Up – will job hunting now begin? - 90 day Trial Period – Update - The Cost of Getting It Wrong - Personal Grievances on the Rise - Update on Bills before Parliament
Vacancies on the Up – will job hunting now begin?
The number of skilled jobs advertised has now risen for 10 consecutive months by 21.7 percent in total and by 8.5 percent in just the last three months.
"We're now seeing business confidence pick up post-recession and as a result
many employers are hiring again," says Paula Bennett, Minister for
Employment.
"These encouraging indicators when added to the drop in the official unemployment rate to six percent, signal a labour market slowly on the mend," says Paula Bennett.
This increase in jobs advertised, if it continues, is likely to take the lid off suppressed movement especially when we consider recent salary surveys showing a median pay increase of only 2.5% for the last 12 months ending February 2010 and other surveys indicating that many people have not changed jobs in the last 18 months owing to a lack of security.
Our concern is that there is a lot of potential change in the market and employers should now be looking at their remuneration structures and how to retain their key staff.
KnowHow can work with you to retain your key employees and ensure that you get the best out of your people. Please contact us on 09 377 9891.
We are now seeing the 90 day trial period as a ‘common’ term of an employment agreement. As we had expected, we are seeing that employers are making good use of the trial period legislation by providing employees with an opportunity and not necessarily hiring and firing ‘willy nilly’.
Termination During the Trial Period
To terminate an employee on a trial period it is essential that:
· The trial period has been agreed and recorded in the employment agreement
· That the trial period is 90 days or less, commencing from the start of the employment relationship (i.e. this could be less than 3 months).
· That the notice of termination is provided during or before the end of the 90 day trial period
· Your business has less than 20 employees (including fixed term and casuals)
If you are unsure of how to terminate during the trial period or if you can do so on solid grounds we are more than happy to talk this through with you. Please contact our team on 09 377 9891.
Recent awards to employees have included:
· $350,000 to a former deputy Managing Director for constructive dismissal and redundancy. Costs included; $193,333 in lost wages, $128,615.38 for redundancy compensation, $15,000 for hurt and humiliation and $6,344 for lost benefits.
· $30,000 to a café worker for an unjustified dismissal
· $3,000 to an allegedly ‘pot smoking’ employee for hurt feelings
And even when you win you lose….
A former Air New Zealand Accounts Clerk was ordered to pay $65,000 towards the airline's legal costs (of $88,878 actual) following her unsuccessful appeal in the Employment Court in 2009. The cost of winning the appeal for her employer was therefore over $23,000.
Personal Grievances on the Rise
The recent statistics on Personal Grievance Awards for 2009 show personal grievance claims have increased 11% compared with 2008. Compensation awarded to employees for hurt and humiliation has increased by 3% to $5,402, compared with 2008. These figures show that regardless of 2009 being a recession year and employers well justified in restructuring there is still a portion of the workforce (albeit a small one) that will take action against employers.
Update on Bills before Parliament
The Employment Relations (Rest Breaks & Meal Breaks) Amendment Bill
The Employment Relations (Rest Breaks & Meal Breaks) Amendment Bill passed its first reading on 29 April 2010.
The Bill amends the Employment Relations Act 2000 to implement government policy on relaxing rest break and meal break provisions for employees.
Under the Bill, there is a requirement for meal breaks and paid rest breaks or compensatory measures. Compensatory measures could include later start or earlier finish times, or time off in lieu. Parties will need to agree in good faith. However failing agreement, the employer can determine the times and duration of the breaks. Compensatory measures would be agreed between the parties and only where there is a reasonable restriction to taking the breaks.
While we agree that a practical and more flexible approach is needed in the legislation, we see that employers will be spending more time updating rosters, following up late starts, and administering time in lieu systems.
The Bill however does provide the employer with more control around the breaks and seeks to ensure that his/her service or production is not compromised.
The closing date for submissions is 11 June 2010, with the report due 29 October 2010.
Unsuccessful Bills:
There was intent to provide employees with statutory entitlements in the event of redundancy or dismissal. This Bill has failed.
A proposed Bill to provide differing levels of minimum wages for youth will also not proceed further.
We are following the Holidays Act review. It appears that this is sitting with the Review Committee who will be considering the submission and drafting legislation. We will advise you upon any further developments.
Wood & Associates - Recruitment
Wood & Associates provide recruitment services on the same basis as our HR Knowhow services. In large part, we will rely on our knowledge of you and your business and we will work hard to find people who are the right fit.
We will provide you with fee estimates for an assignment and we provide a significantly longer guarantee than is the norm.
If you would like to know more about our recruitment services, how we operate and the fee structure please call me, or my recruitment business manager, James Cozens on 09 358 2838 or contact us at James@woodandassociates.co.nz.
Referrals
We are very grateful to our clients who provide us with referrals. If you know of an employer who needs support in managing employment matters or perhaps needs Employment Agreements brought up to date please pass on our contact details or let us know and we will contact them to outline what we do.
Please do let us know if there is more we can do to assist you with your HR matters.
Sylvia Wood Director
HR KnowHow – (09) 377 9891 www.hrknowhow.co.nz The Employer’s Resource Employment Agreements, Company Policy and Procedures, Health and Safety Manuals/Systems Compliance, Restructuring, Redundancies, Managing Performance, Mediations, Dispute Resolution, Personal Grievances, Compliance, Termination
Information contained herein does not constitute a definitive or complete statement of the law. ‘What’s New’ is designed to provide accurate and authoritative information on employment matters. ‘What’s New’ is not rendering legal, accounting or other expert advice. Because employment related matters must be dealt with on a case by case basis the information provided herein is not intended to supplant professional legal and other expert advice being sought in regard to a specific problem.
MARCH 2010
In this edition:
In January this year James Cozens joined the newly formed Wood & Associates as Recruitment Business Manager, a recruitment company which I have set up to provide recruitment services to our Knowhow clients. James brings to the Company a very strong specialisation in Accounting, IT and Professional Services and we will be offering our services in these sectors in addition to looking after our KnowHow clients.
James graduated in Law and then worked for several years in a major UK CA firm before moving into the recruitment industry. He has 25 years experience in Accounting, Legal, Technical and IT recruitment.
He has held senior management roles for leading financial and IT recruiters in the twelve years he has been in New Zealand.
James has recruited for international businesses and many small to medium sized organisations. James is a past President of the New Zealand Division and past Board Director of the Recruitment & Consulting Services Association (Australasia). He currently chairs the Advisory Board for the Department of Accounting & Finance at Unitec.
Over the coming months I will introduce you to James – we are aiming to provide recruitment services on the same basis as our HR Knowhow services. In large part, we will rely on our knowledge of you and your business and we will work hard to find people who are the right fit.
We will provide you with fee estimates for an assignment and we provide a significantly longer guarantee than is the norm.
For a number of years I have been encouraged by clients to take the step of setting up a recruitment arm. Feedback from clients in establishing Wood & Associates has been interesting – key is “meet the brief; don’t just throw CVs at us”.
If you would like to know more about our recruitment services, how we operate and the fee structure please call me or call James Cozens on 09 358 2838 or contact us at James@woodandassociates.co.nz or Sylvia@woodandassociates.co.nz;
Review of Part 9 Personal Grievances
Kate Wilkinson, the Minister of Labour has requested that the Department of Labour undertake a review of the personal grievance system. The objectives of the review are to
consider whether the personal grievance system:
In addition the Minister has requested information as to:
The discussion paper provided by the Department of Labour covers:
§ the operation of the personal grievance system § the cost of problem resolution § the balance of fairness § the varying quality of employment advocates (including Barristers, Solicitors, advocates and no win/no fee representatives) § access to justice § negative aspects of responsiveness and timeliness of services § the disproportionate impact of personal grievances on small to medium enterprises § possible means of regulation § eligibility – raising a personal grievance § the effectiveness of remedies. § assistance to resolve problems at an early stage
Possible options for consideration include:
§ the extension of the trial period beyond the current 90 days and extending this to employers with up to 49 employees (currently 19) § reducing the 90 day period for lodging a grievance § employees length of service (regardless of trial periods) being a factor in whether the employee could raise a grievance § regulation of costs and remedies which may allow greater focus on the substance of issues § removing reinstatement as a primary remedy § provision of non monetary remedies § increasing financial remedies available § extension of the mediation services available
I will be making a submission on the review of Part 9: Personal Grievances. The closing date for submissions is 31 March. I will keep you informed of progress of this review and if you want to offer any feedback for the submission please email me on sw@knowhow.co.nz.
A ministerial advisory group has completed a review of the Holidays Act. The recommendations include allowing employees to exchange one week of annual leave for cash and no change to the current number of Public Holidays.
We see the ability to exchange of one week’s annual leave as positive. It will protect the need for employees to take a decent amount of leave but will provide flexibility for employers.
The advisory group, which included business and union representatives, differed on many of the proposed changes including:
- how to calculate leave and sick leave entitlements - the cashing in of holidays - the transferring of Public Holidays
The union representatives in the group wanted Easter Sunday to become an official Public Holiday but this did not form part of the formal recommendations to the Minister.
We are still awaiting recommendations for the calculation of leave and sick leave entitlements – we would welcome a much simpler calculation.
We will keep you up to date on the outcome of the recommendations.
Review of Part 6A ERA - Continuity of employment if employer’s business restructured
A review is being undertaken of the provisions of Part 6A of the Employment Relations Act. These provisions relate to relationships where the work is independently contracted and if the independent contract changes, such a change could result in a redundancy or a restructure.
The industries affected include cleaning, food and laundry services where independent contractors are commonly used.
The review will include determining employee protection provisions that should be in the employment agreement and will therefore set out further requirements that an employer is required to follow in the event of a restructure.
East Occ Health – Occupational Health Services
We have formed an alliance with East Occ Health run by Alisa Leonard-Smith who is a Registered Nurse with 16 years experience in occupational health.
East Occ Health provides:
If you are interested in knowing more about these services please contact Jules Keery on 09 377 9891 or jules@knowhow.co.nz
From April 1 this year the minimum wage will increase by 25 cents from $12.50 to $12.75 an hour and the training and new entrance wage will increase from $10.00 to $10.20 an hour.
KnowHow’s Move Just a reminder of our new address;
HR Knowhow and Wood & Associates are located at:
Level 8 Old South British Building 3 – 13 Shortland Street CBD AUCKLAND
All other contact details remain the same.
Referrals We are very grateful to our clients who provide us with referrals and it is a key part of our business growth. If you know of a business owner or manager who needs expert HR advice we hope you will consider referring them to us.
Kind regards
Sylvia Wood Director
HR KnowHow – (09) 377 9891 www.hrknowhow.co.nz The Human Resources Specialists We provide advice and hands on support for all your Human Resource management needs Information contained herein does not constitute a definitive or complete statement of the law. ‘What’s New’ is designed to provide accurate and authoritative information on employment matters. ‘What’s New’ is not rendering legal, accounting or other expert advice. Because employment related matters must be dealt with on a case by case basis the information provided herein is not intended to supplant professional legal and other expert advice being sought in regard to a specific problem
December 2009 In this edition:
- Proposed change to ‘serious harm’ definition
Proposed change to ‘Serious Harm’ definition under the Health and Safety in Employment Act
A proposal by the Minister of Labour Kate Wilkinson could see a change to the definition of ‘serious harm’ under the Health and Safety in Employment Act.
The proposed definition aims to provide more certainty around what constitutes serious harm and to ensure that employers do not spend excessive time dealing with minor issues.
Kate Wilkinson has said, “It is important to set a threshold for serious harm at an appropriate level.”
The definition will include physical injuries where an employee is unable to perform his/her duties for 10 or more calendar days, permanent injuries, specified events including electrocution or loss of consciousness, and diagnosed occupational illnesses.
The proposed definition will be introduced to Parliament in the New Year and we will keep you up to date with any amendments to the Act.
In a recent case, Wulff v Air New Zealand Ltd an Air New Zealand flight attendant, Randall Wulff, is to be reinstated after he was dismissed after the company said they could not rely on him to follow standard operating procedures.
Air New Zealand dismissed Mr Wulff last year after he sat down and fastened his seatbelt when the seatbelt light came on during a flight, instead of carrying on with his duties. He had also shown his intention to sit down on another occasion.
Mr Wulff said that cabin crew could take a seat when the light came on if they felt unsafe, but that he accepted that taking a seat whenever the light came on was unacceptable. He also said that any injury caused by turbulence would impact on his ability to take leave.
The Employment Relations Authority determined that Air New Zealand “did not have a sufficiently firm foundation for its conclusion that Mr Wulff could not be relied upon”. The Authority also said that the concerns of Air New Zealand were legitimate but that the concerns could be addressed while the employment relationship continued.
Air New Zealand was ordered to reinstate Mr Wulff and to pay him loss of earnings from the date of the determination until he was reinstated. Mr Wulff’s claim for hurt and humiliation compensation was declined.
Air New Zealand said it was appealing the decision.
Our concerns in this matter are that an Authority member is able to essentially override a company as to the importance of running his/her business in the most effective and efficient manner, having the right to require an employee to comply and being able to rely on that employee to comply.
It is very clear why Air New Zealand has chosen to appeal Yvonne Oldfield’s determination.
We are specialists in annual leave calculations and are happy to assist you with these calculations. If would like our assistance with annual leave calculations please call us on 09 377 9891 or email kh@knowhow.co.nz.
We will be closed for the Christmas and New Year period from 23 December with the office re-opening on Monday 11 January.
At KnowHow we have been fortunate to work with our clients during 2009, through a period which could be said delivered the most demanding business conditions we have faced as business owners.
Many times during the year we have had conversations with clients about making it through to December 2009 and that we should all feel pretty good if we make it.
2009 has seen all of us tighten things up, possibly become better business people and shown us how important our Kiwi resilience is.
I wish you all well and hope that 2010 is a great year for us all.
From Helen and Jo and from me, we wish a very happy Christmas and New Year to you and your families.
Thank you for all your support in 2009 and we look forward to working with you in 2010.
Kind regards
Sylvia Wood Director
HR KnowHow – (09) 377 9891 www.hrknowhow.co.nz The Human Resources Specialists We provide advice and hands on support for all your Human Resource management needs Information contained herein does not constitute a definitive or complete statement of the law. ‘What’s New’ is designed to provide accurate and authoritative information on employment matters. ‘What’s New’ is not rendering legal, accounting or other expert advice. Because employment related matters must be dealt with on a case by case basis the information provided herein is not intended to supplant professional legal and other expert advice being sought in regard to a specific problem
November 2009 In this edition: - Leave – closedown, entitlement and calculations - Annual leave / closedown - template - Annual leave calculation / payment
Leave – closedown, entitlement and calculations With Christmas around the corner, employers need to be planning annual leave requirements for this period. Where an employer’s business is open over the Christmas period the employer needs to assess the staffing requirements based on the operational requirements of the business. Annual leave requests from employees who have a leave entitlement available will need to be accepted or declined accordingly. Where a Company or Organisation closes down over the Christmas period an employer can require employees to take annual leave at this time. Employers must give employees 14 days notice of this requirement in writing. We attach a template for the closedown advice.
Annual leave calculation / payment during closedown For the purposes of clarification annual leave is accrued throughout the year, but the entitlement to take that leave does not occur until the employee has completed 12 months of employment. Calculation of pay for annual leave when employee has annual leave entitlement Where an employee is entitled to and takes annual leave, the employer must calculate annual leave pay;
For those employees who do not have annual leave entitlement at the time of the closedown there are two options for the employer for the treatment of leave during this period: 1. Payment of 8% of the employee’s gross earnings and re-setting the employee’s anniversary date, OR 2. Leave in advance or unpaid leave 1. Payment of 8% of an employee’s gross earnings and re-setting the employee’s anniversary date Where an employer closes down in December 2009 and an employee has not worked the first full 12 months of continuous employment, an option for the employer is to pay the employee 8% of his/her gross earnings, less any annual leave taken in advance since the commencement of employment until the commencement of the closedown. The date of the closedown, or the date nominated by the employer reasonably proximate to the closedown date, becomes the new annual leave anniversary date. The employee would then, at the next closedown in December 2010, be entitled to annual leave of 4 weeks (less any annual leave taken in advance during the year). The balance of the period of the closedown is taken as unpaid leave. 2. Leave in advance or unpaid leave
For the remaining period of the closedown the employer and employee may agree that the employee is to take the balance of the period as either:
Calculation of paid annual leave if taken in advance If an employee takes paid annual leave in advance the employer is to calculate the agreed portion of paid annual leave as follows;
(a) the 12 months immediately before the end of the last pay period before the annual leave if the employee has worked for the employer for not less than 12 months; OR (b) the period of employment before the end of the last pay period before the annual leave if the employee has worked for the employer for less than 12 months
If Public Holidays fall during a period an employee is on annual leave and on a day the employee would otherwise have worked, the Public Holidays are to be treated as paid Public Holidays, and not taken as an annual leave day. Where an employee is not required to work on a Public Holiday that would have otherwise been a normal working day, that employee is paid at the ordinary time rate for that day. Where an employee is required to work on a Public Holiday that would have otherwise been a working day for the employee, the employee shall receive time and one half for time actually worked and also becomes entitled to an alternative holiday. Payment for a Public Holiday is to be calculated using the relevant daily pay for that employee. Because Boxing Day and 2 January fall on a Saturday over this Christmas period, these Public Holidays will be observed:
Casual employees are treated differently under the Act because holiday pay is paid as an identifiable component of the wages or at the conclusion of the casual engagement. Entitlement to a Public Holiday only occurs if the Public Holiday falls on a day that would have otherwise been a working day for that employee. This would apply only if the casual employee’s usual work pattern or roster, or where a casual employee is employed for a period of casual employment, would have required that employee to have otherwise worked on the day the Public Holiday falls. If you require assistance with annual leave calculations, or have any queries relating to the matters outlined in our Newsletter please call us on 09 377 9891 or email kh@knowhow.co.nz.
Referrals We are very grateful to our clients who provide us with referrals and it is a key part of our business growth. If you know of a business owner or manager who needs expert HR advice we hope you will consider referring them to us.
Kind regards
Sylvia Wood Director
HR KnowHow – (09) 377 9891 www.hrknowhow.co.nz The Human Resources Specialists We provide advice and hands on support for all your Human Resource management needs Information contained herein does not constitute a definitive or complete statement of the law. ‘What’s New’ is designed to provide accurate and authoritative information on employment matters. ‘What’s New’ is not rendering legal, accounting or other expert advice. Because employment related matters must be dealt with on a case by case basis the information provided herein is not intended to supplant professional legal and other expert advice being sought in regard to a specific problem
29 October 2009 In this edition: - Meal & Rest Breaks – proposed legislation change - Proposed Redundancy Entitlements
Meal & Rest Breaks – proposed legislation change The Employment Relations (Rest Breaks and Meal Breaks) Amendment Bill was introduced to Parliament yesterday by Labour Minister Kate Wilkinson. The proposed legislation will seek to provide more flexibility with meal and rest break provisions than the current prescribed legislation. Under the Bill, there will be a requirement for meal breaks and paid rest breaks or compensatory measures. Compensatory measures could include later start or earlier finish times, or time off in lieu. The parties will be required to agree in good faith around the arrangements, but failing agreement between the parties the employer can determine the times and duration of the breaks. Compensatory measures would be agreed between the parties and only where there is a reasonable restriction to taking the breaks. Compensatory measures could raise issues for employers - including continually reviewing staff rosters to ensure sufficient resource is available. Unauthorised late starts may start to seep in as employees could feel they have the right to be 10 minutes late because they did not have their rest break the day before. For businesses that do not operate time in lieu systems there will be further administration requirements to monitor and record the time lieu. Small businesses may struggle to cope with employees being absent as all hands are required to be on deck. Employers would need to ensure that the policy around compensatory measures is clearly communicated and managed. The Bill however does provide the employer with more control around the breaks and seeks to ensure that his/her service or production is not compromised.
As the 90 day trial period has been in effect for over 7 months now, we have outlined below an update on what we are seeing in regards to this legislation. The 90 day trial period takes effect from the date the employment relationship commences. This will be the date the employment relationship commences in the agreement, or the date the employee starts work, whichever is earlier. A fishhook that has emerged from the trial period is that employers are recording the trial period as 3 months from the commencement of the relationship, instead of 90 days. If an employer was to terminate within the 3 months but after 90 days, the employer would be exposed if a personal grievance was raised. For businesses with fewer than 20 employees, use of the trial period is becoming more and more common, and while the trial period has to be agreed between the parties, we see it becoming a norm. The trial period should be agreed in good faith and we suggest that during the interview stage you include a question regarding the trial period. An example of this could be: “If we were to offer you a job with the Company/Organisation it would be on the condition that a 90 day trial period would apply and your employment could be terminated within this period if we felt you were not working out. If you were offered the job would you agree to this condition?”
Proposed Redundancy Entitlements The Employment Relations (Minimum Redundancy Entitlements) Amendment Bill is currently before parliament. The Bill proposes minimum redundancy entitlements including: - No less than four weeks notice of termination; and - Four weeks compensation for the first full year of the employee’s continuous employment with the employer, and a further two weeks pay for each subsequent full or partial year of continuous employment, up to a maximum entitlement of 26 weeks remuneration The only proposed criteria to be eligible for a redundancy entitlement is that the employee must be in continuous employment with the employer for at least 12 months prior to the redundancy. In comparison to other countries, the proposed entitlements are very generous. In the UK there is a cap on the week’s remuneration of 240 pounds and Australia has a maximum entitlement of 12 weeks. The potential issues with the proposed Bill include: - Who will be paying for the added costs? The draft Bill does not clearly state who will be paying the extra costs even though it appears it is the employers. - How a week’s remuneration will be calculated. This Bill has not stated a calculation or considered how a week could be calculated where an employee works irregular hours. - What will happen if the employer goes into receivership? Will the employer still have to pay the minimum entitlement? This Bill is surprising in that is specifies a formula more commonly used in government, local government and corporates rather than in the many small to medium sized businesses in New Zealand. In looking at the additional costs employers have incurred in recent years we have: - An additional weeks holiday - 2% employer contributions to KiwiSaver - The impending increase in ACC levies To burden businesses with a redundancy provision of 26 weeks is simply not realistic. We are operating in financially constrained times and it is critical we create an environment where businesses can continue to operate without draconian provisions imposed by government. We note this Bill has been introduced by a Labour MP. We are not holding our breath on this one as it is highly unlikely that National will support the Bill for redundancy compensation to become legislation.
Personal Grievance Claims – Government Review John Key has asked the Minister of Labour to review the process for personal grievance claims required by employers. We understand that the main concern for review is about employers not being penalised where the employer has had a genuine to reason to dismiss an employee but have not followed the legal process perfectly. Currently employers are required to follow a stringent legal process throughout disciplinary and restructuring matters. We see that the legislation will still require an employer to follow a fair and reasonable process, however the Courts may be more lenient with employers on how the process was undertaken. We see that this could be in contrast to the legislation amended in 2004, which now requires employers to undertake the legal process in accordance with what a fair and reasonable employer would do, meaning all ‘t’s’ must be crossed and all “i’s” dotted.
We are currently digesting the ACC changes and will comment on the proposed changes and implications for employers in the next couple of weeks.
The IRD mileage rate for reimbursement for employees who use a personal vehicle for business purposes is 70 cents per kilometre. This reimbursement is exempt from income tax, is for petrol or diesel and the rate is irrespective of engine size. The rate only applies to motor vehicles and does not apply to motorcycles. No mileage rate has been set by IRD for motorcycles as this mode of transport is not commonly used for business purposes.
From 1 November 2009 it will be illegal to drive while talking on a mobile phone without using a hands-free device, and to text / pixt while driving. Please let us know if you would like us to update your Policy and Procedures Manual to reflect such change by calling us on 09 377 9891 or emailing kh@knowhow.co.nz.
Referrals We are very grateful to our clients who provide us with referrals and it is a key part of our business growth. If you know of a business owner or manager who needs expert HR advice we hope you will consider referring them to us.
Kind regards
Sylvia Wood Director
HR KnowHow – (09) 377 9891 www.hrknowhow.co.nz The Human Resources Specialists We provide advice and hands on support for all your Human Resource management needs Information contained herein does not constitute a definitive or complete statement of the law. ‘What’s New’ is designed to provide accurate and authoritative information on employment matters. ‘What’s New’ is not rendering legal, accounting or other expert advice. Because employment related matters must be dealt with on a case by case basis the information provided herein is not intended to supplant professional legal and other expert advice being sought in regard to a specific problem
October 2009 In this edition:
- Suspension – Employer obligations / Case Law
Suspension – Employer obligations
Two recent cases held before the Employment Relations Authority have set out the employer’s obligations when suspending an employee.
Employers must have substantive justification to suspend an employee and must also follow due process. It is not merely enough for an employer to decide that he/she does not want an employee present at work throughout an investigation.
For example, if you are alleging an act of dishonesty with an employee and have sound reason to question his/her honesty then you may be able to argue that you can not have the employee on the Company’s premises until the investigation is complete. On the other hand, if you are raising poor performance with an employee, it would be highly unlikely that there would be any good reason for the employee to not be at work during the investigation. Careful consideration must be undertaken to ensure that your reasoning for suspending an employee can be justified.
If an employer has established a good reason to suspend an employee, then the employer must follow due process when suspending. The suspension must be an action that meets the requirement of being a fair and reasonable employer.
An employer must notify the employee that the employer is considering applying the suspension provision in the employee’s employment agreement and the reason why the employer is considering possible suspension. The employer must provide the employee with the opportunity to provide any information he/she wishes to put forward before the employer makes a decision to suspend the employee. The employer should discuss the terms of the suspension, which would usually be on full pay and for the period of the investigation.
If an employment agreement does not specify suspension, an employer should exercise caution as the employer may not be able to suspend. Suspension without pay would only be in the case where it is specifically recorded in the employment agreement. An unpaid suspension clause in an agreement could be considered “harsh” and “oppressive”.
All employment agreements prepared and/or updated by HR KnowHow have included a suspension clause in the agreement.
In Chia Cheng vs Base Projects Ltd (BPL), BPL had tried to discuss with Chia her $89.50 car grooming bill and why she had charged her Company Credit Card for her lunch with her boyfriend. The Authority had ruled that both parties had carried out an email war, with Chia telling her employer to “get over it” and then emailing her friends and saying her manager is “such a f****wit”. We understand that the employer tried to talk to the employee about the matter and that she refused to talk because she said she was too busy. The employee was then “told to go home and think about your attitude”.
The Courts determined that a fair and reasonable employer would have discussed with the employee the possible suspension and on the terms it would occur before deciding that she was suspended. The Authority believed that the employer acted “rashly in sending her home without a reasonable discussion”, and that the reason to suspend was not justified.
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