“Confrontational” Parking Warden Ordered to Pay $11,500

The Employment Relations Authority (ERA) ordered Yoon Cheol Hong to pay Auckland Transport (AT) $11,500 following a determination that found Mr Hong was not unjustifiably dismissed from his job as an Auckland Transport parking officer, neither was he unjustifiably disadvantaged before his dismissal.

Mr Hong worked as a parking officer, patrolling Auckland city streets and issuing infringement notices for vehicles parked illegally.

AT required, and trained, its officers in various ‘de-escalation’ techniques to manage members of the public who abused or threatened parking officers. The primary technique was described as ‘detach and walk away’.

AT held concerns because Mr Hong made comments which confirmed AT’s fears that Mr Hong would, while on patrol in the streets, sometimes challenge abusive members of the public rather than ‘detach and walk away’.

The incident that triggered the dismissal process was when a man swore at Mr Hong and threatened to break his neck after getting a parking ticket. Mr Hong called for Police assistance during the incident. AT’s concern was that Mr Hong had refused to follow lawful and reasonable instructions issued by them which placed his own health, safety and welfare together with some of the wider parking team at considerable risk which was completely unacceptable to them.

Mr Hong had told AT when he reached a ‘trigger point’ he would not observe de-escalation methods due to his own views on what was and was not tolerable. AT were concerned that Mr Hong was likely to respond in ways that made inflammatory or potentially inflammatory situations worse. This meant AT had lost trust and confidence in Mr Hong.

The Authority said that it was within the range of reasonable responses for AT to conclude what Mr Hong deliberately did, and would likely continue to sometimes do, was contrary to instructions and was serious misconduct.

Auckland Transport sought $36,500 from Mr Hong to pay back what it had spent to defend itself in the unjustified dismissal case; $35,000 for a two-day investigation meeting and $1500 in costs to oppose the interim reinstatement application.

Auckland Transport’s actual legal costs were said to total $55,868.

Over the course of the employment dispute, Auckland Transport had offered Mr Hong two settlement offers prior to the case being heard by the Authority. Both offers, one for $12,500 and another of $15,000 were not accepted.

The authority ruled Mr Hong’s refusal of these settlement offers were cause for a “steely” approach in awarding costs, hence the award to AT of $11,500.

Paying contractors or working as a contractor

IRD’s latest update to tax agents includes some clarification around contractors and withholding tax.

There is a misunderstanding that all contractors are now subject to withholding tax. This is not the case. The change is only for contractors hired by a labour hire business.

From 1 April 2017, contractors working for a labour hire business under a labour hire arrangement must have withholding tax deducted from their income.

Activities and examples of a labour hire business
One of the main activities of a labour hire business is arranging for a person to perform work or services directly for:

  • its clients, or
  • clients of another person.

Examples of labour hire businesses are:

  • an on-hire business
  • an employment agency
  • contract management, or
  • recruitment services.

Withholding tax rate
The standard withholding tax rate for this category is 20%. However, a contractor may choose a lower rate (the lowest rate is 10%) when they fill in their Tax rate notification for contractors (IR330C) form.

They can also apply to us for a 0% special tax rate by filling in a Special tax code application (IR23BS) form. We review their tax compliance history before deciding if we’ll issue a 0% rate certificate.

Sub-contractors

Businesses (eg an engineering business) hiring sub-contractors don’t come under the new legislation. The sub-contractors wouldn’t be paid schedular payments so withholding tax isn’t taken out of their payments.

See some examples of what is and is not a labour hire business

Minimum Wage Increase is Just the Beginning

This article was published on the 2nd November by Chapman ER and sets out some of the employment related financial issues employers are going to face under the new Labour Government.

We recommend you stay up-to-date on matters that effect employers by subscribing to the Chapman ER newsfeed by clicking here and completing the request form.

The minimum wage is increasing. It already feels like old news, particularly in view of the stream of new government announcements. However, that is just the start of measures likely to increase wage costs. The Labour led government has also stated they will change the Equal Pay Bill the previous National government had proposed to prevent a case similar to the $2b aged care workers’ settlement. They are also introducing ‘Fair Pay Agreements’ which will set out minimum employment conditions across industries and sectors for terms such as wages, allowances, weekend and night rates, hours of work and leave arrangements. It sounds like reverting to old Award days to me.

If you are already gulping for air and deciding you will only engage contractors, be aware of the fish hooks of that approach. Within the first 12 months in government Labour has set out to extend the right to bargain collectively to contractors who primarily sell their labour, and investigate measures to improve job security for people in ‘precarious forms of employment’ which includes contracted and sub-contracted workers.

If you are now thinking you will engage youth workers as a more affordable option, there is no respite there. The Labour manifesto states they intend to abolish youth rates within 12 months.

To recap briefly on the minimum wage – it will increase to $16.50 from 1 April 2018. That’s a 4.8% increase.

In the Coalition Agreement it has also been stated that the minimum wage will increase to $20 per hour on 1 April 2021, with incremental steps in between. That is a 27% increase over 4 years. For a full time employee on minimum wage that is an annual salary of $41,600.

What does this mean for employers? To state the obvious, it will increase costs. For employers with proportionally more employees at or near the minimum wage level, that increase in cost will be proportionately higher. Industries that traditionally pay in the lower pay brackets are accommodation & food, wholesale & retail trade, and healthcare & social assistance. (Data source: Treasury)

If you currently have a wage differential between positions, for example a junior line operator, a senior line operator and a supervisor, your employees will want to maintain the differential. As such it is not only minimum wage earners who will expect a significant wage increase.

Unfortunately increasing minimum wage does nothing to improve productivity. I have yet to see employees working harder or smarter as a result of a pay increase. So you are not going to get better outputs as a result.

Some of the key options are:

  1. Absorb the increased costs by accepting lower profits (or in many cases operate at a loss).  One impact of lower profits is a reduction in investment in capital (as return on capital is reduced).
  2. Reduce costs. As labour costs have increased, reducing staff may be the necessary answer, particularly if wages is a high percentage of costs.
  3. Pass on the higher wage cost to customers through increased prices.
  4. Implement productivity improvements (e.g. technology, systems) so you can reduce employee numbers, and/or improve profit margins.
  5. Explore the possibility of changing to a high wage, high value business model.
  6. Sell up, leave the country or hide under a rock for the next three years.

It is important employers start to consider the impacts on their organisation now, and plan for it in advance. Increasing prices incrementally is often more palatable to customers than one large increase. Putting in place plans to increase productivity needs to happen before the business is in trouble. If you need to restructure your staffing this takes time, and again is better done before the business is in distress. Just keep in mind Labour has also stated they want to begin consultation on improving minimum redundancy protection for employees.

And the changes keep on coming.

How to Pay Employees for Upcoming Public Holidays

Christmas Day and New Year’s Day fall on a Monday this year with Boxing Day and the Day after New Year’s falling on a Tuesday. Labour Day is always on a Monday and falls on 23 October this year.

If you are unsure how your employees should be paid over these statutory holidays, first refer to their individual employment agreement to check that it doesn’t provide for any terms in addition to the statutory minimum requirements. Then establish which of those stat days would normally be a working day for them.

When a public holiday falls on a day that your employee would usually work, regardless of how long they’ve been working for you, then they’re entitled to a paid day off.

Employees are only required to work on a public holiday if it’s a condition written into their employment agreement. If they agree to work, you must:

–          pay them at least time and a half and

–          give them an additional paid day off (a day in lieu).

Next the following applies:

When the Public Holiday would normally be a working day for the employee:

If the Public Holiday that falls on the Monday or Tuesday is ordinarily a working day but the employee does not work then they are paid for that Public Holiday the same as for a normal working day i.e. at their relevant daily pay.

If the Public Holiday that falls on the Monday or Tuesday is ordinarily a working day and the employee does work on those days, then they are paid time and a half for the hours they work, and they are also entitled to an alternative day off (lieu day).

When the Public Holiday is not usually a working day:

If the employee does not normally work on the Public Holiday, in this case the Monday or Tuesday, then they do not get paid at all for those days.

If the employee does not normally work on the days the Public Holiday falls but then does work on those days, they are entitled to be paid time and a half for the hours they work, and not entitled to an alternative day off (lieu day)

If you require further information regarding paying employees for Statutory Holidays click here.

 

Huge Fines for Categorising Employees Incorrectly as Contractors

The sole director and shareholder of Direct Auto Importers and Cheap Deals on Wheels, Vishaal Sharma, had claimed that his employees were contractors and had denied owing them their minimum entitlements.

Following a Labour Inspectorate investigation however, the Labour Inspectorate disagreed. The failure to categorise his employees correctly resulted in fines of $65,000 to his two businesses.

The ERA found that both Direct Auto Importers and Cheap Deals on Wheels had not only failed to pay minimum wage or correct holiday pay to their employees, but had also failed to provide employee agreements and didn’t keep accurate records of employment.

A Labour Inspectorate manager, Loua Ward, said “An employer cannot avoid their obligations by simply calling their employees ‘contractors’, and any attempts to do so will not be tolerated by the inspectorate. All employees in New Zealand must be provided with written employment agreements and their minimum employment entitlements, such as the minimum wage and holiday pay,” She also added. “If an employer cannot meet these basic obligations, then they should not be an employer.”

Ms Ward also noted that this incident was not the first offence for one of the organisations, Direct Auto Importers. They were taken to the ERA last year by an employee who was able to successfully claim $17,996 in arrears.  She emphasised that as a result of that claim the employer should have known their obligations.

The responsibility lies with employers to provide their employees with all their correct minimum entitlements and ignorance is no excuse.

Direct Auto Importers were penalised to the tune of $50,000 for not paying holiday pay, providing written employment agreements, or keeping wage, time holiday or leave records, and a further $726 in arrears was ordered to be paid to two staff members for holiday pay owed and working on public holidays.

$15,000 was the penalty for Cheap Deals on Wheels for similar breaches and the ERA also set aside an amount of $10,000 in penalties to be arranged for three former employees of the businesses.

This case sets a serious precedent that employers should take note of. If you are in any doubt as to whether your contractors and/or employees are categorised correctly, please contact us for clarification.

This post is supplied by Chapman Employment Relations

Changes to Parental Leave Payments

There are two main changes to parental leave payments that have taken effect as of 1 June 2017.

 The start of the parental leave payment

Employees may use up their leave entitlements prior to the start of their 18-week parental leave payments starting, even if this takes them past the baby’s arrival. Leave entitlements include annual leave, alternative days, special leave or time off in lieu that accumulated during employment. Before 1 June 2017, the parental leave payment period couldn’t start later than the baby’s arrival.

Pre-term baby parental leave payment

If a baby is born before the end of 36 weeks and the employee is eligible to parental leave payments, they could also get pre-term baby payments.

Employees with a pre-term baby now have more flexibility around returning to work and parental leave payments. Previously, when an employee with a pre-term baby returned to work after they started getting payments, their payments would stop. However, as of 1 June, employees can still get their parental leave payments when they go back on parental leave, as long as it’s no later than the expected date of birth.

For more information regarding the in’s and out’s of parental leave, please contact one of our knowledgeable consultants at Chapman Employment Relations.

Test Your Knowledge – The Privacy Act 1993

The purpose of the Privacy Act 1993 is to promote and protect individual privacy – in particular to establish principles on: collection, use, and disclosure of information relating to individuals and access by individuals to information held about them.

Below are some common misconceptions and facts about your Privacy, rights and requirements courtesy of the Privacy Commissioner NZ.

Q 1. True or False: if your profile on a social network is set so that only your friends can see it, your profile is completely private.

Click here to find the answer

Q 2. True or False: You always have control over the pictures you post online.

Click here to find the answer

Q 3. The Privacy Act protects your personal information. Personal information consists of:

A. Your name, age, weight, height, home address and phone number.

B. Your blood type, DNA code, fingerprints and medical records.

C. Your education, purchases and spending habits.

D. All of the above.

Click here to find the answer

Q 4. It’s really easy to share pictures and stories with your friends on social networking sites. When you’re posting items you should:

A. Post everything that you think is funny and interesting – your friends will love these things!

B. Don’t post anything – it’s a creepy world out there.

C. Think first. Would you be comfortable if your parents, teachers or bosses saw what you are posting?

Click here to find the answer

Q 5. When you’re surfing online, websites can collect this information about you:

A. My personal preferences.

B. My approximate location.

C. The software I’m using.

D. All of the above.

Click here to find the answer

Q 6. You’re buying an item of clothing at the mall. As you’re about to pay for them, the shop assistant asks for your address and phone number. You:

A. Give it to him. The shop probably needs it in case I want to return the jeans.

B. Ask why he needs it. Once you know what the shop plans to do with your information, you can decide whether to hand it over.

C. Refuse. It’s none of their business!

Click here to find the answser

Q 7. Under the law, you have a right to complain if:

A. You think your personal information was improperly collected, used or disclosed?

B. You run into difficulties trying to get your personal information from an organisation, or to get your personal information corrected when it’s wrong?

C. All of the above.

Click here to find the answer

Q 8. Can an employer contact a job applicant’s past employer for a reference?

Click here to find the answer

 

Other Privacy breaches/concerns that Chapman ER have seen of late are:

 

Q 9. Birthdays. Is it OK to email ‘All staff’ notifying them of an employee’s birthday so they can congratulate them or buy them a card or present?

A. It’s only OK if it’s a special birthday for example a 40th or 60th

B. It’s only OK to send to the employee’s immediate team

C. It’s only OK if the employee gives you permission

D. It’s never OK

E. It’s always OK

Click here to find the answer

Q 10. Resignations. Is it OK to send an email to all staff notifying them of the resignation of an employee and communicating where the staff member will be moving to or what they will be doing next?

A. Only OK if the staff member agrees to the communication

B. It’s always OK. The role is being vacated, the employee is leaving and the staff have a right to know.

C. It’s never OK and the staff will find out soon enough when the job is advertised.

Click here to find the answer

Q 11. Work emails. Can you monitor any information on your company’s computer system i.e. Information accessed and saved on your employee’s desk top?

A. No that is an invasion of your employee’s privacy.

B. You can only monitor work related information.

C. You can only monitor information on an employee’s computer if an alarm alerts you to pornography or inappropriate material being accessed

D. It is your system and you can monitor and access any information stored or accessed on an employee’s desktop, laptop, or other device

Click here to find the answer

 

Q 12. Which answer applies to information gathered from an employee during a workplace investigation e.g. Health & Safety, Bullying:

A. The employee can withdraw their statement at any time through the process

B. The employee cannot withdraw their statement once communicated

C. The employee can correct the information provided if it is recorded inaccurately

D. The employee cannot refuse to participate in an investigation process

Click here to find the answer

Employment Agreements Require Updates Now

We encourage you to update your employment agreements immediately as last years amendments to the Employment Relations Act are due to come into force for existing employees very soon. The new requirements, which relate to working hours, cancellation of shifts and restrictions on secondary employment, will apply from 1 April, 2017. The wording of some clauses in your current employment agreements may become ineffective from this date.

Below is a summary of the changes or please contact us if you would like assistance with reviewing your employment agreements.

Zero Hours Contract

There are a number of changes to the Employment Relations Act, which address zero hour contracts, cancelling shifts, making deductions from employee pay, and prohibitions on secondary employment. Below is an article from the Ministry of Business, Innovation and Employment which summarises the changes.

It is likely existing Employment Agreements will require updating to reflect these changes, particularly if you have Agreements with no minimum number of hours guaranteed. Please let us know if you would like your Agreements reviewed or having any questions on how these changes affect your workplace.
 

Addressing zero-hour contracts

The Employment Standards Legislation Bill includes a package of measures to prevent unfair employment practices in the New Zealand labour market, such as “zero-hour contracts”.

The changes aim to retain flexibility where it is desired by both, employers and employees, but also increase certainty by ensuring that both parties are aware at the beginning of the working relationship of the mutual commitment that they have made.

The changes mean that where the employer and employee agree to hours of work, they will be required to state those hours of work in the employment agreement.

The changes also prohibit the following practices:

  • employers requiring employees to be available to work for more than the agreed hours without having a genuine reasons based on reasonable grounds
  • employers requiring employees to be available to work for more than the agreed hours without paying reasonable compensation for the number of hours the employee is required to be available
  • employers cancelling a shift without the provision for reasonable notice or reasonable compensation
  • employers putting unreasonable restrictions on secondary employment of employees
  • employers making unreasonable deductions from employees’ wages.

When hours are agreed, these must be stated in the employment agreement

Where the employer and employee agree to set hours of work, they will be required to state those hours in the employment agreement. This includes agreement on any or all of the following:

  • the number of guaranteed hours of work,
  • the start and finish times,
  • the days of the week the employee will work
  • any flexibility in the above.

What if there are no agreed hours?

The employer and the employee do not have to agree on hours, times or days, but when they do, anything that is agreed must be recorded in the agreement. This will ensure employers and employees are clear in their commitments to each other.

In cases where no hours were agreed to, the employer must provide an indication of the arrangements relating to the employee’s working times. This is consistent with the current law.

Employees will be able to apply to the Employment Relations Authority for a penalty against their employer, if they agreed on hours, but have failed to record these in the employment agreement.

Preventing employers requiring employees to be available without a genuine reason based on reasonable grounds and providing reasonable compensation

The changes will prohibit employers from requiring employees to be available above the agreed hours of work stated in their employment agreement unless employees are reasonably compensated for that availability as agreed in the employment agreement. Employers will not be obliged to offer work that is above the agreed number of hours. Employees will be free to decline extra work unless they agreed to an availability provision and they are provided reasonable compensation for that availability.

What about availability provisions?

Availability requirements and compensation rates will need to be agreed and stated in the employment agreement. An employer can not include an availability provision in the employment agreement, unless there are some guaranteed hours in the agreement.

The employment agreement should also indicate the amount of availability the employer requests.

Employers will also need to have a genuine reason based on reasonable grounds to require employees to be available above the agreed hours. Employers also need to have a genuine reason based on reasonable grounds for the number of hours of availability.

When considering whether there is a genuine reason based on reasonable grounds, employers must consider:

  • Whether it is practicable for them to meet their business demands without using an availability provision
  • How much availability they’re requiring and the proportion of the availability to the number of agreed hours of work

What is considered reasonable compensation for availability?

When establishing what compensation an employer offers to an employee in exchange for their availability, employers must consider:

  • The number of hours they are requiring an employee to be available
  • The proportion of the availability to the number of guaranteed hours
  • Any specific restrictions the availability provision requires (e.g. must not drink while on call)
  • The employee’s regular pay rates
  • If the employee is paid by salary, the amount of the salary

Cancelling a shift only with reasonable notice or reasonable compensation

Reasonable notice and reasonable compensation for cancelling a shift will need to be specified in the employment agreement. When a shift is cancelled, the employer will need to give either reasonable notice or reasonable compensation before the commencement of the shift. If the employment agreement does not specify these, then the employee must be paid the full amount they would have earned, had they worked the shift.

What is a reasonable notice period?

When considering whether the notice period is reasonable, employers must consider:

  • The particular nature of business
  • The ability of the employer to control or foresee cancellations
  • The nature of the employee’s work and the likely effects of a cancellation on employees
  • The nature of the employee’s employment arrangements including whether they have guaranteed hours and if so, the number of guaranteed hours

What is considered reasonable compensation for shift cancellation?

When considering whether the compensation is reasonable, parties must consider:

  • the length of the notice period stated in the employment agreement
  • the remuneration the employee would have received for working the shift
  • likely costs incurred by the employee in preparation for the work

Prohibiting unreasonable restrictions on secondary employment

Employers will be prevented from restricting secondary employment for employees, unless they have a genuine reason based on reasonable grounds to do so. Those grounds won’t be prescribed but will be related to:

  • the risk of loss to the employer of knowledge, property (including intellectual property) or competitive reputation.
  • Preventing a real and unmanageable conflict of interest

Employers must not restrict employees to a greater extent than is necessary. They should consider whether particular cases warrant restrictions instead of putting blanket restrictions on secondary employment.

Prohibiting unreasonable deductions from employees’ wages

The current law already requires employee consent to deductions from wages. The new legislation will mean the employer must consult with the employee on each specific deduction, even where the employee has given general consent to lawful deductions in their employment agreement. This obligation does not extend to lawful deductions for things like Kiwisaver or student loan repayments etc.

The changes will also mean that even where there is consent, a deduction must not be unreasonable. For example a deduction to cover losses caused by a third party through breakages or theft may be unreasonable, particularly if the employee had no control over the third party conduct.

Payroll – End of Year & Start of New Year

Employer monthly schedules and ir-files filed with IRD are based on the payment date of the pay run (not the pay period end date). After you have finalised the last pay for March and printed your end of year reports (make sure this includes leave liabilities/balances), go ahead and file your ir-file with IRD as usual.

The next step is to review and update your employees’ salary and wage information. Ensure all employees on minimum wage have their rates updated to the new minimum wage of $15.75. The new rate needs to be applied from 1 April. If 1 April falls in the middle of a pay period, you can either pay different rates by inserting an extra line with the different rate, or apply the new minimum rate for the whole pay period.

If you have contractors using the WT tax rates on schedular payments (including those hired by labour-hire firms), they are from 1 April able to choose their own tax rate, subject to minimums. New contractors, existing contractors (if they need to change tax rate or starting a new contract) and those opting in to the schedular payments rules need to complete the IR330C Tax Rate notification for Contractors form.

ACC levies, ACC threshold and student loan repayment threshold are automatically updated if you are using payroll software.

Want to read more?

Tax and Contractors

IRD Contractor Changes 

 

Migrant Worker Exploitation Cases Becoming More Prevalent

A migrant worker who was forced to pay her employer a premium to secure herself a job has been awarded $42,813 by the Employment Relations Authority.

Kapilaben Patel was employed as a chef by Curry Pot on Lincoln Ltd for three years from 2011 until mid- 2014.

The ERA found that Patel and her husband had made payments of around $15,000 in return for a job offer with Curry Pot Indian restaurant in Lincoln and assistance and support with a work visa and a residency application. Evidence showed that $5,000 was paid to the Curry Pot Indian restaurant four months before Patel started working there and 11 days before an employment agreement was signed and submitted to Immigration New Zealand.  Patel stated she also paid the directors of the restaurant cash payments.

Patel was awarded $31,413 for unpaid wages, working on public holidays and holiday pay from 2011 until 2014 plus $11,400 in reimbursement for the premium paid to secure her employment.

The company accepted there may be some statutory holiday pay owing to Mrs Patel but disputed all the other amounts claimed. They claimed she did not work all the hours claimed or that she paid them premiums.

“Advances may have been made from Mrs Patel to staff at Curry Pot but these, aside from one payment of $5,000 into the Curry Pot account, were personal in nature and not premium payments and they have nothing to do with Curry Pot” it said.