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.

Minimum Wage Increase from 1 April

The Government have announced that the minimum wages will increase by 50 cents to $15.75 an hour from 1 April 2017.

Barbican Training Centre

Barbican Training Centre is an organisation we love to recommend to our clients, they provide outstanding training for people new to business or those who want to improve their business management and IT skills.

The popular no fee, 36 week, ‘Certificate in Small Business Management’ is starting again in March 2017. The programme is designed to give you the tools and inspiration to kick-start your business idea or manage your existing business more effectively.

Another popular course is the part time ‘Get Money Smart’ programme. It’s one evening a week and free to all permanent NZ residents. The course covers personal finances and personal budgets, hot to keep out and get out of debt, different savings and investment options , understanding real estate, interest rates, mortgages, shares and more.

To register for an Information and Enrollment Session, contact Barbican  or for more information contact Pip Bruce, Barbican Training Centre Limited, 03 547 6138 or visit the Barbican website  for further information and other courses available.

Gifts of Food & Drink

IRD have recently clarified their position on gifts of food and drink, ie hampers, Christmas ham etc, and these gifts now fall under the Entertainment rule and are only 50% deductible as there is a private benefit. It makes no difference whether the gift is to staff, suppliers or customers. Gifts other than food and drink are still 100% deductible as long as it’s business related, keep in mind FBT for staff. As before, any meals, drinks and entertainment are only 50% deductible, unless it is morning or afternoon tea or meals while travelling, however not if accompanied by a potential or existing business contact in which case it is only 50% deductible.

 

Easter Trading Law Change

A recent change to the Shop Trading Hours Act 1990 now enables councils to decide whether shops in their district can open on Easter Sunday. The change is from Easter 2017, depending on each individual council. We will update you closer to the time with our councils’ local policies.

For employers who plan to open on Easter Sunday, this means you must tell staff of their right to refuse to work, eg by group email. This must be done:

  • between eight and four weeks before Easter Sunday, or
  • as soon as possible if new staff join your business less than four weeks before Easter Sunday.

For employees, the law change means they can:

  • refuse to work on Easter Sunday without giving a reason and without repercussions — but they must tell you they’re not going to work
  • raise a personal grievance against you if they believe they’ve been:
    • made to work Easter Sunday, or
    • treated badly for refusing to work Easter Sunday.

An employee who doesn’t intend to work Easter Sunday must tell you in writing within 14 days of receiving the right to refuse. This can be by letter or email.

The Power of Values in Driving Organisational Change

Most people instinctively understand the concept of values, after all we all have them, but most people tend to think of them as something that relates to a person and not an organisation. However, many successful businesses and organisations, across a range of sectors, are successfully using organisational values as a base to improve the culture in their organisation, drive improvements and deliver real benefits to their customers.

Organisational values represent the guiding principles for the way employees go about their jobs and interact with the customers of the organisation. They define non-negotiable behaviours and they underpin the organisation’s vision.

Placing organisational values at the heart of an organisation can deliver some powerful tools when addressing your organisation’s culture. For instance, organisation values can:

  • Provide a framework for how your employees (from the CEO down) treat one another at work
  • Provide a framework for how your employees treat your customers
  • Provide a framework for achieving your vision and increasing organisational effectiveness
  • Can help to create an environment that facilitates job satisfaction
  • Can help you identify employees who agree with your company’s vision and will fit with the culture
  • Can be used in marketing your organisation’s products or services

To be effective the organisational values cannot just be invented around the Board table or with the Senior Management Team. For this values led approach to be successful, four things are critical:

  • Employees and customers’ opinions about the organisation should form a crucial part in developing the values;
  • The values must be embedded from the top to the bottom
  • The values must be visible in every day work across the organisation
  • The values must be aligned to customer expectations

A brilliant example of an organisation using values to enhance its ability to improve the quality of delivery is the Waitemata DHB. It is referred to as the “Waitemata Experience” and is a values based culture change focused on achieving better outcomes and experiences for its patients. Cruicially the DHB realised was that they couldn’t improve patient outcomes without improving staff outcomes. They determined the DHB’s values by collaborating with their staff and their customers. Their organisational values are:

  • Everyone matters
  • Work with compassion
  • Feel connected
  • Better, best, brilliant

They then worked to develop 16 core standards that relate to the values and drive goals, decision making and behaviour within the DHB.  The DHB sought and analysed feedback from employees and patients and was surprised that the employees’ and the patients’ views didn’t always align on similar topics, for example, employees tended to believe that a good clinical outcome was the top priority for patients, but patients indicated that a good clinical outcome was expected. What the patient saw as a top priority was to be able to ask questions and to be listened to by the health professionals they were dealing with.  Patients also indicated that they wanted to feel welcomed and to feel that the place was a friendly one to visit. Whereas employees indicated that appreciation and recognition by their peers and managers was high on their list of needs.

The DHB has indicated that while the Waitemata Experience is still a work in progress the impact it has had on its employees and patients has been a significant and positive one.

If you are interested in improving the culture of your organisation or keen to explore what organisational values might be able to deliver for you, please contact us.

Are You Guilty of the Following?

Here are five of the most common slip ups employers have been making recently.

1. Not having your employee sign the employment agreement prior to starting is liable to result in problems including:

a. Any 90 day trial period clause would be void

b. Terms and conditions could be difficult to enforce and costly to negotiate after the fact.

c. Depending on how long it takes to get an agreement signed a precedent could be set that dictates what those terms and conditions will be

d. Not having an IEA is in breach of the Employment Relations Act

2. Not doing reference checks at all or not doing thorough reference checks on preferred candidates can lead to problem employees further down the track. If you do reference checks don’t be afraid to ask the hard questions such as ‘Were there any formal performance or disciplinary issues related to this candidate?’ or ‘Would you rehire them into the role they were doing before they left?’ ‘Was there ever any reason to question their integrity?’ Look closely at who their referees are; have they left out their last immediate manager? Why?

3. Not following process. Whether you are restructuring, performance managing or disciplining, there is a process that must be followed. There is a legal process and you may also have a documented internal process. It is important to comply with these to avoid any risk of a personal grievance.

4. Hasty decisions! Don’t make them. It is easy to make snap decisions or say things without thinking through the implications or seeking help first. Once you have communicated your decision or spoken certain words it is almost impossible to take them back or rectify the situation without some cost involved.

5. No Recognition. Failing to recognize good workers can cause employees to become disgruntled. Sometimes these are your best people that will walk and when they go you didn’t see it coming. Celebrate successes of teams or individuals and recognize a job well done. Success breeds success and is contagious. Conversely one disgruntled employee can poison those around them and quickly damage your culture.

 If you are unsure of the correct process when it comes to your employees, call us first. We offer 10 minutes free telephone advice for any new matter.

Victory Primary School benefits from $15,000 donation from local business

Below is a recent article from the Nelson Mail about one of our clients, Vortex Spas making a very generous donation to help local kids. Photo is courtesy of Nelson Mail & Fairfax Media

Congratulations Andrew, what a great initiative.

 

A generous donation from a local business has helped Victory Primary School provide food for disadvantaged pupils.

The school had applied for the help of charitable trust KidsCan, which provides food, clothing and other basic needs for those in need.

But KidsCan has a waiting list because they’re already helping 500 schools and more than 115,000 children around New Zealand.

Victory’s large role of 400-plus pupils also meant it faced a long wait, potentially years, to get into the programme. That’s when Vortex Spas came in.

Managing director Andrew Pullen said the company didn’t know about the school’s application when he approached KidsCan about becoming “more proactive” in their support of local charities.

“We wanted to support our own community first and foremost, we wanted to support the most disadvantaged section of the community and we want to support basic needs first.”

Vortex Spas donated $15,000 cash to KidsCan, which saw Victory Primary School accepted into the programme providing lunches for pupisl.

“It’s the teachers and the staff here that really do the heavy lifting,” Pullen said.

The school and the spa business are now organising a raffle to raise $10,000 in funds with the aim to get raincoats for all pupils and shoes for those that need them.

“What we’re really looking for is for the whole of Nelson to be supporting this. If we receive some great success, we’ll be extending out outside of just the Victory area,” Pullen said.

Tickets for the raffle are $5 and available from Benge & Co greengrocers, Stacey Clothing in Richmond, Victory School reception and at a stall at the Nelson Market.

The first prize is a Vortex Spa pool valued at over $11,000. The second prize is a Weber BBQ valued at $1000. Other prizes include Stacey Clothing vouchers, Pestell’s meat vouchers and Benge & Co green grocer voucher.

The winning ticket will the drawn at Victory Primary School on July 8 at 10am.

The top five ticket sellers from Victory Primary School will go on a training run with the Tasman Makos, Pullen said.

School principal Helen Taylor-Young she was quite overwhelmed by Vortex Spas generosity.

“The great thing for us is that it means can get on with the teaching and learning,” she said.

“I feel very privileged that Andrew chose us first.

“The great thing here is that we got a good infrastructure with the community centre and the school partnership, it’s a great place to roll it out and to trial it here.”

Tax Refund Services

Tax Refund Services are advertising heavily at the moment. Rest assured, that if you are a client of ours that we prepare tax return(s) for, we will calculate your tax refund/payment due. If you believe you are owed a tax refund for past years, before you became a client but within the last 5 years, we can look this up for you too.

If you are a client, please contact us first if you have any queries as applying online with another company will cause you to be delinked from our tax agent list with IRD and linked to theirs. When it comes time to prepare your accounts and/or tax return, we will need to relink you to our list, causing an unnecessary charge.

 

Modernising Parental Leave

The Employment Standards Legislation Bill which came into effect on 1 April 2016 brings some changes to Parental Leave, including:

  • Parental leave payment period extended to 18 weeks
  • Parental leave payment extended to non-standard workers and those who have recently changed jobs
  • Entitlements extended to a wider range of permanent arrangement carers with primary responsibility of a child under 6 years
  • Unpaid leave can be taken flexibly within the first year
  • Introducing “Keeping in Touch” hours of work – for example to do training, hand overs and ease back into work
  • Extending unpaid leave to workers who have been with their employer for more than six months but less than 12
  • Allowing workers to resign and still receive payments
  • Increasing penalties for fraud
  • Providing additional parental leave payments for parents of preterm babies

Some of the above requires certain eligibility criteria be met and some are by mutual agreement with the Employer, so it pays to communicate your plans. To read more about the changes and to find out the details about leave entitlements and criteria visit one of these sites:

Ministry of Business, Innovation & Employment

IRD