Employment Law

Our corporate and finance team is proud to have advised local robotics company and long-time client Robotics Plus through its recent acquisition by Japan’s Yamaha Motor Company. Partner Ken Hawkes has worked with Robotics Plus founders Steven Saunders and Dr Alistair Scarfe for over 10 years through their journey of development and innovation, to this major milestone. Robotics Plus is a true local success story. The Tauranga based company develops and produces robot vehicles to improve orchard efficiencies, such as the flagship ‘Prospr multi-use autonomous vehicle’. Identifying a need for such products in the horticulture industry early on, the company has grown from strength to strength, with the acquisition by Yamaha Motor Company paving the way for further international expansion and the scaling up of manufacturing. Holland Beckett’s corporate and finance team advised Robotics Plus on the acquisition supported by the employment and commercial teams. Read The New Zealand Herald article here: Yamaha buys Tauranga’s Robotics Plus, unveils big plans Read Robotics Plus release here: Robotics Plus acquisition by Yamaha Motor to enable precision agriculture for growers

This article was published for the Bay of Plenty Times, Friday 14 February 2025 It seems like with every change of government comes the inevitable slew of changes to employment law. The Act Party’s focus on employment law reform has made this truism even truer for the Coalition Government. Big changes have already been made.  The ink was barely dry on the election results when the Coalition Government binned the Fair Pay Agreements framework proposed by the previous Labour Government.  Next up was that classic political football, 90-day trial periods, with the Coalition Government re-opening them back up to employers regardless of size (the Labour Government had limited them to employers with fewer than 20 employees). So what morsels can we look forward to on the Coalition Government’s menu in 2025?  The Holidays Act was temporarily in the crosshairs, with plans to replace it with an entirely new Act, but this has now been sent back to the drawing board by Minister for Workplace Relations, Brooke van Velden.  On the other hand, work is continuing on reform of the Health and Safety at Work Act, following consultation which concluded late last year.  We can expect more detail of proposed changes later in the year. The Minister announced a new “gateway test” for determining whether an individual is an employee or a contractor last year.  This will significantly alter the way that the Employment Relations Authority approaches this question.  As it stands, the Authority looks beyond the written agreement in place and assesses the “real nature of the relationship”, to determine whether a worker labelled as a contractor is actually an employee.  2024 provided a high profile example, when the Court of Appeal ruled that Uber drivers were employees, not contractors.  The changes proposed would mean that, in the first instance, the Authority would instead first consider whether: The business has a written agreement with the worker specifying they are an independent contractor; The business does not restrict the worker from working for another business (including competitors); The business does not require the worker to be available to work on specific times of day or days, or for a minimum number of hours – or if it does, the worker can sub-contract the work; and The business does not terminate the contract if the worker does not accept an additional task or engagement. If these criteria are all met, then the worker will be automatically deemed to be a contractor.  If one or more of the criteria are not met, only then will the Authority apply the “real nature” test as usual.  Our take is that the criteria need a lot more clarification before employers can enjoy the certainty that the changes are designed to provide.  Hopefully this will come when the bill containing the changes is introduced later this year. Another major proposed change on the cards for 2025 is the introduction of an income threshold above which an employee would lose the statutory right to raise an unjustified dismissal personal grievance.  Cabinet has agreed the threshold base salary will be $180,000.  The Minister has said that this is directed at offering senior employees and their employers more choice over their employment arrangements.  Employees and employers can agree to opt back into the unjustified dismissal personal grievance regime, or agree their own dismissal procedures.  Despite this, we would expect to see fewer protections against unjustified dismissals for senior employees as a result of this change.  One question requiring clarification is whether these employees will retain the ability to challenge their dismissal via another type of claim; e.g., a common law claim for breach of contract. The Coalition Government is also targeting remedies for personal grievances, with proposed changes to disqualify employees who pursue successful personal grievances from being awarded remedies where their behaviour has amounted to “serious misconduct”.  Further, employees would be disqualified from being reinstated to their previous role, or from receiving compensation for hurt and humiliation, where their behaviour has “contributed to the issue”.  Other proposed changes included allowing remedies to be reduced up to 100% for other types of bad behaviour, a requirement that the Authority consider if the employee’s behaviour obstructed the employer’s ability to meet their legal obligations, and “increasing the threshold for procedural error” in cases where the employer’s actions against the employee are considered fair.  This last point is particularly interesting, given we are concerned that an unintended consequence of these changes could be that employers would no longer be required to meet any fair process standards as long as they can establish they had a good enough reason to dismiss an employee.  We look forward to this issue being clarified as well, when the bill containing these changes is introduced later in 2025.

In a recent decision, the Employment Court has ruled in favour of High Performance Sport New Zealand (HPSNZ), overturning a decision made by the Employment Relations Authority in January 2024. In its initial ruling, the Authority had determined that HPSNZ was required to engage in collective bargaining with The Athletes Cooperative (TAC), a union representing both the individual and collective interests of its athlete members.[1] The Court heard evidence from a number of current and former athletes, including several who have represented New Zealand at international events.[2] Their evidence highlighted deficiencies in the current funding system, particularly the lack of employment protections for athletes and the insufficient prioritisation of their interests and well-being.[3] The key legal dispute centred on the circumstances in which a union may validly initiate collective bargaining with an employer in accordance with s 40 of the Employment Relations Act 2000 (the Act).[4]  The Court ruled that for a union to validly initiate bargaining, it must be in an employment relationship with an employer.[5] Based on the context and purpose of s 40, the Court determined that such an employment relationship can only exist when members of the union are employed by the employer.[6] The Court referred to the Supreme Court’s decision in AFFCO[7] where the word “employees” was held to have a broader meaning than in s 6 of the Act and covers persons seeking employment in some situations where those persons are not strangers to the employer in contractual terms.  While TAC is a registered union and HPSNZ is an employer, the Court found that TAC’s members were not “sufficiently connected” to HPSNZ in a way that would establish an employment relationship for the purposes of s 40. It clarified that HPSNZ deals directly with the National Sporting Organisations and not the athletes directly and as such any reference to HPSNZ in the athletes’ agreements is limited only to funding and not an employment relationship.[8] The Court’s decision clarifies the legal criteria for applying s 40 and the circumstances under which a union can validly initiate collective bargaining with an employer. TAC has sought leave to appeal the decision to the Court of Appeal.[9] As a further comment, the decision highlights the complexities of the relationship between HPSNZ, National Sporting Organisations and athletes in elite programs, in particular the application of funding and employment protections afforded to athletes. The final outcome of this matter will no doubt have a significant impact on the landscape of the New Zealand sports environment. _____ [1] The Athletes’ Cooperative Inc v High Performance Sport New Zealand Ltd [2024] NZERA 43 (Member Anderson). [2] High Performance Sport New Zealand Ltd v The Athletes’ Cooperative Inc [2024] NZEmpC 250 at [41]. [3] At [42]. [4] At [1]. [5] At [88]. [6] At [88]. [7]  AFFCO New Zealand Ltd v New Zealand Meat Workers and Related Trades Union Inc [2017] NZSC 135, [2018] 1 NZLR 212 at [75]. [8] n 2 at [89]. [9] Dana Johannsen “Athlete union’s legal bid for collective bargaining with High Performance Sport NZ overturned” (16 January 2025) Radio New Zealand <www.rnz.co.nz>.

Swearing? We are all guilty of doing it to some extent, but what about in the workplace? Is it acceptable and if so, to what degree? Can your employer discipline you for an outrage of expletives? In some circumstances and in certain workplaces, dismissal may be wholly warranted, while in others, it may not, notwithstanding that it is the same conduct in question. Confused? Context is key alongside a myriad of factors to be taken into consideration. Ultimately it will come down to what is fair and the workplace culture. The issue of “fairness” is addressed in the Employment Relations Act 2000 which tells parties whether a dismissal will be fair or not. For instance, in the case of Waihape v AFFCO New Zealand Limited [2017] NZERA 13 several mitigating factors were taken into consideration, including the context of the situation, the nature of the workplace and the relationship between the parties involved. In Waihape, it was determined that given the nature of the workplace, several individuals regularly swore in their day-to-day banter and an employer would struggle to justify taking action for a staff member using bad language in those circumstances. The evidence showed that management failed to crack down on similar offensive language in the workplace. The Authority quoting from precedent said: “It is well established that an employer will fail to justify a dismissal where communications do not appear to be greatly out of character with others apparently condoned by management in the workplace.” Overall, case law suggests that if an employer wishes for certain standards to be upheld, it will need to ensure there are policies in place to make employees aware that swearing is unacceptable. Furthermore, employers will need to demonstrate that it does not tolerate swearing in the workplace by enforcing the policy when it is breached. It is both best practice and prudent for employers to ensure that the expected and acceptable standards of behaviour are addressed and imbedded into any training and induction processes. Above all else, it is imperative that employers do not single out an individual for the use of course language while letting other employees get away with the same. The key takeaway is, like with all disciplinary matters, a fair procedure must be followed. An employer will need to establish the facts and review any offensive language in the context of the circumstances alongside the company’s relevant policies. Before taking disciplinary action, an employer will need to carefully consider whether a verbal warning or written warning is more appropriate. Dismissal would only be justifiable if the employee’s conduct warrants gross misconduct and summary dismissal. Whether you are considering taking action against an employee or you are an employee facing disciplinary action yourself, we recommend getting cogent advice first. Speak to our employment law team today.  

With the economy continuing on its downward slide, you will not be alone in giving thought to potential cost cutting measures, including reducing your labour costs. Restructuring is usually a last resort for employers and is only a step that tends to be taken when there seem to be no other viable options for reducing costs quickly.  While the impact on employees is immense, it is clear that a restructure process can be just as stressful and fraught for an employer.  That is why, sometimes, employers can get things wrong and may find themselves at the centre of a personal grievance, which can result in greater stress, cost and uncertainty. A restructuring needs to be substantively justified, and procedurally correct.  If you do not meet both of these requirements, there is a risk that if an employee were to make a claim against you, it could be upheld. What is Substantive Justification? It is likely that during recessionary times, such as we are in now, the substantive reasons for a restructure will be fairly obvious to your employees.  However, you will still need to justify this by providing evidence in support.  This may include pointing to reduced sales figures or forecasts, showing increased costs (i.e. materials, rent, insurance), or any other information that you are willing to share that goes toward justifying the proposal to restructure. What is the Correct Procedure? The procedure for restructuring is usually where an employer can get tripped up.  To start, you need to remember that you should not pre-determine that a restructure is inevitable.  You have a good faith obligation to your employees to consult with them before any decisions that may affect their employment are made.  It may be that during consultation, you are able to see a way forward that means a restructure is not required, or at least not to the extent that you had originally envisaged. Once you have substantive justification, you need to advise your employees that you are proposing a restructure and give them adequate information including what the restructure would entail, how it would impact them, and how you wish to consult with them about it. You will then move to the consultation stage and be ready to provide further information or answer any questions the employees may have.  Once you have finished consultation, you will need to advise the employees of your proposed decision.  Your employees should then be given an opportunity to comment on or ask further questions about the proposed decision.  It is not until they have been given this opportunity that you should procced to confirm your decision. The exact process you follow will depend on factors such as the size of your workforce, the number of roles that may be impacted, the typical method of communication with employees, the specific terms of your employment agreements, and the location of your employees. Having guided employers through numerous restructures, the one point we want you to keep in mind is that getting your restructure right is by far more preferable than having to deal with the consequences (and potential costs) of getting it wrong.  We can provide specific advice and guidance on restructuring and all other employment related issues, so please contact our employment law team at any time for further information.

Earlier this week the Workplace Relations and Safety Minister Brooke Van Velden gave a speech to the Auckland Business Chamber, reiterating her priorities following the conclusion of the Government’s 100-day plan in which Fair Pay Agreements were abolished, and the availability of 90 day trial periods extended to all new employees. The Minister has confirmed that delivering changes to the Holidays Act (“Act”) is one of her top priorities, which is likely to be welcome news to both employers and employees. Compliance with the Act has been difficult and costly for employers and payroll providers. The Labour Government put together a taskforce in 2018 to address the many issues being experienced by employers when calculating leave and holiday entitlements. The taskforce made a number of recommendations, all of which were accepted (for further details on these changes see our previous article here). A draft Leave Entitlements Bill was prepared, however was not introduced prior to last year’s election. The overarching issue with the Act is that there are multiple ways to calculate an employee’s holiday pay, and the Act has struggled to keep up with working arrangements outside of a normal five day a week salaried employee. Payments such as bonuses, commission, or if an employee works variable hours mean that the calculations are not straight forward and are often done incorrectly. The changes proposed were an attempt to simplify these calculations. The Minister has now confirmed that the changes recommended by the taskforce and the draft Bill will not be “simply rubberstamped” and will be subject to scrutiny as well as consultation with key stakeholders. She went on to say “if the policy is difficult to draft, chances are businesses would have a tough time implementing it too”. This indicates a major reset of the Act, and the changes which we had expected, could be on the way. Other indicated changes to employment law include a change to the rules surrounding contractors (with the Court of Appeal due to hear the Uber case this month (see here for our previous advice regarding this), we are likely to also have further developments in this area from the Courts later in the year) and changes to personal grievances. The Minister has asked for advice on whether an income threshold for raising a personal grievance can be set and removing eligibility for any remedies when an employee is at fault. The Minister has been very clear that she would like to receive feedback from the stakeholders who will eventually have to work with the Act and it is important that businesses use this opportunity to have a say on the Act. The majority of employers have struggled to achieve strict compliance with the Act due to its many complexities. Putting forward issues which regularly impact your business will ensure these can be given consideration. Our team will be closely monitoring this and will provide specific information on how feedback can be given when this information is available. If you require assistance with your current obligations under the Act, or would like to discuss providing feedback then please feel free to get in touch with a member of our specialist employment law team.

The use of Artificial Intelligence (“AI”) in the workplace is likely to become increasingly common as technologies advance and benefits become proven and trusted. One AI development that looks set to be eagerly embraced by business is the generative pre-trained transformer model designed by developer OpenAI and used in its Chat GPT product (as well as in competing products, such as Google’s Bard and Microsoft’s Bing Chat). In a nutshell, Chat GPT is a large language model chatbot that is able to generate content based on requirements set by the user.  It essentially searches the internet to find information that matches your query and can then produce written content including articles, emails and even social media posts, as well as images and graphics. While the use of this technology may create huge benefits for your workplace, there are a few key points that you should be aware of before you start: If you plan to use Chat GPT in the workplace, you should open a Chat GPT Enterprise account (or its equivalent). The Enterprise account will provide greater speed, data security and privacy than a standard individual account.  Yes, it will cost more, but if your employees use Chat GPT from their own account there is a risk that sensitive/confidential information may be leaked and could become available to anyone.  If you use the Enterprise level service, any information you input or work product received will remain private to you and will not be used by the model to provide work output for third parties. Furthermore, if an employee uses their own Chat GPT account to generate work product, it is the employee who will be the copyright owner of the work product – not the employer. This may create the issue of having to assign or license the right to use the content, or the employee having the ability to share the work product with third parties without requiring your consent to do so.  It may be simpler to have copyright clearly belonging to you from the start. Another important point is that the content that you receive may not always be correct or suitable! Chat GPT looks for any available information to help it formulate its work product.  That means it will not always retrieve accurate information, and in some cases could be basing its work product on false information.  Furthermore, the style of the response may not be suited to you or your customers.  Chat GPT is not yet able to distinguish between what might be a great communication to an American consumer from one that would work better in a New Zealand context. If you are thinking about using AI in the workplace, it really is a good idea to put policies in place so that you and your employees understand the parameters and effects.  It is an ever-evolving world of technology so you will need to ensure that policies (and employment agreements) are regularly reviewed and updated to meet your needs. If you require any assistance with your policy drafting and implementation, our employment law team is here to help (and will provide you with a much better-tailored service than Chat GPT!)

On Monday 11 December 2023, the new three-party Coalition Government confirmed that the Fair Pay Agreements Act 2022 would be repealed, and that the use of 90 day trial provisions will be extended beyond small businesses. It is the Government’s intention that these changes will be implemented through a Member’s Bill which will be passed under urgency before Christmas. There are also other proposed changes to employment law that have been signalled by the new Government. 90 day trials Currently the use of 90 day trial periods, which allow an employer to dismiss an employee without being required to provide any reasons for the dismissal, is limited to businesses with 19 or fewer employees. The change will mean trial periods are available to all employers when taking on a new employee regardless of the number of employees. If done correctly, dismissal pursuant to a trial period clause means an employee is unable to raise a personal grievance for unjustified dismissal. The change restores the position as it was under the previous National Government. The new Government considers that this change will allow greater opportunities for employees as employers could then take a risk on someone who “might not tick all the boxes in terms of skills and experience but who has the right attitude, without the risk of a costly dismissal process”. It is important to note that employers will still be required to comply with the existing provisions under the Employment Relations Act 2000 which relate to trial periods, such as ensuring the trial period is limited to new employees, and agreed to in writing before the employee starts work. We suggest employers wanting to utilise 90 day trial periods touch base with our employment team to ensure that these clauses are correctly drafted for inclusion in employment agreements and meet all requirements to allow them to be used as intended. Fair Pay Agreements Fair Pay Agreements were introduced by the previous Labour Government to try and improve the collective working conditions and wages of particular sectors. It allowed workers to negotiate collectively, in an attempt to increase their negotiation and bargaining power. The Government has now confirmed that this will be repealed. Currently six sectors have successfully applied to start negotiations (including security, hospitality and cleaning) but none have yet received a Fair Pay Agreement so it appears these will not advance any further. It is important to note that even with the change, collective bargaining will still continue under Part 5 of the Employment Relations Act, just without the formal process provided by the Fair Pay Agreements Act. Other signalled changes The Coalition Agreement entered into by the new Government also signals its intention to progress several key changes to personal grievances. This would include removing eligibility for an employee to claim remedies, including financial compensation, for a personal grievance where the employee is at fault. Additionally, the Government plans to put in place income thresholds for personal grievance claims. If an employee earns over a certain amount then they will be statutorily barred from raising a personal grievance claim. The specifics of this are still to be confirmed, however may take a similar form to a Bill introduced by the National party while in opposition (the Employment Relations (Allowing Higher Earners to Contract Out of Personal Grievance Provisions) Amendment Bill) which included a provision allowing employment agreements to contain a clause preventing an employee from raising a personal grievance if that employee earnt over the set threshold. It is unclear at this stage what the Government intends to set the income threshold at. Independent contractors are another area of employment law which the Government has indicated it wishes to reform. Under the Coalition Agreement “contractors who have explicitly signed up for a contracting relationship can’t challenge their employment status”. This would be a big shift away from the current legal position which allows the Courts to look beyond the written agreement and at the true nature of the relationship between the parties. This will mean that those wishing to enter into an independent contractor arrangement will need to be careful as to how this is documented to ensure it accurately reflects the parties intentions. Other smaller changes indicated by the new Government include stopping work on the income insurance scheme, allowing for moderate increases to minimum wage, a commitment to providing greater protections against migrant worker exploitation, reforming health and safety law, and increasing the annual cap on workers under the Recognised Seasonal Employer scheme (likely a welcome announcement to the horticulture industry). If you would like further information regarding the upcoming changes, or to amend your employment agreements to include trial periods, please do not hesitate to get in touch with a member of our specialist employment law team.

Given the current economic conditions facing employers in New Zealand, it is predicted that pay rises for employees will be at far lower levels than those seen during the past two years. However, employees are also aware of the relatively tight labour market and are themselves facing increased living costs, which may mean they are willing to look for other employment opportunities if their expectations are not met. This can provide a difficult situation for an employer. The need to keep pay increases to a minimum will need to be balanced against the need to retain valued employees and limit the costs of recruitment and training for new employees. So, is there anything an employer can offer that won’t negatively impact the bottom line but might keep employees motivated and committed? Well, one possible solution could be the introduction of “Summertime Hours”. Put simply, Summertime Hours represent a set period of time during those (hopefully) warm, sunny months when employees are able to end their working day a few hours earlier to make the most of the (fingers crossed) great weather. For example, Summertime Hours could be specified as being a 3.00pm finishing time on Friday afternoons during the months of January and February. The upside to Summertime Hours? Firstly, your employees will be even further convinced that they are working for the right employer, meaning that more employees will choose to stay in your employment and will not be tempted to look elsewhere for alternative roles. Secondly, it will boost staff morale on the whole, and a happy workplace leads to better results all round. Furthermore, this initiative is unlikely to cost you anything. It is very possible there will be little impact on productivity levels because employees will show their gratitude by ensuring they put in extra effort throughout the rest of their week as a show of appreciation (and to ensure the Summertime Hours happen again next year). As was seen with the introduction by some employers of four day weeks, employees continued to have the same level of output even when working within the condensed time frame. Finally, it is a great way to boost your public reputation as a good employer, meaning you may be first choice for potential employees looking to be hired. There may of course be reasons Summertime Hours would not work. For example, it may be difficult for some businesses to implement Summertime Hours if there are certain employees whose roles necessitate them remaining in the workplace until the usual close of business time (while everyone else is flying out the door with their beach towel slung over one shoulder). You don’t want to create division as this may lead to frustration and feelings of unfairness, but workarounds might be found (ie. those particular employees take the time off at a different time or day of the week). Another reason Summertime Hours may not work is if they become an administrative hassle to organise (ie. if employees want to take advantage of the early finish, but request for it to occur on a different day to the one you were willing to offer). This may mean that more time and effort goes into the implementation of the policy than was initially expected. Overall, Summertime Hours do seem able to provide a real benefit to employees that will boost the morale of the whole workplace, while not adding to wage and salary costs and having no detrimental impact on productivity. As such, it may be an idea worth serious consideration. The key to successful implementation of a Summertime Hours Policy is to ensure that the terms of the policy are clear and workable. The first step might be to raise the idea with your managers and/or employees and get feedback as to whether it would be something they think is a good idea (note: we predict they will say “yes”), how they see it working in your workplace (ie. the most appropriate day, how they will plan their time to ensure all required work is completed as usual), and to get ideas about what the parameters should be (for example, it will only happen on a Friday afternoon, and only until the end of February). If you want to discuss a possible policy for your employees, or any other employment related policy ideas that you might have, we are happy to help and will ensure you have a clear and well-drafted document for everyone in your workplace to follow. If you have any general employment related queries or topics of interest that you would like us to cover in our upcoming articles, please let us know!

Chief Judge Inglis of the Employment Court has delivered her anticipated decision declaring six Gloriavale women as employees for their time at the remote Westland Christian community. Facts Serenity Pilgrim, Pearl Valor, Rose Standtrue, Virginia Courage, Anna Courage, and Crystal Loyal referred to as the “Gloriavale Six” by the media, were all born into Gloriavale and remained there until leaving between 2017 and 2021. From the age of about 6 years’ old they helped in the communities’ kitchen, laundry, and sewing facilities. By the age of 15, they had all left school to work full time in groups called “Teams” which fulfilled the domestic needs of the community. For example, in 2018, the Teams produced on average 11,000 meals and washed 17,000 items of laundry per week. The evidence showed that the working environment was “unrelenting, grinding, hard, and physically and psychologically demanding”. After leaving the Community the women made a complaint to the Labour Inspector regarding the working conditions they had faced. Two investigations were completed in 2017 and then in 2020/2021 but did not result in a finding that the Gloriavale women were employees. This led to the women escalating matters to the Employment Court. They are also simultaneously suing the Labour Inspectorate for breaching their statutory duties which will be heard separately. Volunteers? The Employment Relations Act 2000 excludes certain workers, such as volunteers, from being categorised as employees. Volunteers are defined as workers who do not expect to be rewarded for their work do not receive any reward for their work. Gloriavale argued that the women were volunteers. Despite not earning wages, the women received food, shelter, clothing, religious support and guidance, and the promise of spiritual redemption against the threat of eternal damnation. The evidenced showed that high value was placed on these factors, likewise with Gloriavale’s reliance on the Teams for their work in the communities facilities. The Chief Judge was satisfied that the women were not volunteers as they did expect to be rewarded for their work and they did in fact receive reward for this work. However, the women were not automatically declared employees because they were not volunteers. Employees? In determining whether an employment relationship existed between the women and Gloriavale, the Chief Judge was required to examine all relevant factors when considering the real nature of the relationship. The Chief Judge considered the following factors demonstrated that an employment relationship did exist with the six women: While many current residents of Gloriavale demonstrated a strong willingness to work, in reality the women had little choice about whether they work or not. If they refused to work they would be required to leave the community and lose their family, friends, and everything they had known in life. The evidence recorded the women’s subservience to the Overseeing Shepherd and male leadership group in all things including their work. Working was an expectation, and they were rostered on the Teams from 16 years old. At work they could not freely move between Teams or areas ie. from the kitchen to the laundry without asking for approval. The Chief Judge compared the working condition to that of a large scale hostile. There were commercial sized kitchens and industrial scale equipment. Both current and former residents provided evidence that the work of the Teams was essential to the operation of the community. The Chief Judge recognised that this type of work would be generally paid for if outside of the community. The Court rejected Gloriavale’s argument that the women were merely doing work “domestic” in nature. Nor was it accepted that the work was done for each of the women’s family or some kind of notional family. Relatedly, the Chief Judge recognised that the community’s way of life and religious tenets were relevant in determining the employment status of the women, but it was ultimately not decisive. Overall, the Court determined that the women were subject to strict direction and control akin to an employment relationship. Implications This decision only applies to the six women and not all current Gloriavale members. The women will be entitled to minimum employment entitlements, including minimum wage, annual leave, and sick pay. However, the Court still needs to determine which entity or person was the employer of the women and therefore liable to pay the minimum entitlements. Due to the complex organisation structure, the Court adjourned to allow for further evidence and arguments to be raised in this respect. This decision shows that the Employment Relations Authority and Employment Courts will look past the labels used by parties to determine the real nature of the relationship. In conjunction with the recent Uber decision, it illustrates an increasing focus on ensuring that groups of workers are not being exploited and are receiving the minimum employment entitlements. The decision also highlights that rewarding a worker in means other than money does not preclude them from being classed as an employee. This is especially relevant for not-for-profit organisations who have volunteers and workers who exchange their time for services. Gloriavale has stated that they will be appealing the decision, claiming “that the decision will have a significant effect on how faith-based communities, iwi, and whanau choose to live and structure their household responsibilities”. This was recognised in the decision where the Chief Judge said: “The Court’s role is confined to determining employment status and whether workers are able to access minimum entitlements and protections, not spiritual issues or matters of religious dogma.” How can we help? If you would like further information regarding the decision and the impact that this decision may have on your business and your staff, please contact a member of our employment law team.

Amendments to the Employment Relations Act 2000 means that from 13 June 2023, employees will have 12 months to raise a personal grievance related to sexual harassment. Employers should be aware of changes that will be required for all new employment agreements. The new law extends the timeframe for employees to raise a personal grievance with their employer for sexual harassment claims from 90 days to 12 months. The timeframe commences from the date on which the action alleged to amount to a personal grievance occurred or the date the employee became aware of the action, whichever is later. The new law will not allow for any retrospective/backdated sexual harassment personal grievance claims. The extended timeframe will only apply to cases where the sexual harassment occurred or came to the employee’s attention on or after 13 June 2023. The previous 90-day period will continue to apply to any sexual harassment that occurred before the new law came into force. What steps are employers required to take? Employment Agreements Employment agreements entered into on or after 13 June 2023 will need to reflect the new law. It is a legal requirement for employment agreements to contain information on how to resolve employment disputes, as well currently including a specific reference to the 90-day time limit period for raising personal grievances. Employers will now need to refer to the extended 12-month timeframe for sexual harassment claims for all new employment agreements finalised on or after 13 June 2023. Failure to do so may result in the employer being liable for a penalty, and could provide a defence to an employee if they failed to raise a personal grievance claim within the new 12-month period. We recommend that employment agreement templates are updated accordingly. Employment agreements are not required to be updated for current employees (employed prior to 13 June 2023). Policies Employers should carefully review company policies that refer to time periods for raising personal grievance claims, and update these to reflect the new 12-month period for sexual harassment claims. How can we help? Please let us know if you would like any assistance in updating your employment agreement templates and policies to reflect this change. It may also be a good opportunity for employers to also undertake a more general review of their employment documentation to ensure compliance and best practice.

The Fair Pay Agreements Act 2022 came into effect on 1 December 2022. The Act creates a statutory framework for collective bargaining for Fair Pay Agreements (FPA) that provides for a mandatory, sector-wide collective bargaining regime. FPAs will also supplement collective bargaining between unions and employees, as well as bargaining for individual terms and conditions. We have outlined how FPAs will operate and the potential implications for businesses and employers. Why are Fair Pay Agreements being implemented? The Government has stated that the purpose of the legislation is to bring together employers and unions to bargain for minimum terms and conditions for all employees across an entire industry or occupation. How will the Fair Pay System work? Initiating the process The FPA process will start if a union meets either the representation test, or the public interest test and initiates bargaining. The representation test means that 10 percent of a given occupation or sector, or 1000 workers (whichever is less) support initiating bargaining for the proposed FPA. The public interest test requires the relevant employees to receive low pay and: Have little bargaining power; or Have a lack of pay progression; or Not be adequately paid, taking into account factors such as working long or unsocial hours (for example, weekend or night shifts) or have contractual uncertainty (for example, performing short-term seasonal work or working on an intermittent or irregular basis). The union must identify who would be covered to establish that one of the above tests have been met. The union must also identify whether it is to be occupation or industry based. The union then applies to the Chief Executive of the Ministry of Business, Innovation and Employment (MBIE). MBIE must be satisfied that either the representation or public interest test has been met. MBIE can request further information and/or call for public submissions in making this determination. If a union is successful it must identify and notify all unions that represent affected employees, and affected employers, and publish a notice to that effect. All employees in the occupation or sector covered by the proposed FPA will be covered by the bargaining, as will their employers. Representation Both employers and employees will be represented throughout the process. For workers, this will likely be the union who initiated the bargaining process. For employers, this will largely depend on whether or not it is a public or private sector. All parties have a duty of good faith, as well as requirements to ensure Māori employees and employers are adequately represented. FPA terms Parties must agree on the following employment terms: Start date and expiry date of the FPA which must be for a period of between three and five years; Who is covered by the FPA; The normal hours of work; Minimum base wage rates (including when and how they are adjusted); Overtime; Penalty rates; Any superannuation; and The process for varying an FPA. Parties must discuss, but are not required to include in the FPA, the following topics: Redundancy; Flexible working; The objectives of the FPA; Training and development; Leave entitlements; and Health and safety. Parties may also discuss and include any other employment-related topics they consider to be relevant. They can also allow exemptions for businesses that are in significant financial hardship, set regional differences, and other differential terms, so long as they comply with the Human Rights Act 1993 and minimum employment entitlements. If disputes arise during the bargaining process, parties can access the MBIE mediation service. In some circumstances they may also apply to the Employment Relations Authority (ERA) to have the terms of an FPA fixed through a Determination. Finalising FPAs Once agreed between the parties, an FPA needs to be approved by the ERA who will carry out a compliance assessment. If approved, then it will be ratified and come into force through regulations or orders. All employers who fall within the coverage of the FPA will then be bound by it. This includes employers who did not participate in the bargaining process. What are the (potential) implications of the Fair Pay System for employers and business owners? Unlike current collective bargaining, under the Fair Pay System there is no opportunity for employers to opt out. Therefore, businesses may have less freedom to negotiate individual employment terms with their employees which could have a negative impact on small-to-medium-sized businesses. That employment terms will apply to all businesses operating in an industry or occupation regardless of their involvement in the bargaining process could lead to businesses feeling disengaged. It also remains to be seen how this will work in practice with multiple employers with competing interests. Independent contractors are not currently covered by FPAs but the Government has indicated this may change. There will be penalties for employers that attempt to avoid the FPA process by engaging workers as independent contractors when they are truly an employee. If you would like further information regarding the effect that the Fair Pay System may have on your business, please contact a member of our employment law team.

Last week the Employment Court released its decision in which it has found in favour of four Uber drivers, ruling that they are deemed to be employees rather than independent contractors. This is in contrast to an earlier decision of the Employment Court in 2020 which held an Uber driver was not an employee. Employment Court Decision The Employment Court was tasked with assessing the real nature of the relationship between the four Uber drivers and Uber to determine whether the drivers are employees or independent contractors. In doing so, the Court looked at the real nature of the relationship, including looking at features of control, economic reality, and integration which were present in the relationship between the drivers and Uber. After hearing a raft of evidence from both sides over a two month period, the Employment Court made a declaration that the drivers were employees. This declaration meant, among other things, that the drivers were entitled to approximately six years of backdated wage entitlements such as sick leave and annual leave. In reaching its decision, the Court looked past the wording of the drivers\' contractual terms. Little weight was given to the drivers being labelled as “independent contractors”. Rather, the Court prioritised the control which was exercised by Uber over the drivers. For example, the contractual terms were set by Uber with the drivers being unable to engage in any negotiation. This in itself reinforced a high degree of control over their drivers. A key part of the control over the drivers was Uber’s ability to set the prices for each driver’s fare and not revealing this information until the driver had accepted the ride. In doing so, Uber deprived the drivers from assessing the profitability of each potential ride. Drivers were unable to run their business as they saw fit which the Court recognised as a hallmark of an independent contractor. Control was not limited to pricing; drivers were unable to uniquely market their services. They could not develop their own branding, sign-write their cars, or differentiate themselves in any meaningful way. The contractual terms and app also functioned in a way which prevents drivers from establishing business relationships with clients. Any goodwill accumulated by the drivers was limited to Uber’s driver rating system which drivers could not control. The Court held that the only way for a driver to increase their profits, was to work longer hours. Along with the drivers’ inability to determine the price for their services, the way in which the rides are distributed were also controlled by Uber. Drivers with higher ratings would be offered more profitable rides more often; those with lower ratings were offered limited work. Ultimately, Uber was unable to convince the Court that they were purely a platform which connected customers with drivers. Uber emphasised that drivers are able to choose their times of work and work in other jobs. The Court did not accept this point – in a post-pandemic employment environment flexible working has become common place and is a neutral factor in determining whether someone is an independent contractor. The Court also gave little weight to drivers providing their own vehicle and mobile phone as an indication of the drivers being contractors. Historically, providing your own equipment implied a significant investment into a specialised craft, however, most people have access to a car and a mobile phone so the Court considered this was not a specific investment for the role with Uber. What does this mean for the future? Uber NZ has signalled that they will be appealing the decision to the Court of Appeal. This may help in providing clarity given we now have two judgments from the Employment Court which both reach different outcomes. We consider this to be a timely reminder for businesses that they need to regularly review any independent contractor arrangements they may have, and assess the real nature of the relationship. If you require assistance with this please contact a member of our experienced employment law team.

The Employment Relations Authority has recently found that an employer unjustifiably dismissed an employee after they refused to cover their newly dyed blue hair. Background The Employment Relations Authority (ERA) has ordered an employer to pay their former employee nearly $10,000 after she was summarily dismissed without notice for divisive behaviour and refusal to comply with its house rules. Ms Lummis was an 18 year old student when she began work at the Stokes Valley New World in August 2018. At the beginning of her employment she signed an individual employment agreement and a set of house rules. This was her first job. In 2019, Stokes Valley New World was sold to Shawz Group 2019 Limited. The new owners entered into new individual employment agreements with the existing staff. In November 2019, Ms Lummis signed a new employment agreement but the existing house rules were not replaced and continued to apply. In November 2020, Ms Lummis dyed her hair partially blue. When she started her next shift, she was asked to cover it with the company’s branded baseball cap which was available to staff as a part of the uniform, although for many positions was not mandatory. When Ms Lummis returned for her next scheduled shift, she forgot her hat. Ms Lummis informed management that she had forgotten it, and in any case it was not a requirement under the house rules. Because of Ms Lummis’ response, she was pulled aside by her manager mid-shift and in front of other colleagues. She was informed that refusing to wear a hat to cover her blue hair was “serious misconduct” which could result in disciplinary action or even dismissal. The employer relied on the fact that it was “commonly understood” that staff with “unnatural” hair colours had to be covered, despite this not being reflected in Ms Lummis’ employment agreement or the house rules. After an investigation meeting, the employer labelled Ms Lummis’ conduct as insubordinate, which could amount to serious misconduct with the chance of disciplinary action including dismissal. This was followed by a disciplinary meeting at which Ms Lummis stood her ground, maintaining that she was under no obligation to wear a hat to cover her hair. The employer claimed that her conduct was divisive, and she had undermined the employment relationship . She was then summarily dismissed for serious misconduct. Ms Lummis then filed a personal grievance for unjustified dismissal. ERA Decision The ERA found in favour of Ms Lummis finding the employer could not rely on “common knowledge” when attempting to assert a contractual requirement. There was no proper communication, with the employee being merely told to wear a hat without any explanation of the origin of the requirement. The 2018 house rules signed by Ms Lummis, which required that an employee’s hair, jewellery, and presentation was “in keeping with the professional image of the store”, was interpreted in favour of Ms Lummis, with the ERA finding that this rule did not extend to a requirement for an employee to cover their dyed hair. Additionally, Ms Lummis provided a specific reason why she acted the way she did (she believed there was no contractual requirement for her to wear a hat) and the ERA found that this was entirely reasonable in the circumstances. The ERA awarded Ms Lummis $7,000 for the hurt and humiliation she experienced and $3,000 for lost wages resulting from the summary dismissal. Where did the employer go wrong? While an open and deliberate failure to obey a lawful and reasonable order can justify disciplinary action by the employer, the employer needs to demonstrate that it has properly promulgated a lawful and reasonable order. It is clear in this case that Ms Lummis was asked by her employer to wear a hat, and that this constituted an order. However, it was determined that this order was not lawful and reasonable, taking into account the scope of Ms Lummis’ contractual obligations. The employer had an obligation to fully engage with Ms Lummis on this point, but did not do so. Additionally, Ms Lummis provided a specific reason why she acted the way she did (she believed there was no contractual requirement for her to wear a hat) and the employer failed to adequately consider this. How can employers avoid this? For workplace policies to be implemented effectively, there must be adequate consultation with the employee and any order or directive must be lawful and reasonable. It is best practice to discuss and obtain written agreement by the employee before the implementation of any rules if they are not specifically addressed in any employment agreement.

Recent developments in employment law means now is a good time for employers to review employment agreements and ensure they are up to date and inclusive of the recent changes. We have outlined these changes in further detail below. Sick leave From 24 July 2021, after 6 months’ continuous employment, employees will be entitled to 10 days sick leave, an increase of 5 days. Employees can carry over up to days’ sick leave to a subsequent 12-month period of employment up to a maximum of 20 days’ current entitlement. Leave for miscarriages or stillbirth From 31 March 2021, employees can now take up to three days’ paid bereavement leave if they, or their partner, experience a miscarriage or stillbirth. People planning to have a child through surrogacy or adoption are also eligible for this bereavement leave if the pregnancy ends by miscarriage or stillbirth. This leave is available to employees per pregnancy and there is no limit on the number of times an employee can access the leave. Matariki public holiday This year, New Zealand celebrated its first official Matariki Public Holiday, on Friday 24 June 2022. This is New Zealand’s first public holiday to recognise Te Ao Māori (the Māori worldview). Matariki is a standard national public holiday. If an employee is to work on Matariki, they must be paid at least time and a half and, if it is a day that employee normally works, then the employee must be given a “day in leu” otherwise known as a paid day off at a later date agreed between the employer and employee. Minimum wage increase On 1 April 2022 the adult minimum wage increased from $20 per hour to $21.20 per hour. This will be particularly important for employers who have salaried staff that frequently work in excess of their usual hours each week. Employees must be paid at least the minimum wage for every hour they work. As a result of minimum wage increasing, paid parental leave payments have also increased to a maximum of $621.25 gross per week. Privacy Act 2020 The Privacy Act 2020 governs how organisations and businesses can collect, store, use, and share information. While many of the existing principles of the former Privacy Act 1993 have been carried over, there have been important updates which will have a direct impact on both employers and employees. The changes include updating existing principles, introducing a new privacy principle, new criminal convictions, fines, as well as new reporting obligations for organisations (including employers) for when a privacy breach has occurred. These changes have increased the responsibility of employers when it comes to handling employee information. Conversely, employees have been granted more protection over the information their employer holds. Because of this, it is important that both parties to an employment relationship understand their rights and responsibilities. This is especially the case when dealing with the sensitive information, e.g. the details of a workplace investigation. Ensuring your employment agreements and policies reflect these changes is key to compliance as well as maintaining best workplace practice. Restraints of trade In the wake of COVID-19, the resulting tight labour market has placed a premium on skilled workers. This has led to a number of employers attempting to retain their staff through restraints of trade. It is crucial that employers understand the nature of a restraint of trade before they are included in any employment agreement or before an employer attempts to enforce. There are two types of restraint of trade: non-competition and non-solicitation. A non-competition clause prevents an employee from working in a similar field to their former employer’s business. They are generally used to protect the former employee’s confidential information or customer relationships. However, as this limits an individual’s ability to make a living, there are difficulties associated with their enforcement. The second type of restraint of trade is non-solicitation. Non-solicitation clauses prevent a former employee from soliciting clients, suppliers, or potentially other employees from their former employer. These focus on protecting relationships and client bases. To enforce this type of clause, the employer must show that the restriction on the former employee is reasonable. We can help employers develop safeguards to protect their business, if there are concerns that a departing employee will adversely impact business. 90 day trial period clauses and probationary period clauses As a reminder, 90 day trial periods are now only available for employers with fewer than 20 employees. 90 day trial period clauses must also strictly comply with the relevant employment laws. There are many fishhooks: for example, if there are material deficiencies in the wording of a clause, or the employee did not sign and return their employment agreement before commencing work, an employer will not be able to rely on the 90 day trial period provision. If a business has 20 or more employees, it cannot use a 90-day trial period. However, employers can use a probationary period provision. Unlike a 90 day trial period, if an employer chooses to dismiss an employee at the end of the probationary period, the employee can bring a personal grievance for unjustified dismissal. Health and Safety To say that the recent health and safety landscape has been difficult for businesses to navigate, is an understatement. We recommend reviewing employment agreements, and associated policies, to ensure they adequately protect the business. To ensure employment agreements remain compliant with current law and any further changes to health and safety legislation, we suggest that health and safety clauses refer, by way of an example, to employees “working in a safe manner in compliance with all applicable Health and Safety Acts, regulations and codes of practice…”. Businesses may also want to consider reviewing any health and policy that they have, or implementing one, if they do not already have one in place. Concluding comments When reviewing employment agreements, it is also helpful to review any workplace policies which may be in effect and ensure that the policies are not only consistent with the employment agreement, but also fit for purpose and achieve the objectives of the business in introducing the policy. If you have any questions about the above or how you may be affected in your particular circumstance, please contact a member of Holland Beckett Law’s employment team to discuss. We would be happy to review current employment agreements to ensure they are up to date and reflect best practice. The information contained in this article is general information only, and does not constitute specific legal or other professional advice and should not be relied on as such. Readers should obtain specific advice before making any decisions or taking any action based upon information contained in this document.

The report of the Holidays Act Taskforce, focussing on problems with the Holidays Act 2003 (“the Act”), was released to the Government in late 2019. The Government has since announced it has accepted all of the Holidays Act Taskforce’s recommendations. Employers and employees can expect legislation reflecting these changes to be introduced prior to the next election. Since its introduction in 2003, the Act has been in the spotlight for all the wrong reasons. It was intended to be simple and easy to apply, providing clarity of employees’ holiday entitlements and employer obligations. While the provisions are drafted neatly in the abstract, when applied in practice, particularly to any unconventional working arrangement, compliance becomes difficult to achieve. Several changes to the Act have already been implemented by the government. Notably, these include: the Holidays (Bereavement Leave for Miscarriage) Amendment Act 2021, entitling employees to three days of bereavement leave for miscarriage or stillbirths; the Holidays (Increasing Sick Leave) Amendment Act 2021 which increased sick leave entitlements from five days to 10 days per year after six months’ of employment; and Te Kahui o Matariki Public Holiday Act 2022 introduced Matariki as a public holiday. What other changes can be expected? Annual holidays The most anticipated change of the Taskforce’s review is the change in how employers will calculate annual holiday entitlement as well as FBAPS (family violence leave, bereavement leave, alternate holidays, public holidays, and sick leave). Determining what a ‘week’ is for those who work variable hours has been given more clarification. The recommendations place a focus on what is said in the employment agreement, otherwise, the average number of hours is to be taken from the corresponding days from the previous 13 weeks. The recommendations maintain the status quo of four weeks’ annual holidays\' entitlement when the employee has worked for their employer for 12 months. However, it is proposed that employees will be able to take annual holidays on a ‘pro-rata’ basis in their first 12 months of employment. The current concept of “Ordinary Weekly Pay” is to be replaced by “Ordinary Leave Pay” (OLP). OLP will encompass an employee’s base rate plus any scheduled overtime, allowance, commission, and incentive payments. Annual Holiday payments are proposed to be paid at whatever is greater between OLP, average weekly earnings over the last 13 weeks, and average weekly earnings over the last 52 weeks. FBAPS leave The current “Average Daily Pay” (ADP is calculated over the past 52 weeks) is to be replaced in favour of the new OLP. Family violence Leave, bereavement leave, alternative holidays, public holidays and sick leave are to be paid at the greater of OLP or the average daily pay over the last 13 weeks. Alternative holidays Presently, employees are entitled to an alternative holiday if they work (or are on call) on a public holiday that is an “Otherwise Working Day”. The recommendations propose that in the first instance, this should be determined by reference to the employment agreement. Otherwise, if the employee has worked 50% or more of the corresponding days in either the previous four or thirteen weeks, it will be an “Otherwise Working Day”. Gross earnings The recent 2021 Court of Appeal decision of Metropolitan Glass & Glazing Ltd held that when a payment is subject to residual discretion, even when all conditions are met, it is to be considered a discretionary payment and not a contractual one. If adopted, the Taskforce’s recommendations would replace the Court of Appeal’s definition, and extend “gross earnings” to include any payment (except for reimbursement) that falls within any given reference period. This means that discretionary payments would form part of any calculations for payment for an employee’s annual holidays. Pay-as-you-go-leave The Taskforce recommendations consciously tighten the use of pay-as-you-go-leave (PAYG). It is envisaged that only employees who are engaged in strictly casual work will be entitled to receive PAYG. If an employee qualifies, the employer must review their employment status every 13 weeks to ensure that the employee is still engaged in genuine casual work. Importantly, PAYG will no longer be available for employees on fixed-term arrangements. Record-keeping requirements Employers are obligated to keep their employees\' wages, time, and leave records as well as to make them accessible to their employees. Currently, there is no legal requirement to provide employees with payslips. The Taskforce’s recommendations will require employers to provide payslips (physical or digital). It is proposed that the payslips will include general information, leave entitlements, and any relevant corrections. What are the key takeaways? It is promising to see that the deficiencies of the Holidays Act, particularly its application to variable working hours are attempting to be addressed. However, it is unclear when the legislation will be amended and whether the proposed changes will achieve the desired reprieve from complexity, as the recommendations refine the Act rather than reinvent it. Additionally (and critically), the proposed changes will put pressure on businesses as employee entitlement increases, with the potential for these to be implemented with the economy slowing. If you have any questions about the above or how these changes may affect you in your particular circumstance, then please do not hesitate to contact a member of our employment team. The information contained in this article is general information only, and does not constitute specific legal or other professional advice and should not be relied on as such. Readers should obtain specific advice before making any decisions or taking any action based upon information contained in this document.

Good employment relationships are central to a business’s success. However, sometimes these relationships break down. When this happens, the parties may be able to resolve the problem between themselves or at mediation. Where a matter cannot be resolved informally, or urgent relief is required, either party may refer the matter to the Employment Relations Authority (Authority). Where a matter is resolved at mediation, the parties often agree around contribution to legal costs. Costs in the Authority are an important factor to consider, and we set out below the rules for recovery of costs by a successful party in the Authority. What are costs awards? When a claim is heard in the Authority, the Authority may order the unsuccessful party to pay costs to the successful party. The successful party can generally expect some contribution from the unsuccessful party, but the contribution is typically not representative of a party’s true costs. Parties are encouraged to agree on costs between themselves. However, if they cannot agree, the Authority has the power to order the unsuccessful party to pay the other party costs and expenses that the Authority considers reasonable. How much can you get awarded in costs? The Authority has a ”daily tariff” system as the starting point for assessing costs. Currently, the daily tariff of costs is $4,500 for the first day spent in the Authority, and $3,500 for subsequent days. Costs may be adjusted upwards or downwards based on various factors. For example, costs may be reduced if the successful party’s behaviour unnecessarily increased costs, the successful party did not succeed on all the claims they made, or if the unsuccessful party can show that paying the costs would cause them considerable hardship. Costs may be increased if the unsuccessful party made arguments that had no prospect of success, or the unsuccessful party previously turned down an effective settlement offer. Making reasonable, without prejudice offers of settlement, can assist and be referred to when seeking a costs uplift. However, parties should be aware that the costs of having your case heard will generally be greater than the amount that may be awarded in costs, and therefore even successful parties will likely find themselves out of pocket after having their case heard. Recent changes to costs The Authority recently released a practice note with changes regarding costs. From 2 May 2022, the following categories of a matter are not subject to a daily tariff and the parties are to bear their costs: referrals for bargaining facilitation; disputes about the application, interpretation or operation of a collective agreement; pay equity processes; screen industry processes; fair pay agreement processes; collective bargaining disputes; disputes about access to workplaces; and fixing of the terms of a collective agreement. For example, for parties involved in collective bargaining, there is now a presumption that costs awards will not be made for disputes that may arise during this process. For other matters, such as personal grievances and breaches of employment agreements, the Authority states that the parties should evaluate what they do in those proceedings on the understanding, if unsuccessful, they will usually have to contribute to the costs of the successful party, as well as meeting their own costs. Summary If a party does pursue a claim in the Authority, it should be aware that it is unlikely to recover its full costs, if successful. If you need advice on employment matters, including resolving an employment dispute, feel free to get in touch with our employment team.

COVID-19 has placed unprecedented stress upon businesses and employers across New Zealand. While some are struggling to fill roles, others are discovering that they need to restructure to reduce costs, or operate more efficiently. Businesses are able to change their structuring as is commercially necessary. In doing so they need to ensure that their restructure process and the outcome for employees, is carried out and justified in accordance with New Zealand employment law. What is restructuring? A restructure occurs when changes are made to a business structure, generally to make it run more efficiently, optimise performance, change focus, or cut costs. Restructuring might involve: creating new roles; merging existing roles; disestablishing roles that are surplus to requirements; or a combination of the above. If employees are impacted, employers need a genuine business reason for the change, for example, financial reasons, downturns in work, changes in products, changes in consumer behaviour, or merging with another business. What is redundancy? If a role is disestablished and the employee affected is not redeployed to another role, their employment will be terminated for redundancy. Redundancy should be the last option. Before doing so, employers are required to consider potential redeployment options within the business for the impacted employee. When certain of the same roles are to be disestablished, an employer must select the employees for redundancy using a fair selection process. There must be a clear criteria for selecting the employees to be made redundant (and alternatives considered). Alternatives need to be explored first. It is unlawful to make an employee redundant and then replace them, or make an employee redundant due to poor performance or other issues not related to the restructure. These matters can be complex where a restructure is driven by unsuitability or performance issues as well as business requirements, or if the employer has already got a performance or disciplinary process underway when a restructure is implemented. We can assist to navigate the complexity. Restructure Process We recommend that employers obtain legal advice before they proceed with a restructure process affecting employees. Employers must act in accordance with the principle of good faith under the Employment Relations Act 2000 throughout the restructure process, meaning that employers must be communicative, act fairly, and be active and constructive in maintaining a productive employment relationship. In terms of the restructure process, as a guideline, we set out below the necessary steps: Step 1. Document the Proposal: the ‘what is proposed’ and ‘why’; Step 2. Consultation Meeting: the ‘what does it mean for you’ and ‘what do you say in response’; Step 3. Consideration of Feedback: employer reflection, ‘what does the feedback mean for the proposal?’ and ‘are further changes required/further consultation necessary?’; Step 4: Communication of Outcome: with reflection on feedback; Step 5: Meeting to Discuss Outcome: ‘what does this mean for you’ and if the role is disestablished, ‘what alternatives are available?’ (if alternative roles are available, these should be considered). Redeployment and Retraining Employers must consider redeploying employees as an alternative to redundancy, as failure to do so could result in claims of unjustified dismissal. An employer is not obliged to offer an employee redeployment to a position requiring a significant amount of retraining or skills and experience the employees does not have. However, if there is an alternative suitable role that the employee has the skills and experience to perform or could perform after some retraining, the employer must offer it to the employee. It is not enough for the employer to simply offer the employee the opportunity to apply for a suitable alternative role. An employee is not obliged to accept an offer of redeployment to an alternative role. If an employee turns down an offer of redeployment, the employee will be redundant. Mistakes to Avoid To reduce the risk of a personal grievance claim, employers should not: make a predetermined decision as to the outcome of the proposed restructure process (and express an opinion on the outcome in writing! – even private emails may be discoverable); be unclear about the proposal or the possible consequences if implemented; use redundancy as a mechanism to remove staff for other reasons eg. due to poor performance; refuse to give relevant information in support of the rationale for the proposed restructure; and fail to consider redeployment as an alternative to redundancy. If you have any questions regarding this guidance on restructuring and redundancy, our Employment team can assist.

After more than two years of Covid-19 lockdowns, alert level changes and the traffic light system, for many workplaces the mindset of 9-5 Monday to Friday at the workplace is shifting. Additionally, with borders re-opening and Kiwis heading off overseas, employers are having to work harder to retain and recruit skilled employees. The above has resulted in an increase in pressure for employers to offer flexible work arrangements for employees. However these arrangements come with the added complication of ensuring compliance with legislation including the Holidays Act and the flexible working requirements under the Employment Relations Act. ‘Flexible working’ is a defined term used in the Employment Relations Act to describe individualised, permanent variations to an employee’s working conditions. It does not provide for blanket staff arrangements or benefits, nor does it allow employers to maintain overall flexibility on the terms. Additionally, depending on the arrangement being offered, it may impact how annual leave is calculated for employees, as this accrued based on days and hours of work. For example if an employer were to implement a 4 day week policy, the 5th day of the week would not be considered an “ordinary day of work” under the Holidays Act, so annual leave would accrue at 4 days per week instead of 5. There are some options available to employers, including implementing stand alone policies, which give flexibility outside of the usual employment requirements, but allow employers to maintain discretion around the benefit being offered as much as possible. A policy enables a number of issues to be covered off including: Making it clear that the employer prioritises the wellbeing of its employees which assists with encouraging retention and recruitment; The policy can clearly outline how it expects employees to perform their role; Making it clear that the policy allows the employer discretion to amend, revoke or suspend elements of the policy to meet business demand; and Measures to ensure that employee output is maintained. There are a number of different initiatives that we can assist with advising on and drafting including: Working from home; Flexible start and finish times; 4 day week; 9 day fortnight; Remote working; Part time hours; Job share arrangements; or Paid study leave. We recommend that employers wanting to offer flexible working arrangements get in touch with a member of our employment team to discuss preparing a bespoke flexible working policy that does not cut across any contractual or legislative rights or create legal risk.

The Fair Pay Agreements Bill (Bill) was introduced to Parliament on 29 March 2022. The Bill proposes a statutory framework for collective bargaining for Fair Pay Agreements (FPA) that would provide for a mandatory, sector-wide collective bargaining regime. FPAs would also supplement collective bargaining between unions and employees, as well as bargaining for individual terms and conditions. The Bill is not yet law, it is only a Bill at this stage and still needs to go through the usual Parliamentary process. This will include the Bill being considered by a Select Committee which will ask for and consider public submissions. We have outlined how FPAs would operate if the Bill were passed and introduced in its current form, but note the Bill is at quite an early stage of the legislative process. Why are Fair Pay Agreements being proposed? The Government has stated that its intention in introducing the Bill is to bring together employers and unions to bargain for minimum terms and conditions for all employees across an entire industry or occupation. How would the Fair Pay System work? Initiating the process The FPA process will start if a union meets either the representation test, or the public interest test and initiates bargaining for a FPA. The representation test means that 10 percent of a given occupation or sector, or 1000 workers (whichever is less) support initiating bargaining for the proposed FPA. , The public interest test requires the relevant employees to receive low pay, have little bargaining power, and have a lack of pay progression. The union must identify who would be covered by the initiation of bargaining to establish that one of the above tests have been met. The union must also identify whether it is to be occupation or industry based. The union then applies to the Chief Executive of the Ministry of Business, Innovation and Employment (MBIE). Upon receipt of the application MBIE must be satisfied that either the representation or public interest test has been met. It can call for public submissions in making this determination. If a union is successful it must identify and notify all affected employees and employers. All those employees and employers who are notified are then covered by the bargaining. Representation Employers and employees would all be represented by bargaining parties throughout the process. For workers, this would likely be the union who initiated the bargaining process. For employers, this will largely depend on whether or not it is a public or private sector. All parties have a duty of good faith, as well as requirements to ensure Maori employees and employers are being adequately represented. FPA terms Parties must agree on the following employment terms: Start date and expiry date of the FPA which must be for a period of between three and five years; Who is covered by the FPA; The normal hours of work; Minimum base wage rates (including when and how they are adjusted); Overtime; Penalty rates; Any superannuation; and The process for varying an FPA. Parties must discuss as part of the bargaining process, but are not required to specify in the FPA: Redundancy; Flexible working; The objectives of the FPA; Training and development; Leave entitlements; and Health and safety. Parties may also choose to discuss other terms of employment. They may agree that different terms apply to different employees or classes of employees, for example, on the basis of the territorial districts in which the employees work, or that the terms commence at a later date for specified employers. Parties will be able to, but are not required to, discuss and include any other employment-related topics they consider to be relevant. They can also allow exemptions for businesses that are in significant financial hardship, set regional differences, and other differential terms, so long as they comply with the Human Rights Act 1993 and minimum employment entitlements. If disputes arise during the bargaining process, all parties have access to the MBIE mediation service to try and resolve matters. In some circumstances it may also be possible to apply to the Employment Relations Authority (ERA) to have the terms of an FPA fixed through a Determination. Finalising FPAs Once agreed between the parties, an FPA would then need to be approved by the ERA who will carry out a compliance assessment. If approval is granted by the ERA then it will be ratified by those covered by the FPA and also MBIE. MBIE will then bring the FPA into force through regulations or orders. Once the FPA has been finalised then all employers who fall within the coverage of the FPA will be bound by it. This includes employers who did not participate in the bargaining process. What are the (potential) implications of the Fair Pay System for employers and business owners? Unlike current collective bargaining, under the Fair Pay System there is no opportunity for employers to opt out. Therefore, businesses may have less freedom to negotiate individual employment terms with their employees which could have a negative impact on small to medium sized businesses who have never been around a bargaining table before. Employment terms negotiated in an FPA will apply to all businesses operating in that industry or occupation regardless of involvement, which could lead to businesses feeling disengaged from the process. It also remains to be seen how this will work in practice with multiple employers with competing interests. Independent contractors are not currently covered by FPAs but the Government has indicated this may change. There will be penalties for employers to attempt to side step the FPA process by engaging workers as independent contractors when the true relationship is one of employer and employee. If you would like further information or assistance with preparing a submission to be put forward for consideration by the Select Committee please contact a member of our employment team.

At midnight on 24 February, New Zealand moved into Phase Three of the response to community transmission of the Omicron variant of COVID-19. This means that there are currently more than 5,000 positive cases of COVID-19 community transmission being recorded each day. With the increase in positive COVID-19 cases, the isolation requirements for close contact and household contacts have changed, with he requirements loosening, freeing up more Omicron close contacts to work. It is now only positive cases and household contacts of positive cases which must isolate for 10 days. Other close contacts are being advised to monitor for symptoms, and if they arise, get tested and stay home until they receive their results. With transmission and contacts increasing, and the high number of people being required to isolate and therefore be absent from the workplace, issues may arise as to whether or not an employer is required to pay an employee who is isolating. We have briefly outlined the different examples below. When able to work from home The current recommendation is that workers who can work from home should do. However, this is not always possible, depending on the nature of the employee’s work. For example, a customer facing employee that works in retail or hospitality cannot carry out their usual role while at home. It might be possible to reallocate tasks so that the employee is able to perform some work from home (for example placing orders for stock or taking phone calls), but this may well be limited. If an employee is ready, willing and able to work from home, then they should be paid for doing so. In this case, an employer must continue to pay the employee as per normal. This also accords with Government recommendations to employers to allow flexibility in work from home arrangements. When unable to work from home If an employee is unwell or tests positive for COVID-19, and is unable to work, they are entitled to take sick leave. The Holidays Act 2003 provides that after six months’ of employment, an employee is entitled to 10 days’ sick leave each year. These 10 sick days can also be used when an employee is required to care for others who are sick or who are dependents, e.g. a household member has COVID-19 and they are isolating with them and providing care. If an employee uses all of their sick leave entitlement and are still unable to return to work, unless otherwise agreed, they will then be on unpaid leave. Alternative arrangements could include allowing the employee to use their annual leave, time in lieu or other leave entitlements, or leave in advance. Where an employee is well but unable to work because of isolation requirements, the employee does not technically qualify for sick leave. The employer and employee should consider what options are available, such as taking annual leave or leave without pay, or the employer accessing one of the below Government assistance schemes. In some situations, particularly where an employer has an excess annual leave balance, it may be tempting to have them access their annual leave balance. However, this can only be done where agreed by the employee, or, if required by the employer, following a genuine consultation period around the taking of leave, only if no agreement can be reached, giving the employee 14 days’ notice of the requirements to take leave. In the case of isolation requirements, the isolation period will have expired before the notice period has expired. Close Contact Exemption Scheme Critical businesses may obtain an exemption for workers who perform critical work. The workers must be vaccinated, asymptomatic, undertake RAT testing and meet associated rules of the scheme, including not being able to perform such work remotely. We can provide advice to assist in determining if your business, and which of your employees, qualify. Bubble of One There is also an exemption for workers who are household contacts, asymptomatic and vaccinated, to perform work in a ‘bubble of one’, where conditions are met, including providing them their own physical space to perform the work. We can advise on qualification for this exemption. Unlike the Close Contact exemption scheme, there does not appear to be any RAT testing requirement, however as a household contact they will have day 3 and day 10 testing requirements. Financial support available for businesses There are several financial support schemes available to businesses to assist with the impact of COVID-19 depending on that business’ specific circumstances. COVID-19 Support Payment The COVID-19 Support Payment (“CSP”) opened for applications on 28 February 2022. The CSP is a payment available to businesses which have experienced a 40% or more drop in revenue as a result of COVID-19 when compared to the revenue earned 5 January 2022 to 15 February 2022. The CSP for a particular business will be based on the number of employees and the level of revenue. There are a number of requirements which must be met to qualify for the CSP. Please get in touch for further details. Short-Term Absence Payment The Short-Term Absence Payment is available to employers to pay workers who isolate while waiting for a COVID-19 test result. To be eligible, workers need to be unable to work from home and need to miss work while waiting for their test results. The expectation is that this payment is used to pay affected employees’ wages. If the employee’s wages are less than the Short-Term Absence Payment then the difference should be used to help pay any other affected employees. Leave Support Scheme The Leave Support Scheme is available to employers to help pay employees who have to isolate and who can’t work from home. Again, the expectation is that this payment is passed on to workers. Small Business Cash Flow Loan Scheme The small business cash flow loan scheme will provide assistance of up to a maximum of $100,000 to businesses employing 50 or fewer full-time employees. If an employer has previously applied for this loan and it has been fully repaid, it may apply again. The maximum amount an employer can borrow depends on how many full time and part time employees it has. This loan is interest free if it is paid back within two years. Otherwise, it incurs a 3% interest rate for a maximum term of five years. Repayments are not required for the first two years. In order to be eligible for this scheme, the employer must show at least a 30% drop in revenue due to Covid-19, measured over a 14-day period in the past six months compared with the same 14-day period a year ago. If revenue from the same period a year ago was also affected by COVID-19, then compare the same 14-day period two years ago. Conclusion The above advice is only general in nature. The legal framework If you would like specific advice on what your rights, obligations, or duties are as an employee or employer, the Holland Beckett Employment team would be happy to assist.

The recent arrival of the highly contagious Omicron variant in New Zealand has prompted further developments in the Government’s COVID-19 response. Health advice that a third dose of the Pfizer and other COVID-19 vaccines is required to offer immunity against Omicron has led to a further extension of the existing vaccine mandate to include a booster shot requirement. At present, the COVID-19 Public Health Response (Vaccinations) Order 2021 has required only that affected workers in the border, health, education, fire and emergency, and retail, hospitality, and service sectors are vaccinated against COVID-19. For most New Zealanders, this has meant receiving two doses of the Pfizer/BioNTech vaccine, which was until recently the only vaccine available here. Certain other vaccines have been accepted for those few immunised overseas, based on Ministry of Health efficacy assessments. With changes to the Order introduced on 23 January 2022, most workers covered by the mandate will need to also receive a booster shot to be able to continue working in affected roles. A transitional grace period has been introduced together with the new requirement: Border and MIQ workers eligible for a booster on or before 15 February 2022 must receive it before that date; Health and disability sector workers eligible for a booster on or before 15 February 2022 must also receive it before that date; and Primary and secondary education, corrections, police, defence, and fire and emergency workers eligible for a booster on or before 1 March 2022 must receive a booster before that date. There is some ambiguity as to the booster dose requirement for those workers in food and drink businesses, gyms, events, close-proximity businesses, and tertiary education providers in areas at Red (currently the whole of New Zealand). The changes to the Order extend the booster dose requirement to employees in these businesses already covered by the vaccination mandate who are 18 years or older (under 18 year olds not being eligible for the booster at present). Ministry of Health advice however is that the booster dose mandate does not yet extend to these workers. The fact no transitional provision has been made for this group suggests the government’s intention is in keeping with the Ministry of Health’s advice. We assume compliance with the Order will be enforced in keeping with this. At present, a booster shot is only available to those who had their second dose of the vaccine more than four months ago. Workers in the education and corrections sectors and police in particular may have only just received their first or second doses, given the vaccination mandate was only recently extended to these groups. We note that workers not yet eligible for a booster when the transitional periods above applying to them ends, have up to 183 days after their second dose to get their third. This six month period provides time to schedule a booster dose after becoming eligible. Our understanding of the drafting of the legislation is that new employees starting in affected roles after 23 January 2022, must receive a booster dose before they carry out any parts of their role covered by the mandate. This represents a change from earlier requirements around workers coming into vaccination-mandated roles where receiving one dose before starting work, and a second dose within 35 days afterwards, was sufficient. Employers’ obligations to support mandated workers to receive the vaccine during work hours, including by providing paid time off where that wouldn’t disrupt their business, now extend to booster doses. There is an exception for a very small number of workers able to obtain a centrally-administered medical exemption from the Ministry of Health. Exemptions might also be available on a case-by-case basis in the case of potential disruptions to essential supply chains or critical businesses at the ministerial level. Differing criteria and restrictions on exemptions apply for workers in different groups. It will be an offence for a worker covered by the extended mandate who has not received at least one booster dose, to continue working after these dates. Both the employer and the individual employee could face fines or, for a serious deliberate breach of the Order, imprisonment. Businesses also face an extension to their record-keeping obligations. Businesses and other entities with workers required to have had a booster shot, must now record what vaccine they were boosted with and when. For those allowed to work ahead of receiving a booster shot under the transitional provisions, the business or entity must record the date the grace period ends for the affected worker. Additional requirements will also now apply to businesses that provide home-based education and care services. As well as ensuring their workers have received a booster dose in-keeping with the above timeframes, they must now also ensure that every person in the home that they are providing services at who is over the age of 18 is vaccinated and has received a COVID-19 booster dose. If you would like tailored advice on what your rights, obligations, or duties, as an individual or someone conducting a business or other undertaking, our Employment team can assist.

The recent Supreme Court decision in Tourism Holdings Ltd v A Labour Inspector of the Ministry of Business, Innovation and Employment [2021] NZSC 157 (“Tourism Holdings”) held that commissions can form part of an employee’s ordinary weekly pay for the purposes of calculating holiday pay if they are made substantively regularly and temporally regularly. Holidays Act 2003Under the Holidays Act 2003 (the “Act”) holiday pay must be at a rate based on the greater of two calculations: either the employee’s “ordinary weekly pay” as at the beginning of the annual holiday (s21(2)(a)(i) of the Act), or the employee’s average weekly earnings for the twelve months immediately before the annual holiday (s21(2)(a)(i) of the Act). Commission is included in an employee’s “ordinary weekly pay” where it is a regular part of that pay. However, the Act recognises that some employees may not have an ordinary working week. The Act therefore provides an alternative way of calculating pay in section 8(2) of the Act. The formula is as follows: (A-B)÷C where: A= the employee’s gross earnings for either the four calendar weeks before the end of the pay period immediately before the calculation is made; or if the employee’s normal pay period is longer than 4 weeks, the pay period immediately before the calculation is made. B= The total amount of payments described in s8(1)(c)(i) to (iii) which includes productivity or incentive based payments and commission that are not a regular part of the employee’s pay. C= four (as in, to average the earnings in the four weeks considered). The question for the Supreme Court in Tourism Holdings was what constitutes “regular” for the purposes of deciphering whether commission forms a “regular part of the employee’s pay”. Tourism Holdings Ltd v A Labour Inspector of the Ministry of Business, Innovation and Employment Tourism Holdings operates guided bus tours throughout New Zealand as part of their brand of offering tourists a “kiwi experience”. To do so, it employs “driver guides” who, in addition to their general duties, sell tourist activities through third party operators for which they are paid commission. Drivers only receive commission payments once a tour has finished and after they have completed certain administrative procedures required by Tourism Holdings. As drivers did not have a typical working week, the alternative calculation in s8(2) applies. The Employment Court agreed with Tourism Holdings’ position that that driver guides’ commissions are to be deducted from the holiday pay calculation because they are not a regular part of the employee’s pay, and thus they fall within s8(1)(c)(i)-(iii) and part (b) of the equation. This was because the commission does not form part of the drivers’ pay for an ordinary working week, as was not earnt by a driver until the reconciliation process was completed. They effectively construed “not a regular part of the employee’s pay” as “not a regular part of the employee’s pay for an ordinary working week”. However, the Court of Appeal and the Supreme Court overturned this decision. Both Courts emphasised that the purpose of the alternative calculation is to provide for situations where an employee may not have an ordinary working week. They held that, irrespective of whether commission forms part of an ordinary working week, it must be included when calculating ordinary weekly pay under s8(2) if it is a “regular” part of the employee’s pay. Thus, while commission payment may be insufficiently regular to effect the calculation of pay for an “ordinary working week” under s8(1)(a), it may be sufficiently regular to be material to a calculation of earnings over a four week period under s8(2)(a). Whether it is “regular” is to be construed in relation to the time period under consideration- four weeks for s8(2)(a), and one for s8(1)(a). The Court of Appeal found that regularity can be in two ways: substantive regularity or temporal regularity. The Supreme Court clarified that both are required for commission to be considered in holiday pay calculation: Substantively regular, being made systematically and according to rules; and Temporally regular, being made uniformly in time and manner. It was held that the bus drivers’ commission was regular. Relevance for EmployersThe decision confirmed that incentive based payments, including commission, forms a “regular part of the employee’s pay” under the Act if they are made substantively regularly and temporally regularly. The significance of this decision is that the holiday pay rate calculated under s8(2) may be greater than if it was calculated under s21(2)(b)(ii) (ie. the employee’s average weekly earnings for the 12 months immediately before the end of the last pay period before the annual holiday). This is only material when commission earnt in the four week period referenced in s8(2) is greater, as a component of ordinary weekly pay, than the 1/52 portion used to calculate “average weekly earnings” under s21(2)(b)(ii). There was some concern from Tourism Holdings that employees may strategically time their annual holiday so as to maximise their holiday pay by taking leave after a particularly lucrative four weeks. However, the Court of Appeal dismissed this as a concern and also held that such a result would not be inconsistent with the scheme and purpose of the Act. If you would like more information or advice on any relevant calculations for payment for holidays and your obligations as an employer, please do not hesitate to contact us.

In a recent decision, the Court of Appeal confirmed that payments under discretionary incentive bonus schemes do not fall within the definition of gross earnings under the Holidays Act 2003 (“the Act”). Holidays Act 2003 When calculating payment for holidays under the Act, employers must take into account “gross earnings” as defined in section 14(a) of the Act. The greater the amount of “gross earnings”, the greater the potential calculation for payment for holidays. Under section 14(a) of the Act, gross earnings are defined as all payments that the employer is required to pay to the employee under an employment agreement, including productivity or incentive-based payments. Therefore, any payments that the employer is not bound to pay are excluded from the employee’s holiday pay calculations. This includes any “discretionary payments”. Metropolitan Glass & Glazing Limited v Labour Inspector, Ministry of Business and Innovation and Employment [2021] NZCA 560 In 2016, Metropolitan Glass introduced a short term discretionary bonus scheme for senior employees. The terms and conditions of the scheme expressly stated that Metropolitan Glass retained the discretionary right to make or withhold payment, even if the employee met the targets. As with other employers, Metropolitan Glass calculated payment for holidays on the assumption that discretionary incentive bonus schemes fall within the meaning of “discretionary payment”. The Ministry of Business, Innovation and Employment (“MBIE”) challenged this assumption. The Employment Court agreed with MBIE, and held that all incentive or productivity based payments would be considered gross earnings under the Act, and therefore had to be included in the calculation of payment for holidays. The Court also held that a term does not have to be included in the formal written employment document to be binding under an employment agreement. Rather, contractual obligations could arise from sources outside of the formal agreement. This decision contradicted general commercial practice and would have resulted in employers having to backpay millions of dollars’ worth of holiday pay to employees. In a win for employers, the Court of Appeal reversed this decision. They held that the Employment Court’s interpretation of the Act misinterpreted the key distinction that gross earnings are compulsory under an employment agreement, whilst discretionary payments are not. The Court of Appeal agreed that the fact the bonus scheme was not incorporated in the original written agreement did not of itself render the payments discretionary. Rather, the key question of whether something is or is not part of “gross earnings” is whether it is compulsory. Given that Metropolitan Glass retained the discretion to decide whether to pay the bonus, the scheme fell within the definition of discretionary payment. What does this mean for employers? This decision affirms that discretionary bonus schemes are not to be considered in calculations for payment for holidays where the employer expressly retains a discretion to withhold incentive payments. If an employer’s discretion is limited to when payment will be made, or how much, then it will be considered gross earnings. Thus, the key for employers is that the scheme is neither conditional nor guaranteed. Notably, however, the employer is still under a legal obligation to exercise its discretion fairly and responsibly. The decision was also significant in its confirmation that the meaning of “employment agreement” will differ depending on context. Binding payment obligations can arise from sources other than the formal written agreement, which are then considered “gross earnings” for the purpose of calculating payment for holidays. Is the law settled? This decision highlights, once again, the glaring need for reform of the Act. Greater clarity and certainty is needed for employers. It is yet to be determined whether the Labour Inspector will appeal this decision to the Supreme Court. However, significant policy concerns were raised in the Court of Appeal, perhaps hinting at a desire to appeal. These concerns were based around fears that this outcome would enable an employer to pay an employee a deliberately low salary and top it up with discretionary payments, meaning holiday pay would be less than regular remuneration. Further uncertainty exists in light of the current Holidays Act Review and planned overhaul. Nevertheless, the law as it currently stands has landed in a satisfactory place for employers. If you would like more information or advice on any relevant calculations for payment for holidays and your obligations as an employer, please do not hesitate to contact us.

The Government has announced a significant expansion of the mandatory employee Covid-19 vaccination requirement, saying that vaccination is “critical to preventing the spread of COVID-19”. Based on the announcement, by the beginning of 2022, many health sector workers, and most early childhood, primary, and secondary education sector workers, will be required to have received two doses of the COVID-19 Pfizer/BioNTech COVID-19 vaccine (the only vaccine available in New Zealand at present). Until the announcement, the COVID-19 Public Health Response (Vaccinations) Order 2021 (Order) has required certain border workers to be vaccinated against the virus, to continue working in those roles. Limited exemptions were available. Previously, the Government had indicated reluctance to widen compulsory vaccination requirements. As recently as August, limiting requirements to those working in MIQ facilities, on aircraft, and at ports and airports was seen as sufficient to protect those most at risk of exposure to the virus. However, now with the Delta variant having been circulating in the community for over a month, Ministers have decided they “can’t leave anything to chance” in ensuring the robustness of these important sectors. Who is affected? In his press release announcing the policy change on 11 October, COVID-19 Response Minister Chris Hipkins said that anyone carrying out “high-risk work in the health and disability sector” will need to be fully vaccinated. The Minister said this will include “general practitioners, pharmacists, community health nurses, midwives, paramedics, and all healthcare workers in sites where vulnerable patients are treated (including Intensive Care Units)”. It is also likely to include workers in “aged residential care, home and community support services, kaupapa Māori health providers and Non-Government Organisations who provide health services.” The Government had not yet worked out the full list at the time of the policy being announced. Definitive guidance will not be available until the amendment Order is published, and the list should be considered subject to change. The position is clearer for the education sector. The expanded mandate will include the staff of all primary and secondary schools, kura, and all early learning services and providers who may have contact with children. The Minister said this will include all home-based educators, and all support people in schools and early learning services “such as teacher-aides, administration and maintenance staff and contractors.” From 1 January 2022, schools, kura, and early childhood services and providers will need to maintain a vaccination register for staff. The Minister said that the Government was still undertaking policy work as to whether mandatory vaccinations will be required for the staff of tertiary education providers. With the stated rationale for imposing such wide-reaching requirements being that vaccines are not yet available for children under the age of 12, the Government may not immediately take that step. When do newly affected workers need to get vaccinated by? Based on the announcement, health and disability sector workers caught by the new mandate would need to receive their first dose of the vaccine by 30 October 2021, and their second no later than 1 December 2021. Staff in the education sector covered by the requirement would need to receive their first dose by 15 November 2021 and their second by 1 January 2022. The Minister has said that those who are not fully vaccinated by 1 January 2022 will be required to undergo weekly COVID-19 testing. Assuming the Government follows the model currently applicable to border workers, workers commencing employment in newly mandated roles after 30 October 2021 or 15 November 2021 (depending on which sector they are in), will likely need to have received one dose of the vaccine before starting in that role, and their second within seven weeks of their first. What will employees and employers need to do? As noted above, we do not yet have the wording of the proposed Order. However, the Government’s statements suggest it will apply the provisions currently applicable only to border workers. Assuming this is the case, then the following would apply: It would be an offence for affected workers to carry out jobs listed above unless they are vaccinated, or partially vaccinated during the transition periods set out above. Employers would commit an offence if they allow affected workers to carry out their roles unvaccinated (unless an exemption applied). Employers would be required to notify people caught by the Order of their duty to be vaccinated. Affected workers would commit an offence if they deny their employers access to their COVID-19 vaccination records, or withhold details of their vaccination dates. Employers whose employees are covered by the Order would be required to facilitate their employees receiving vaccination during work hours. Non-deliberate breaches of the Order would be infringement offences. The enforcement officer could either issue a $300 on the spot fine, or take the matter to Court and request that a fine of up to $1,000 be imposed. Deliberate breaches of the Order could result in a criminal conviction, and imprisonment of up to six months. Parliament recently increased the maximum fine payable for these more serious breaches to $4,000. Will exemptions be available? In the press release, the Government said that “under certain circumstances exemptions may be possible.” Assuming the Government carries forward the provisions applicable to border workers, we anticipate that at least the current medical exemption will apply to employees in the new covered sectors. In order to receive an exemption, an individual must have been examined by a ‘suitably qualified health practitioner’ who has certified that vaccination would be “inappropriate” because the person has “particular physical or other needs”. Once their employer is satisfied and reports that exemption to the Ministry using the online register, the employee is permitted to work unvaccinated, but must provide confirmation of that exemption to their employer or an enforcement officer on request. In this case, the employer will need to consider whether the employee is safe to work and/or whether the health or other condition making them inappropriate for vaccination, also makes them more vulnerable in terms of risk of Covid exposure from a health and safety perspective. Additional requirements for the education sector As well as extending the vaccination mandate to certain education workers, the Government announced two further policy changes affecting schools and early learning services and providers, being: From 1 January 2022, secondary schools and kura will need to keep a register of their students’ COVID-19 vaccination status. Students who do not confirm they are vaccinated are to be deemed unvaccinated. All school workers in Auckland and other regions that were at Alert Level 3 as of 11 October 2021, will need to provide a negative COVID-19 test result before they can return to work onsite. This announcement came as the Government announced that Auckland schools will remain closed to most pupils as Term 4 begins on 18 October 2021. What can employers with employees who refuse the vaccine do? The expansion of the mandate is likely to lead to renewed calls for the Government to provide more clarity to employers on how to comply with their employment law obligations in the face of COVID-19. Despite the compulsory vaccine requirements, the duty of good faith under the Employment Relations Act 2000 continues to apply. This means careful consultation/communication of timeframes and any compulsory requirements is necessary, as well as engagement around any exemption that may apply. Any employment action taken as a result of the new requirements will need to be justifiable in terms of the Act, and a proper employment process conducted (e.g. termination of employment due to failure to be vaccinated). Alternatives, such as redeployment into a non-vaccine required role, or consideration of an exemption should be explored. The Employment Relations Authority has so far upheld the dismissal of a customs employee who refused vaccination and confirmed that the ordinary justification test applied, and also declined an application for interim reinstatement for aviation security officers who were dismissed after declining vaccination. We anticipate that there will personal grievance claims resulting from implementation of these requirements, and further case law will be released which will assist employers in navigating their obligations. Where we can help? We have been advising our clients on a wide range of employment issues arising in relation to COVID-19, including in interpreting and applying the Border Order, consulting with employees, Privacy Act issues and related employment and health and safety issues. With the frequent changes and developments in this space, it is important to seek advice where unsure, to ensure your business complies with all of the requirements.

An earlier version of this article was published on 23 August 2021. This revised version was published on 7 September 2021 to reflect the mandatory record keeping rules now being in force, and to include information published by the government after 23 August 2021. New Zealand is famous world wide for its Covid stopping Lockdowns. But our ability to sustain regional and localised lockdowns, and to avoid the full economic impact of shutting down our economy, is only because of our ability to contact trace quickly and effectively. As the huge number of contact events and places of interest in the current outbreak has shown, this ability is of critical importance in the new Delta environment. This is why, on 23 August 2021, the Government announced its a decision (which had been in discussion for a number of months) to formally require most businesses to keep contact tracing records at all alert levels. These requirements came into force at 11.59 pm on 7 September 2021. At the time of the 23 August announcement, it had been suggested a similarly wide-reaching requirement on individuals to sign in would be imposed. Because of difficulties around enforcement, it has since been clarified that scanning or signing in will not be mandatory. BackgroundContact tracing has obvious privacy concerns – it requires people to provide personal information and creates an accessible record of the places they have been. Making it mandatory has continued to be controversial throughout the pandemic. Probably as a result of this controversy, the Government has long held off on making it a mandatory requirement unless there is an active outbreak. Until the new rules came into effect, at alert level 1 businesses and event managers had only been required to display a QR code at or near their main entrance. Only at alert level 2 or above had businesses – and then only a small number of businesses – been required to keep a fuller record of who had visited and to monitor compliance with that requirement. Outside of businesses, there have also been record keeping requirements for social gatherings – in particular, gatherings at marae, weddings, funerals, tangihanga and religious services. Again, until the new rules came into effect this had only applied at alert level 2 and above. The New Requirements for Businesses and Event ManagersFrom 11.59 pm on 7 September 2021 a “contact record rule” applies to certain businesses and services. Ensuring a range of contact tracing options are available is part of the new normal. Which businesses are affected depends on which alert level a business is operating under. At alert level 4, the rules apply to primary industries, supermarkets, petrol stations, courts and tribunals and the justice sector, and providers of: health services (including pharmacies and funerary services); food delivery services for bakeries, uncooked food suppliers, and alcohol suppliers; cooked food delivery services contracted by health service providers (like Meals on Wheels); purveyors of essential non-food consumer products; building, construction, and maintenance services; postal, courier, freight, logistics, and transport services; scientific services; school and community-based services; key utilities and communications; government and security services; and pest management services. At lower alert levels, the above services remain affected by the new rules. Also affected at lower alert levels are businesses not able to operate at level 4, including cafes, restaurants, barbers, rest homes, libraries, museums, swimming pools, massage parlous, beauticians, barbers, hairdressers, exercise facilities, cinemas, theatres, casinos, and concert halls and nightlife venues. Visitors to aged care and healthcare facilities will also need to be provided with scanning in options, as will those attending social gatherings including those at private houses, marae, weddings, funerals, tangihanga and faith-based services. The person in charge of providing an affected business or service at a particular workplace to have “systems and processes” in place to allow every person aged 12 or over who enters their workplace to either scan their QR code or record their visit in another way. This could involve either having them create their own contact record by signing a register at the door or dropping a slip into a box, or having a staff member take down details. The key requirement is that people who are not able to scan QR codes have a convenient way to record their visit, however long they are at the premises. The requirement is in addition to the existing rule that means workplaces have to display a QR code at or near their main entrance. For businesses with multiple premises, or event managers that run events at different locations, their manager on the day at each of their sites is responsible for ensuring the requirement is complied with. The coming into force of these additional rules is a good reminder to ensure that members of your management team are familiar with their obligations under the Covid orders. The government has also made clear that it expects scanning and signing in facilities to be made available to all workers, contractors, customers, and volunteers. Workplaces with multiple entries and exits should ensure QR codes and registers are made available at all of these doors, including employee entrances. PenaltiesCompliance with the new rule is mandatory. An intentional breach of the requirements carries the risk of a conviction resulting in a criminal record and up to six months’ imprisonment or a fine of up to $4000. While during previous lockdowns the Police have been cautious in using their formal powers, preferring to warn people, during the current outbreak we have seen the Police making greater use of their formal enforcement powers. With the greater threat to the community and economy that Delta represents, and the importance of being able to quickly trace contacts to combatting the spread of the virus, we expect to see the Police quicker to prosecute non-compliance of the rules than earlier in the pandemic. The Courts are also taking offences against the Covid orders seriously. During the March 2020 lockdown, many people who breached received short sentences in prison: deliberate flouting of the law carries a very real risk of similar treatment. For many people the risk of a criminal conviction will also be a significant deterrent. Businesses that face conviction will of course only risk a fine in most cases, but will also need to weigh up the considerable reputational risk conviction brings. PrivacyWhile businesses will now be required to comply with these obligations, it is important that they also take into account their obligations under the Privacy Act 2020 when recording information. Key obligations include: Only gathering information that is necessary; Only using information for the purpose for which it was gathered; and Destroying information when it is no longer needed. Contact tracing information should be kept separate and, in accordance with the Covid Orders, destroyed after 60 days. It should not be used for other purposes (like client data bases) without specific permission. As the information is highly personal, it must also be stored carefully to avoid anyone accessing it. The risks of getting things wrong in terms of privacy are serious with compensation for breaches awarded under the Privacy Act 2020 often exceeding $10,000. A number of businesses, citing privacy concerns, have moved away from having a register book open on the counter towards having complete-and-tear forms that are posted in boxes. We consider this can better help businesses comply with their Privacy Act obligations to protect personal information against wrongful access. It will however be important that the information posted in the boxes is regularly collated so that it is accessible to contact tracers. Non-Compliant Customers When the mandatory record keeping rules were first announced, the Government suggested that customers and visitors to venues would also be put under an obligation to make use of scanning in facilities. This caused anxiety for some business and event operators, it not being clear if they would be expected to enforce scanning in, or turn away non-compliant customers. The government has now clarified that scanning or signing in will not be mandatory. A spokesperson for the Department of Prime Minister and Cabinet has said that “there is no expectation or requirement that businesses or locations should force a customer or visitor to scan in or provide” contact tracing details. Nor are they “required to expected to turn people away who may refuse to make a record of their visit”. This is a welcome clarification for businesses already likely to be under pressure with recent closures, for whom being made to turn away non-compliant customers would cause further loss. With the media reporting widespread resistance to mandatory contact tracing requirements in some sectors of the community, it is also likely to spare businesses from becoming a flashpoint for anti-Covid restriction agitation. Where We Can HelpHolland Beckett Law has been advising our clients on what the ever-changing array of public health measures means for them day-to-day. The changes in messaging around mandatory scanning in requirements illustrates how quickly the situation can develop. With the frequent changes to the rules, it is important to have people on your side who understand the requirements and can help you ensure your business complies with all of the requirements. We are more than happy to discuss your situation and help you better understand your rights, obligations, and options.

In addition to the more well-known financial support systems in place such as the Wage Subsidy and Resurgence Support Payment (RSP) – COVID-19 FAQ for Employers - Holland Beckett (hobec.co.nz), there are other avenues available to assist employers to pay employees who are impacted by COVID-19. This includes providing free childcare for essential workers who qualify to enable them to attend work. COVID-19 Short Term Absence Payment What is it? A one-off payment to help employers to keep paying an employee who needs to be away from the workplace (in accordance with public health guidance) to await a COVID-19 test result, and cannot work from home. This extends to circumstances where the employee is the parent or caregiver of a dependent who is staying home awaiting a COVID-19 test, or where the employee is a household member or secondary contact of a close contact, and the employee has been advised to stay at home while awaiting the close contact’s COVID-19 test results. How much do employers receive? Employers will receive $359 per eligible employee. Employers cannot apply twice for the same employee in that 30 day period. Who is not eligible? Those involved in routine surveillance testing who have not been notified to stay home, returning international air crew, those who are currently overseas, those who are in managed isolation facilities, or those who are employees of a State Sector organisation or State Owned Enterprise (unless granted an exception). How are staff paid? If the employee is taking sick leave during this time, the payment will need to be used to pay the worker their sick leave entitlements. If the employee has used up all of their sick leave, the employer should attempt to pay the employee as if they had been working that day, or otherwise pay them at least the full amount of the payment ($359) while they are awaiting their test results. If the employee’s usual wages are less than the payment, they need to be paid their usual wages. COVID-19 Leave Support Scheme What is it? A weekly payment to help employees who are required to self-isolate (in accordance with public health guidance) and cannot work from home. Employees must meet one of the following criteria: They have COVID-19 and have been told to isolate until advised otherwise; They are a close contact of someone who has COVID-19 and have been told to self-isolate through the contact tracing process; They are a parent or caregiver of someone who has been told to self-isolate through the contact tracing process; They have been directed to self-isolate by a Medical Officer of Health (in the Bay of Plenty region, these are Dr Jim Miller, Dr Neil de Wet, and Dr Phil Shoemack); They are considered ‘higher risk’ if they contract COVID-19 and have been told by a medical practitioner to self-isolate while there is community transmission; or They have household members who are considered ‘higher risk’ if they contract COVID-19 and a medical practitioner has told them to self-isolate. How much do employers receive? Employers will receive $600 per week for full-time employees, and $359 per week for part-time employees. This will be paid in a lump sum, and covers a period of two weeks from the date that an application is submitted. Employers cannot apply for less than two weeks. If an employee returns to work in less than two weeks, the remaining amount can be used to pay for other employees who are receiving less than their usual wages due to COVID-19. The employer is able to keep reapplying for the payment as long as the criteria is met. Who is not eligible? Those who are household members or secondary contacts of a close contact, casual contacts, those who have not been directed to self-isolate through the contacting tracing process, those involved in routine surveillance testing who have not been notified to stay home, returning international air crew, those who are currently overseas, those who are in managed isolation facilities, or those who cannot work because they have care of dependants and have been unable to access care for those dependants and those who are employees of a State Sector organisation or State Owned Enterprise (unless granted an exception). How are staff paid? The employer must use their best efforts to pay the employee at least 80% of their normal pay (including from the payment received), or otherwise pay them at least the full leave support payment rate. If the employee’s usual wages are less than the payment, they need to be paid their usual wages. IMPORTANT NOTE: It is not possible to receive more than one COVID-19 related payment for the same employee (i.e. the employer cannot receive both the Short-Term Absence Payment and the Leave Support payment). Childcare Assistance for Essential Workers From 23 August 2021, free childcare will be available for essential workers who do not have care in place for their child or children aged up to 13 years old. Access to the scheme is restricted to those who are working in essential businesses under Alert level 4, including (but not limited to) supermarkets, residential care services, passenger services and health services, as well as fire and emergency and border workers. Funding is available where there is no other adult in the worker’s household that can care for the child or children. The above is general information. If you have specific questions or require advice, please contact one of our Employment Law team.

As at 11.59pm on 17 August 2021, New Zealand moved to Alert Level 4. This article recaps the key tips and takeaways for employers who are likely to be impacted by the COVID-19 lockdown. What financial support is available? Wage Subsidy: The Government has announced that applications for the Wage Subsidy will be open from Friday 20 August 2021 for a period of two weeks, if the country remains in lockdown. Eligible businesses will receive up to $600 per week for each full-time employee and $359 per week for each part-time employee. The Wage Subsidy will be available to all employers, sole traders, self-employed people or contractors who meet the following criteria: Are registered and operating in New Zealand; Have employees legally working in New Zealand; and Anticipate they will experience a 40% decline in loss of revenue due to alert level 4. Resurgence Support Payment: Applications for the Resurgence Support Payment (RSP) will be available from Monday 24 August 2021. The RSP is designed to support businesses facing a reduction in revenue due to an alert level change. Eligible businesses can receive the lesser of $1,500 plus $400 per full-time equivalent (FTE) employee, up to a maximum of 50 FTEs, or four times (4x) the actual revenue decline experienced by the business. To be eligible, the business must have experienced at least a 30% drop in revenue or a 30% decline in capital-raising ability over a 7-day period, which is due to the increased COVID-19 alert level. Businesses can receive both the RSP and the Wage Subsidy if the respective criteria is met. Can I reduce an employee’s pay or hours during the lockdown period? Not without agreement. An employer has good faith obligations to be communicative and responsive, and this requires consultation with an employee before any proposed reduction in pay or hours are made. It is important to provide the employee with a genuine reason for the proposed changes (for example, financial reasons or as an alternative to redundancy) and if possible a clear timeframe of how long the changes are expected to remain in place. Any agreed change should be recorded in writing between the parties. If agreement is not able to be reached, then a restructure may be necessary impacting one or more roles depending on the circumstances. Can I expect an employee to take annual leave during the lockdown period? Employees can be encouraged by their employer to take unused annual leave during the lockdown period. If agreement is reached that the employee will use their annual leave during this time, this should be recorded in writing. If the employee and employer cannot agree on a time for taking leave, the employer can require the employee to take annual leave at a specified time during the closedown by giving the employee 14 days’ notice of the requirement to take annual leave. However, the good faith obligations still apply and the employer should use reasonable effort to reach agreement with the employee before utilising their right to require the employee to take annual leave. What about sick leave? An absence from work due to business closure is not ‘sick leave’. However, employees and employers can agree that the employee will take unused sick leave during a lockdown if themselves, or one of their dependents, are sick. Employees cannot be required by their employers to take sick leave during the closedown if they are not sick. It is important to remember that minimum sick leave entitlements increased from 5 to 10 days per year from 24 July 2021. Employees get the extra five days per year when they reach their next entitlement date (being either after reaching 6 months’ employment or on their sick leave entitlement anniversary). The above is general information. If you have specific questions or require advice, please contact one of our Employment Law team. Authors: Christie McGregorPartnerE: christie.mcgregor@hobec.co.nzDDI: 07 928 7099M: 021 0841 4220 Abigail PearceSolicitorE: abigail.pearce@hobec.co.nzDDI: 07 571 3830

With Aotearoa now experiencing the first Level 4 lockdown since the Covid-19 Public Health Response Act 2020 was passed in May last year, the Government has issued a completely new order that sets out the restrictions (and exceptions) for what Level 4 looks like. The Covid-19 Public Health Response (Alert Level Requirements) Order (No 9) 2021 (the Order) is based on the same three main restrictions that applied during the March 2020 Lockdown: A direction that everyone stays home, except for essential personal movement (cl 15); A direction that all business premises are closed unless they are “Alert Level 4 Businesses or Services” (cl 18); and A prohibition on any outdoor gatherings, except where all of the people live together (cl 18). The Order also contains other rules that apply even with permitted activities – such as maintaining 2m distance wherever possible and wearing masks on public transport, in taxis or when in shops. New Zealanders are now used to these requirements and have a good understanding of the main requirements of lockdowns. What is less clear is the exceptions – what are they allowed to do outside, and what businesses are still allowed to operate. Essential Personal Movement The personal exceptions, or “essential personal movement” under the Order cover a range of issues. Some are very specific – like attending court hearings or returning from MIQ. However, most of the exceptions are more general. The key exceptions for individuals are: Using Essential Services: People are allowed to leave their homes to access businesses that are still operating, so long as they either stay in the same district (measured using territorial authority boundaries) or are going to the nearest option (if it is across the boundary). Attending work: People may go to their place of work if they are working in a business that is allowed to remain open and their work cannot be done from home. Medical or Veterinary Services: People may go out to access medical services, to help someone they live with access medical services, or to get emergency veterinary care. Recreation: People are allowed to go out to a place that is readily accessible from their home (including by vehicle) for recreation, so long as it is not a high risk activity (which includes tramping, swimming, diving, and water sports and motor sports of any kind). Shared care arrangements: As set out in our other article on the topic, leaving home for shared child care is also permitted. These activities are not exhaustive, but cover the most popular activities that are permitted at Level 4. All of them are also subject to the standard requirements to keep at least 2m from other people and not to meet with people from outside your ‘bubble’. Business Exemptions The situation for businesses is more complex. The order sets out a detailed schedule of different “Alert Level 4 Businesses or Services” that are allowed to operate. The important ones to be aware of are: Food and essentials: Groceries, petrol and essential items can still be sold – with non-grocery items needing to be sold via online delivery. The products being sold must be “essential” to qualify. Medical services: Medical providers are allowed to keep operating under Leve 4. Accommodation: Motels and other accommodation providers are allowed to remain open, but must not serve food. Supply Chain: Anyone involved in supplying food and essentials or supporting essential businesses is entitled to continue operating provided that they have appropriate contact tracing in place. This also includes businesses responsible for managing services like gas, water and power. Essential Construction: Construction work can continue if it is necessary for maintaining existing critical infrastructure or to deal with immediate health and safety risks. This includes work on private homes but only if it is for urgently needed repairs. Businesses that supply builders and tradespeople can also stay open, but only for trade customers. Transportation: Taxis and public transport can remain operating. Other than essential groceries and petrol stations, most essential businesses are not allowed to have customers on-site and need to deal with them remotely. Where customers are on site, they are required to remain 2m apart in most cases. Penalties Failure to comply with the Order can result in fines, and in some cases even imprisonment. Breaching the Order is, in most cases, an infringement offence. This means you can be given a “ticket” for $300 for most breaches. Alternatively, the Police can go to court asking for you to be fined up to $1000. Where the breach was deliberate, this is also a criminal offence and there is a maximum penalty of six months’ imprisonment. While this will usually be reserved for serious cases, any intentional breach carries a possible criminal conviction. During the March 2020 lockdown, many people who breached received short sentences in prison – deliberate flouting of the law carries a very real risk of similar treatment. Special Exemptions The Director-General also has a specific power to allow other exceptions for individuals or groups. Applying for an exemption requires a person to provide a good justification for why they should be exempt. Holland Beckett Law has experience applying for these exemptions, and is happy to discuss your situation if you think that an exemption is appropriate for your business.

Gate Gourmet New Zealand Ltd v Sandhu [2020] NZEmpC 237 deals with employment rights and obligations arising during the COVID-19 lockdown. The key issue was whether an Employer was obligated to pay employees the minimum wage if they were not working due to partial business closure, but were “ready, willing and able” to do so. Facts Gate Gourmet New Zealand Limited (Gate) is an airline catering company which closed part of its business during the nationwide lockdown in March and April 2020. For some employees, the partial closure meant that there was no work available and they were required to stay at home for the lockdown. Gate paid these employees 80% of their normal wage. However, for those who ordinarily received the minimum hourly wage, this payment equated to less than what they would have been entitled to receive by law for working under the Minimum Wage Act 1983 (MWA). Five employees, through their union, filed in the Employment Relations Authority. The Authority found that if the employees were “ready, willing and able” to carry out their function in an essential industry, Gate was required to pay them at least the minimum wage. The Authority ordered Gate to reimburse the employees for the difference between what they had been paid and the minimum wage. Gate challenged the Authority’s determination in the Employment Court. Employment Court decisionThe primary issue for determination was whether the employees were entitled to be paid minimum wage for the period in question.Section 6 of the MWA provides that all employees “shall be entitled to receive from [their] employer payment for [their] work at not less than the minimum wage”. The Court considered what constituted “work”, and the majority found: The purpose of the MWA was to ensure employees received a base rate for work completed. It did not provide a guaranteed minimum income; Employees who stayed at home were not “working” for the purposes of section 6, and therefore the MWA did not apply in this case. Being “ready and willing to work” was not the same as working under the MWA; Accordingly, the payments that the employees received of 80% of their ordinary pay (and less than the minimum wage for a 40 hour week) was lawful; Although the MWA did not apply, Gate still had other employment obligations including arising from their employment agreements. The employees’ employment agreements provided for full-time employment for a minimum 40 hour-week – this meant that the Company was obligated to pay the employees for those 40 hours, even when work was not actually performed (through no fault of the employees). Interestingly the Chief Judge dissented, concluding that the minimum hourly wage applied, given that the employees could not work for reasons of the pandemic and not due to their default, illness or accident, so no deduction from the minimum wage could be made. She said lawfully an agreement couldn’t be made to reduce the employees’ wages to 80% of the minimum wage, however it was open to the employees to agree to a reduction of their hours of work to give the equivalent result. She said that to allow the majority’s interpretation to apply, meant that it took away money from the most vulnerable group of employees where Parliament had intended to provide them with an income floor, being the minimum wage.Take home findings for employees and employersThe lockdown and wage subsidy were not intended to override the legal rights of employees and the obligations on employers to uphold those. Consideration should always be given the to the legal framework of minimum obligations, as well as the rights and entitlements under each employee’s employment agreement.Given the risk of future Covid restrictions/lockdowns, employers are reviewing their employment agreement terms and policies to ensure they are relevant and suitable going forward. This can be a two pronged approach with employment terms – dealing with existing employees (e.g. consulting regarding proposed changes), and ensuring future employment agreements are appropriately set up going forward. Matters to consider when reviewing employment agreements include provisions around minimum hours of work, suspension (including in pandemics) and working from home. Policy provisions that may require review include those regarding flexible work, working from home/remote working and sick leave. Special consideration should be given to those employees receiving minimum wage and the consequences of possible future lockdowns. The above is general information. If you have specific questions or require advice, please contact one of our Employment Law team: Christie McGregorPartnerE: Christie.McGregor@hobec.co.nzDDI: 07 928 7099M: 021 0841 4220 Abigail PearceSolicitorE: Abigail.pearce@hobec.co.nzDDI: 07 571 3830

At noon 12 August 2020, Auckland moved to COVID-19 Alert level 3 and the rest of New Zealand moved to Alert level 2. Resurgence Wage Subsidy On 18 August 2020, Finance Minister Grant Robertson announced additional funding of up to $510 million for a targeted extension of the Wage Subsidy Scheme, being the ‘Resurgence Wage Subsidy’ (RWS). The RWS is able to be applied for between 21 August 2020 and 3 September 2020. It is anticipated that approximately 470,000 affected employees will receive this. The criteria for the RWS is similar to the previous Extension to Wage Subsidy Scheme, where applications remain open until 1 September 2020. The RWS criteria is: • The Business must have had, or expect to have, a minimum revenue drop of at least 40% because of COVID-19; and • The revenue drop must relate to any consecutive period of at least 14 days between 12 August 2020 and 14 September 2020, compared with a ‘similar period’ in the previous year. Eligibility for the RWS is not limited to Auckland businesses. Any business in New Zealand can apply and will qualify provided they meet the criteria. Businesses that have been operating for less than a year or have ‘high growth’ may also be eligible for the RWS. To determine whether these businesses meet the 40% ‘decline in revenue’ assessment, they must compare their revenue against a 14 day period that gives the best estimation of the revenue decline related to COVID-19. We anticipate that the undertakings required for the RWS will be the same as provided for the previous wage subsidies, that is that the employer must endeavour to pay at least 80% of an employee’s pay, but may reduce to the minimum wage subsidy payment. The employer also cannot terminate qualifying employees’ employment while in receipt of the RWS. COVID-19 Tracer App QR Code All businesses are required to display the COVID-19 tracer app QR code prominently at all entry points, allowing any attendees to sign in via the tracing app. This is expected to last through Alert levels 2 and 3. COVID-19 Employment Cases There had been conflicting views by employers around whether anything more than the wage subsidy needed to be paid to affected employees (beyond making ‘reasonable efforts’ to pay 80% of their usual pay), and whether an employee could be paid less than their ‘usual remuneration’ while working, or while unable to work due to the lockdown. The Employment Relations Authority has determined: • Employers cannot make deductions from pay unless expressly authorised (such as by a deductions clause in their employment agreement contemplating circumstances including COVID-19). This means that an employer must pay the wage subsidy plus a top up, without deduction, unless agreed with the employee. The Government’s requirement was that the employer must make ‘reasonable efforts’ to top up an employee’s pay to 80%; • An employer cannot unilaterally reduce an employee’s remuneration. Failure to pay full remuneration is unlawful. For example, in that case, the employer attempted to reduce the employee’s pay without agreement; • Employers cannot contract out of minimum wage requirements as a result of COVID-19, even if an employee agrees. So all hours worked must be paid at least at the minimum wage (currently $18.90 gross per hour); and • Where an employee is ‘ready and willing to perform their work’, they must be paid, irrespective of whether there is work to provide them (unless expressly allowed by their employment terms. For example a waged employee where hours of work vary subject to guaranteed minimum). The employer may, however, withhold payment where an employee refuses or fails to perform work. In that case, the Authority accepted an argument of ‘no work no pay’. Looking Forward We have many clients who, before, during and after lockdown have reorganised their businesses with a view to decreasing costs/trading through COVID-19 interruptions. Key takeaways are: • Employment law obligations still apply during COVID-19 alerts and lockdowns. While restructure processes may be truncated, where justified, any restructures must be substantively and procedurally justified; • Good communication is essential. A paper trail evidencing consultation is important. Technology can be utilised – for example using zoom/facetime for meetings; • Consultation requires provision of an explanation of what is proposed, a rationale for the proposal, and details of how this will affect the employee concerned; • Redeployment should be considered, and any applicable criteria should be set out (for example where multiple of the same roles are being reduced); • Lawyers/advocates continued to work during level 2, 3 and 4 lockdown and can provide advice/representation to affected employees. This should not unreasonably hold up an employment process; • Changes to employment terms, such as hours and days of work need the agreement of affected employees; • Restructures shouldn’t be utilised as a means to address poor performers or ‘dead wood’, there need to be genuine reasons on reasonable grounds to disestablish a role; and • Ultimately, an employer has the ability to organise their business in a way that meets their needs, provided this is substantively justified, and carried out in a procedurally fair way. The above is general information. If you have specific questions or require advice, please contact one of our Employment Law team. Authors: Christie McGregor Partner E: Christie.McGregor@hobec.co.nz DDI: 07 928 7099 M: 021 0841 4220 Alby McClelland Solicitor E: Alby.McClelland@hobec.co.nz DDI: 078 570 0692 M: 027 367 8666

On 11 May 2020, the New Zealand Government announced that the country would be moving to Alert Level 2 and on 14 May 2020, Finance Minister Grant Robertson announced additional funding of up to $3.2 billion for a targeted extension of the Wage Subsidy Scheme. Wage Subsidy extension The Wage Subsidy extension provides for a further 8 weeks of payments after the existing scheme ends on 9 June. Applications for the extension are open for a 12-week period from 10 June until 1 September. The extension will provide an 8-week payment per named employee and the weekly rates will be the same as under the previous scheme. It will be paid to the employer as a lump sum. Employers cannot apply for the Wage Subsidy extension for an employee until their 12-week wage subsidy under the previous scheme has finished. The 12-week period begins from the day the employer applied for the previous wage subsidy, rather than when the payment of the subsidy was made to that employer. In addition, employers must have had, or expect to have, a revenue loss of at least 50% for the 30 days immediately prior to applying, compared to revenue for the same period in the previous year (there are different calculations for organisations where this is not possible, such as new businesses or pre-revenue firms). The employer will also need to agree to certain obligations, such as to: Pass the subsidy on to employees; Retain employees for the duration of the subsidy; Use best endeavours to pay employees 80% of their normal pay; and Take active steps to mitigate the impact of COVID-19 on their business which may include talking with the bank, making an insurance claim, or activating a business continuity plan. Considerations for Employers in Level 2 For many, Level 2 means returning to the workplace. While most businesses can open, they should only do so if they can operate safely. For employers, this requires implementing restrictions and guidelines in the workplace to do everything reasonably possible to reduce the risk of COVID-19 transmission at work. To achieve this, employers should consider: Implementing alternative ways of working; Talking with employees to identify risks and how to manage them; Asking all employees who have cold or flu-like symptoms to stay away from the premises; and Social distancing of at least a meter where possible. It is also important for all workplaces to keep records of who has attended the premises each day for the purposes of effective contact tracing. While methods used to reduce the risk of COVID-19 transmission will vary between businesses and sectors, all employers must ensure their workplace complies with health and safety requirements if they wish to open and remain that way.

Wage Subsidy Scheme – Employer ‘top ups’ Prior to 27 March 2020, employers receiving the wage subsidy were required to undertake that they: Will use best endeavours to retain the relevant employees in employment; and Will use best endeavours to top up their relevant employees’ pay to 80% of their normal income. From 4pm on 27 March 2020, employers receiving the wage subsidy are now required to undertake that they: Will retain the relevant employees in employment; and Will use their best endeavours to top up their relevant employees’ pay to at least 80% of their normal income. The Government has confirmed that for those employees whose usual pay is less than the subsidy, they can be paid the lesser amount and the difference between that employee’s usual pay and the wage subsidy can be used to subsidise the pay of other affected employees. For example, where an essential worker’s normal hours are less than 20 hours a week, and their ordinary pay is $250, they will receive $250 gross, and the remaining $100 of the subsidy can be used by the employer to apply towards other employee’s pay. If an employee’s normal income is more than the amount of the wage subsidy, an employer must use their best endeavours to pay the employee 80% of their income, in addition to the full amount of the subsidy. ‘Best endeavours’ is not defined, and the Government acknowledges that if this is not possible the employer can pay less, including simply passing on the subsidy if appropriate. An employer must not unlawfully compel or require an employee subject to a wage subsidy application to use their leave entitlements the for the period they receive the subsidy in respect of those employees. An employer can agree with the employee that they will use their annual leave entitlement to ‘top up’ the wage subsidy. Such an agreement should be recorded in writing, and would not be appropriate where the employee is still required to work. Subject to the wording of his/her employment agreement, an employee usually only qualified for sick leave if they are genuinely unwell, and cannot compel the employer to pay sick leave if the employee does not qualify. Obligations of good faith The requirement for employers to act in good faith and be responsive and communicative in the employment relationship, does not change as a result of COVID-19. This includes in dealings with essential workers regarding working arrangements and health and safety, and dealing with remote workers around their arrangements and pay. For many employers, receipt of the wage subsidy means a ‘hold’ on restructuring. They are entitled to use the 12 weeks to assess the impact on their business and determine what further steps may be necessary as a result of the business disruption. This could ultimately include implementing a restructure and redundancies as a result. Good faith consultation obligations continue to apply and must be followed, albeit that processes may be run quicker than in less pressing circumstances. Consultation may include: Circulation of the proposed change to all employees likely to be affected, along with a constructive and clear explanation as to why this is sought; Allowing employees reasonable time to respond, comment, take advice if required, and suggest other options; and Genuine consideration by the employer of the employees’ responses before any final decisions are made. By following a clear process and adhering to good faith obligations, the employer will reduce the likelihood of an employee raising a personal grievance and/or the employee being ultimately successful in a claim. Restructures We understand that certain employers have unilaterally implemented changes to employee’s employment conditions without consultation. For example unilaterally reducing employees’ hours or rate of pay. If an employer wishes to do this then it must consult with employees first, and attempt to obtain agreement. If agreement cannot be reached, then advice should be sought regarding potential restructure action. We anticipate that, in relation to the employers above, there may be personal grievance claims arising from unilateral actions (with affected employees having 90 days to raise a personal grievance in respect of the employer’s actions). We have also heard indirectly of employers implementing restructures affecting multiple people in the same role, without any selection criteria being applied or consulted on. Again, this creates an avenue to challenge the process and may give rise to personal grievance claims later. Personal Grievances The general obligations on an employer, including the overriding duty of good faith continues to apply despite the pandemic circumstances. Disgruntled employees have 90 days from the date of which the alleged action occurred or came to the notice of the employee, whichever is the later. We therefore encourage employers to remain cautious when making decisions that impact on employee’s employment, be mindful of the implications of the undertaking given for the wage subsidy and seek legal advice where appropriate. Union Involvement The New Zealand Council of Trade Unions (NZCTU) has recently announced an online tool created for employees who have been treated unlawfully to register their concerns and/or workplace issues. The types of issues the NZCTU is expecting to identify includes: dismissals/redundancies; forcing workers to take annual leave and sick leave; treatment of workers in relation to the wage subsidy; changing terms and conditions of employment; the treatment of casual and other precarious working people; and breaches of health and safety laws. NZCTU intends to identify where systemic breaches may be occurring, and work with Government to put measures in place to prevent these breaches or unlawful treatment of employees. Summary To the extent possible we advise care when dealing with employees, and encourage employers to seek advice where needed.

These FAQs are based on the current Government and Ministry of Health Guidelines correct as of 30 March 2020. Due to the fluid situation with COVID-19, these FAQs are designed to be a general guide, and employers should take specific legal advice. 1.  Do I have to pay employees during the alert level 4 period? The escalation of New Zealand’s alert level from 2 to 3, and subsequently to 4 from 11:59pm on Wednesday 25 March 2020, means that all businesses (unless they qualify as an essential service under the attached list or lifeline utilities) must not have their employees working on site. People are instructed to stay at home and stop any interactions with others outside of those in their household. Where employees can work remotely, they should be paid as usual, with the wage subsidy available as necessary. Where remote work is not possible, this creates an issue of the employer being unable to offer work to the employee and the employee not being able to accept work. In this case we recommend seeking the Covid-19 wage subsidy, and to provide a paid ‘top up’ to at least 80% of the employee’s normal pay ( if this is reasonably able to be paid given the circumstances of your business see further details below). If this is not possible, the wage subsidy only is able to be paid. See below for details. If making an employer provided top-up to the wage subsidy is not an option (for example if the 30% impact threshold cannot be met), the below options can also be considered: Offer the employee access to leave entitlements (see below – this cannot be forced on employees); Offer paid ‘special leave’ (this is encouraged, but not compulsory); Agree to the employee taking unpaid leave and leave the role open; Agree to a reduction in hours or pay; Have the employee conduct online study or another alternative task not related to their role; or Restructuring/disestablishing the role, where justified and after proper process.Restructures should be approached carefully, and employers should take specialist advice to minimise risk. Beware of rushed or ill-considered processes, or opportunistic selections. Consider all options first.   2.  Can I require employees to take annual leave or other paid leave entitlements? In some circumstances, employers can require employees to use annual leave entitlements. Consultation is required. If agreement cannot be reached on the time for taking leave, the employee may be required to do so on 14 days’ notice. Annual leave must be paid at the employee’s contracted rate of pay. We recommend seeking advice before doing so. Other than as above, employers cannot ‘force’ employees to use their annual leave. We recommend consulting with employees and recording agreements in writing regarding leave. If the wage subsidy is available, we would recommend taking this approach and not forcing employees to take leave. An absence from work due to business closure is not ‘sick leave’. However, this could be accessed on a discretionary basis (technically they would not be entitled to this unless they are genuinely unwell). Other leave may be available to be accessed, including time in lieu and discretionary leave. Whether the employer can require the employee to take these will depend on the terms of the leave entitlement itself. 3.  Can I reduce an employee’s pay or hours during the closedown period? You may only reduce an employee’s hours and pay if the employee agrees to the reduction. Consultation is necessary, with best chance of agreement being reached if the employer is constructive in explaining why this is sought. It also helps if a definite timeframe for the reduction is set out. If agreement is not able to be reached, then a restructure may be necessary impacting one or more roles depending on the circumstances. Note that the above is not required if the wage subsidy is able to be accessed and employees this alone is passed on. 4.  My business is considered an essential service/lifeline utility. Do I have to pay employees who do not want to come into work? If the business is not required to close due to it being an essential service or lifeline utility provider, employees may be required to attend work if necessary, for operations. However, health and safety is paramount. The employer must ensure that alternative ways of working are adopted to ensure the safety of employees including shift working, social spacing, staggered meal breaks and the like. Consultation on these changes to work is encouraged. If an employee is required to attend work, but refuses, the employer should consult to understand the reasons for refusal and will need to assess whether the refusal is reasonable. If an employee is considered ‘vulnerable’ then they shouldn’t be required to attend work. If agreement cannot be reached, the employer may direct the employee to attend work, and if the employee refuses, cease paying the employee (and may take disciplinary action as a result of the failure to follow a reasonable directive). This should be a last resort. With good consultation, the reason for refusal may be worked through and resolved, and agreements reached. Issues may arise for essential businesses, where the wage subsidy is unavailable, in what to do with such employees, and whether they can/should be paid if they don’t wish to work (but are not incapable of doing so). 5.  What is the COVID-19 Wage Subsidy and how can this help my business? The COVID-19 Wage Subsidy is available to all employers, sole traders, self-employed people or contractors who meet the following criteria: Is registered and operating in New Zealand; Has employees legally working in New Zealand; Has experienced a 30% decline in actual or predicted revenue compared to the same period last year and that decline can be attributed to COVID-19; and Has taken active steps to mitigate the impact of COVID-19. When the Subsidy was originally implemented, it was done so on the basis that the employer undertook to take ‘best endeavours’ to: Pay employees a top up to at least 80% of their usual pay; and Keep the employment of employees receiving the wage subsidy on foot. The above would imply that there would be circumstances where an employee was paid less than the 80% or the employee’s employment was terminated during the wage subsidy 12 week period. The original scheme capped the amount an employer could claim at $150,000. This has since been removed and any employer who was initially impacted by this cap can reapply. On 27 March 2020 the Government announced changes to the wage subsidy, which take place from 4pm that day. The Covid-19 leave subsidy is now ‘wrapped into’ the wage subsidy. The employer undertakings now require that the employer: Make ‘best endeavours’ to pay the top up to 80% of the employee’s usual pay; and Must keep the employment open for all employees where a wage subsidy has been granted. It was also made clear that, if it was not possible to provide the employer ‘top up’, an employer can simply pass on the wage subsidy with the role remaining open. This was justified as allowing the employer time to assess the situation and determine what, if any, action is required in respect of its employees. Additional clarification has been provided by the Government regarding the subsidy, including: Confirming that that receipt of the wage subsidy does not override employer’s existing obligations under the Employment Relations Act 2000, for example the duty of good faith and requirement to be active and constructive in the employment relationship and communicative in relation to the employment; Employers cannot change employee’s conditions of employment, including to rates of pay, hours of work, or leave entitlements without consultation with and written agreement of the employee; Employers may not unlawfully compel or require any employee to use their leave entitlement while they receive the wage subsidy; and The wage subsidy is only to be used for the purposes of meeting your named employees’ ordinary wages and salary. If an employee’s actual pay is less than the subsidy (eg. the employee is part time and earns less than $350 per week) you can pay the employee’s ordinary pay and use the remaining balance to subsidise other impacted employees. The Government has also announced that employers must discuss the application for the wage subsidy with their employees and gain their consent to information sharing with the Ministry of Social Development. Where possible, this consent should be in writing. The wage subsidy is a lump sum payment for 12 weeks. It is $585.80 per week for employees who work 20 hours or more per week, and $350 per week for employees who work less than 20 hours per week. Repayment obligations will apply if employers: Fail to meet any of the above obligations about how the wage subsidy must be used (eg. do not pass on to employee costs); or Employers were not, or stop, being eligible for the subsidy; or Provide false or misleading information in an application; or Receive insurance such as business interruption insurance for any costs covered by the subsidy. We note that the subsidy is provided in a ‘high trust’ environment and we are receiving feedback that payments are made very quickly – even overnight. It remains to be seen how many questions will be raised later around eligibility. The purpose of the wage subsidy is to ensure that employees are retained in employment and provide essentially a universal basic income for employees. 6.  What is the COVID Leave Payment and when can I apply for this? The COVID leave payment has been folded into the wage subsidy scheme. Specific provisions for employees working in essential services who require sick leave for COVID-19 are anticipated to be announced later this week. 7.  What are my general obligations to employees during any business closure? Despite the economic pressures and constraints, employers are still required to comply with their obligations under the Employment Relations Act 2000, and do the following: Ensuring employees are kept informed and consulted in relation to any proposed decision that may impact their employment, and continue to deal with employees in good faith; Stay up to date with the COVID-19 response package and Ministry of Health Guidelines; If still operating, implement appropriate adjustments to the workplace and way of working i.e. social distancing, split shifts, encouraging proper hygiene, working from home where possible; and Ensuring employees feel supported and informed in this stressful time, and offer access to services such as EAP (remotely) where available/ appropriate. *Guidelines for self-isolation: You arrived in New Zealand after 1:00 am on Monday 16 March from any country (except those listed on the countries and areas of concern under Category 2) you will need to self-isolate for 14 days. People who have recently travelled from Category 2 countries and territories should be aware of the COVID-19 symptoms. You do not have to self-isolate if you are well. Anyone who develops symptoms within 14 days of departing the Category 2 country and territory should contact Healthline (0800 358 5453). You arrived in New Zealand before 1:00 am on Monday 16 March from China, Iran, Italy or South Korea you need to self-isolate for 14 days from the day you left that country. You have been in close contact with someone confirmed with COVID-19 you will need to self-isolate for 14 days from the date of contact. For further comment please contact:Christie Goodspeed - PartnerMobile: 021 084 14220Email: christie.goodspeed@hobec.co.nz

On 28 February 2020, New Zealand confirmed its first case of Coronavirus (COVID-19), and the number of confirmed cases continues to increase. At the time of writing New Zealand currently has 11 confirmed cases. After a 13-fold increase in COVID-19 in the past two weeks, the World Health Organisation have labelled the outbreak a “pandemic”. On 14 March 2020 the New Zealand Government announced further travel restrictions, which included a requirement that all travellers entering New Zealand must self-isolate for a period of 14 days immediately following their arrival in New Zealand. This includes New Zealand residents and citizens and came into effect at 1am Monday 16 March 2020. COVID-19 and the Workplace These restrictions have heightened the challenges already facing New Zealand employers at this time. This is an unprecedented situation. Minimising the spread of COVID-19 within workplaces is important to ensure employees are kept safe and well at work, while also ensuring other obligations are met. Employer Considerations Employers should consider the following: The duty to provide a safe workplace for employees and what this requires. The seriousness of the virus and how to manage the health risk to workers and other people in the workplace. The obligation to treat employees in good faith, operating in an open and communicative way. Dealing with situations where employees are required to self-isolate or where isolation/work from home needs to be directed. Working from home arrangements, and what to do when not possible. Work strategies and whether reducing employees’ hours or redundancies are necessary and how to manage this. Providing clear communications to employees around the employer’s planned response to the virus and the implications for employees is key, as well as setting out the employer’s expectations of its employees (eg. using good hygiene practices). Many employers already have plans in place for ‘worst case’ scenarios, including having an infectious case. Self Isolation/Absence from Work For any staff who are required to self-isolate, or if an employee is exhibiting symptoms, employers should not require these employees to attend work as this may be in breach of the obligations to keep employees safe which are contained in the Health and Safety at Work Act 2015. That obligation extends to all in the workplace, not just employees. Employees who are self-isolating but not unwell, should be encouraged to work from home where possible. If the employee can work from home, they should be paid normally. If the employee is not unwell but unable to work from home, then employers should consider special paid leave. Other arrangements could also be considered including working from other premises or working from the homes of other staff members. Where an employee cannot work but is not unwell, deducting leave from the employee’s annual or time in lieu or other balance may be possible but only following consultation with the employee and any relevant conditions in their employment agreement/policies. There are mechanisms to require employees to take annual leave in certain circumstances which may be able to be utilised. There may also be mechanics to allow employees to be suspended with or without pay, depending on the employee’s employment terms. If employees have booked non-essential travel (except to Pacific Islands) it will be important to discuss as soon as possible to confirm if they intend travelling, and if so, how they intend to manage the self-isolation period. There may also be isolation requirements in the destination country to consider. It will be important to stay up to date on developments of measures taken overseas. Employers may also face issues when employees either refuse to self-isolate or attend work when ill. Circumstances may justify a direction to the employee not to attend the workplace. Failure to follow a reasonable direction could lead to disciplinary action up to and including dismissal. We recommend advice be taken before taking disciplinary steps. Some employees may request to self-isolate because they consider themselves at a higher risk of harm from the virus. Communication is key. Having up to date contact details for staff, and details of any relevant pre-existing health conditions is important. Impacts If the impacts of COVID-19 mean that your business needs to consider temporary or permanent staffing changes which could result in hours being reduced or roles being made redundant. We recommend seeking advice before starting any such process/discussion. Higher Risk Industries There are certain workplaces/industries where the risk and considerations are greater, including: Medical and dental practices and other health related fields with greater risk of infection; Childcare; and Tourism operators and businesses dependent on tourists. Tailored advice is best to meet the employer’s requirements. Overseas Examples Overseas employer measures to deal with the outbreak include: Partial/total closure of businesses; Enforced work from home arrangements; Reducing or eliminating large meetings and seminars, using Skype/phone etc. instead; Operating in teams, with limited staff in the employer’s offices; Cancelling all non-essential travel; and Reducing/eliminating physical client contact; Enforcing contact rules, e.g. no handshakes and physical contact. What Next? These are concerning and reasonably unprecedented times. Communication is key. Support should be offered where possible including employee assistance/counselling, where appropriate, to support the mental wellbeing of staff. We can expect the virus to continue to cause ongoing disruption both internationally and domestically. Cabinet has approved the development of a Business Continuity Package to help support the economy through the disruption caused by COVID-19. The package includes a targeted wage subsidiary scheme, training and re-deployment options for affected employees and working with banks on the potential for future working capital support for companies that face temporary credit constraints. We advise an open and communicative approach, which is guided by your unique business, its resources and flexibility. Planning is key. We are happy to provide advice tailored to the individual circumstances of your business and employees. For further comment please contact: Christie Goodspeed Partner Holland Beckett Law Mobile: 021 084 14220 Email: christie.goodspeed@hobec.co.nz Sophie Law Senior Solicitor Holland Beckett Law Mobile: 027 305 7190 Email: sophie.law@hobec.co.nz

On 5 December 2018 the Employment Relations Act Amendment Bill was passed, bringing changes to employment law in New Zealand. While the majority of these changes will come into effect on 6 May 2019, some of the changes are already in force following the Bill being given Royal assent on 12 December 2018. The Domestic Violence Victims’ Protection Act 2018 also comes into effect on 1 April 2019. What do these changes mean for employers? 90 day trial restrictions The most significant change coming is the restriction on 90 day trial period clauses, preventing dismissed employees from bringing personal grievance claims. From 6 May 2019, only businesses with fewer than 20 employees will be entitled to include a trial period clause in employment agreements. Probationary periods will still be available for employers with 20 or more employees, however there will be no immunity from claims for unjustified dismissal. The number of employees will be taken on the day on which the employment agreement is entered into. For businesses who are close to the 20 employee threshold, this will require particular consideration when providing a new employee with an employment agreement. Reinstatement given priority where possible If an employee is dismissed and brings a personal grievance claim before the Employment Relations Authority, then if requested by the employee, the first course of action the Authority must consider is reinstatement. This means it is going to be even more important for employers to ensure a proper process is being followed when considering dismissal to avoid a reinstatement remedy. We recommend getting legal advice at an early stage during a disciplinary procedure to ensure that the process and outcome will withstand scrutiny later. Rest and meal breaks The 6 May 2019 changes also reinstate provisions relating to prescribed rest and meal breaks. The number and duration of breaks will depend on the hours worked by the employee. The employee and employer must attempt to agree on when breaks are to be taken, and if no agreement can be reached, the breaks will need to be taken as prescribed, including in the middle of the work period. Changes in relation to unions Access to workplace Changes already in effect include right of access by union representatives into workplaces on union business. Union business can include providing information on the union and recruiting new union members. Employers must not unreasonably withhold consent to the union representative, and are not able to deny access based on there being no union members on site, provided that the work which the employer performs is covered by the relevant union membership’s rule. New Employees From 6 May 2019, employers who have a collective agreement in place must ensure that all new non-union employees are employed on terms consistent with the collective agreement for the first 30 days of employment. Employers are also required to provide all new employees with information about any relevant unions, as well as copies of the collective agreement. After the expiration of the 30 day period, the employer is able to negotiate an individual employment agreement with the employee. Time off for union business For employees who are union representatives, the changes will require that they be provided with adequate time to perform their union duties during work hours and they must be paid their usual rate for performing this union work. Deductions Employers are now no longer entitled to make deductions from an employee’s pay for a partial strike. An employer will be able to respond to partial strike action the same way as a regular strike, and available response options include suspending employees without pay or a lockout. Domestic violence leave from 1 April 2019 Under the Domestic Violence Victims’ Protection Act 2018 employers are required to give employees who have been affected by domestic violence, up to 10 days domestic violence leave per year if required. This is in addition to any annual leave and sick leave entitlements. The employer is entitled to request proof that the employee has been affected by domestic violence, to qualify the employee to domestic violence leave. What will constitute proof is not defined. Under this Act an employee who is affected by domestic violence is also entitled to request a short-term variation to their working arrangements. Short term will be up to two months. An employer who receives such a request will be required to respond in writing within 10 working days. Employers must also not treat an employee adversely in their employment on the grounds that they are, or that they are suspected to be, a person who is affected by domestic violence. Failure to comply with this will be grounds for an employee to raise a personal grievance. Implications The amendments have implications for all employers. If you would like to discuss how the changes will affect your business, please speak with one of our team.

Changes Employment Law 2018 The new Labour-led coalition Government has introduced a new bill to amend the Employment Relations Act 2000 and implement the employment law reforms that were promised prior to last year’s general election. The Employment Relations Amendment Bill 2018 (“Bill”) states that the changes are “intended to introduce greater fairness in the workplace between employees and employers, in order to promote productive employment relationships”. While these changes do include some new initiatives, a significant number are simply a roll-back of changes enacted by the previous government. The proposed key changes are: Restriction of the 90 day trial period 90 day trial periods will be limited to employers with fewer than 20 employees. Probationary periods will remain available to employers. However, unlike trial periods, dismissals in reliance on probationary periods allow employees to raise claims for unjustified dismissal. Care must be taken as the rules in relation to procedural fairness apply. Restoration of rest and meal breaks Currently, employers and employees are encouraged to bargain in good faith for the timing and length of rest and meal breaks. The proposed restoration of prescribed rest and meal breaks is intended to provide certainty to employees. This may result in unintended inflexibility including for part time workers. A very limited number of employers in essential services will be exempt from the requirements (such as air traffic controllers) where it is not practical for workers to take breaks at certain times. Reinstatement restored as the primary remedy to unfair dismissal Reinstatement is intended to be restored as the primary remedy for employees who have been found by the Employment Relations Authority to have been unjustifiably dismissed. To avoid reinstatement, an employer will need to be able to show why reinstatement is unreasonable and impractical on the facts of the case. In practice, this remedy is reasonably infrequently used, due to the breakdown in an employment relationship leading to an unjustified dismissal claim. In our view, many employees will continue to prefer to seek compensation rather than reinstatement. Greater protection for “Vulnerable Employees” when a business is transferred or restructured Under existing legislation, employers with 19 or fewer employees (“Small Employers”) are exempt from providing the protections afforded to specific groups of vulnerable employees (those deemed to be at greater risk of losing their job due to restructuring including cleaners and caterers). Under the proposed changes, Small Employers will no longer be exempt, and all vulnerable employees will have more time to consider whether to transfer to a new employer. Collective bargaining and union rights The Bill strengthens collective bargaining and proposes to restore various union rights in the workplace, including: (a) Restoration of the duty to conclude bargaining, which would be required unless there is a \"good reason\" not to; (b) Restoration of earlier initiation timeframes for unions in collective bargaining, so that a union can initiate bargaining first; (c) Removal of the ability for employers simply to opt out of bargaining for a Multi-Employer Collective Agreement (MECA); (d) Restoration of the 30 day rule, where for the first 30 days new employees (who were not union members) must be employed under terms consistent with the applicable collective agreement. After 30 days, the employer and employee can negotiate changes to the individual employment agreement; (e) Repeal of partial strike pay deductions which will prevent employers from making deductions from wages for low level industrial action; and (f) Restoration of union access without prior employer consent. Union access to workplaces will still be subject to requirements to access at reasonable times and places, having regarding to business continuity, health and safety. The Bill also proposes a number of new provisions to support union rights, including: (a) A requirement to include pay rates in collective agreements. This change is based on recent case law and may include pay ranges or methods of calculation; (b) Employers must provide reasonable paid time for union delegates to represent other workers (for example, in collective bargaining); (c) A requirement for employers to provide additional information about unions in the workplace along with a form for new employees to indicate whether they want to be a union member; and (d) Greater protections against discrimination for union members including an extension of the 12 month threshold to 18 months relating to discrimination based on union activities and new protections against discrimination on the basis of being a union member. Concluding comments The Bill had its first reading in February and is currently being considered by the Education and Workforce Select Committee. Submissions are now closed and the Committee is due to report back to Parliament by 1 August 2018. It is predicted that the legislation could be in place by the end of this year. The proposed changes are not the first under the new government. Other recent changes include the extension of paid parental leave, and an increase in minimum wage which was lifted to $16.50 in April this year. Workplace Relations Minister Iain Lees-Galloway has recently made two announcements. The first is regarding the setting up of a task force to review the Holidays Act. The task force will focus on how to simplify that Act, and in particular will look at the two ways in which holiday pay is calculated. This has come about as a result of recent reviews that have concluded that many employers are calculating holiday pay incorrectly. The task force is due to report back mid-2019. The second announcement is in relation to the Government’s proposed Fair Pay Agreements that can be entered into to set minimum employment terms and conditions for all workers in the industry or occupation covered by the Agreement. The Government has announced a team led by former Prime Minister Jim Bolger to develop recommendations on the design of a Fair Pay Agreement system, which is due to report back by the end of 2018. There is also a Members Bill attempting to deal with “triangular employment”. This is intended to allow labour hire workers working in a business, to be covered by collective agreements that business has with its employees, and to allow such workers to bring personal grievances against the business. While there are undoubtedly more changes to come, it is certainly clear that the changes in the employment law landscape will have an increased focus on employee rights. If you have any questions about the above, or how these changes may affect you in your business, then please contact a member of Holland Beckett Law’s employment team to discuss.

Recent developments in employment law give rise to a need to review and update employment agreements to ensure they are up to date. 90 day trial period clauses You may be aware that the new Labour-led coalition government has proposed that 90 day trial periods will be limited to employers with fewer than 20 employees. This proposal, if adopted into law, will most likely not come into effect until sometime in late 2018. In the meantime, all employers can continue to use 90 day trial periods (provided the particular clause is valid). 90 day trial period clauses must strictly comply with legislation. If there are deficiencies in a clause, there is a risk that the clause is interpreted against the employer. Trial period clauses may be invalid if they fail to specify when the trial period commences or state that they are for a period of “up to 90 days” or “not exceeding 90 days”. As a result of recent case law, we suggest that 90 day trial period clauses state that the trial period is for 90 calendar days and commences on the employee’s first day of work. Our recommendation is for 90 day trial period clauses to include the following wording at the beginning: The Employee is initially to serve a trial period of 90 calendar days beginning on the employee’s first day of work. 90 day trial period clauses are also required to: (a) Be in writing; (b) Specify the period in which the trial period is in force (ie. a period of 90 days); and (c) State that if the employee is dismissed within the trial period they cannot bring a claim for unjustified dismissal. Employers must still give employees notice that their employment is terminated, and we recommend that a shorter period of notice is specified in the 90 day trial period clause. Trial period clauses can only be valid for new employees (i.e. if you re-employ the same person at a later time, you cannot rely on the 90 day trial period clause). It is also important that the agreement containing this clause is signed by both the employer and the employee prior to their first day of work. This should be insisted upon, bearing in mind the need to allow the employee sufficient time to seek independent advice on the proposed agreement. Planning is key. Health and Safety Given the new and extended obligations imposed under the Health and Safety at Work Act 2015, we recommend that your employment agreements include an up to date health and safety clause. You need to ensure that any health and safety clause in your current employment agreements does not refer to previous legislation that may no longer apply. To ensure your employment agreements remain compliant with current law and any further changes to health and safety legislation, we suggest that your health and safety clause refer, by way of an example, to your employees “working in a safe manner in compliance with all applicable Health and Safety Acts, regulations and codes of practice…”. Consultation regarding any deductions from wages If an employee is indebted to his/her employer, and the employer proposes to obtain repayment from the employee’s remuneration, the employer is now required to consult with the employee, specifically in relation to the proposed deduction and obtain their agreement, before deducting from the employee’s remuneration. The employee’s agreement should be recorded in writing. If multiple payments are to be made over time, then this should be specified, but note that the employee can withdraw such consent in relation to the deductions. Should the employment agreement provide for a blanket ability to make deductions from an employee’s remuneration, this cannot be taken to circumvent consultation requirements with the employee and this practically should take place. Employment agreements could be amended to reflect consultation requirements, for example: The Employer shall be entitled to make deductions, after consultation with the Employee, from the Employee\'s remuneration for any debt owing from the Employee to the Employer. Zero hours contracts and availability provisions A zero-hour contract is where an employee agrees to be available for any work offered by an employer, where the employer does not guarantee any hours of work in return, and the employer is obliged to work. In effect, an employee under a zero-hour contract is constantly ‘on-call’ and receives no certain income or payment in exchange from that availability. These are now banned. A zero-hour contract is different to casual employment, which is still allowed, because a casual employee can decline any offer of work. When the ban on zero-hour contracts was brought in, new restrictions on availability provisions were also introduced. On-call and standby clauses are common examples of availability provisions. An availability provision can only be included in an employment agreement that includes guaranteed hours of work. This effectively prohibits zero-hour contracts. An availability provision can only be included in an employment agreement if there are genuine reasons based on reasonable grounds for including the availability provisions. Reasonable compensation must be provided to employees for making themselves available. If the availability provision does not meet these requirements, then employees can refuse to perform work in addition to their guaranteed hours. So what is reasonable compensation, and how much more do employers have to pay for availability? In practice, salaried employees can agree with their employer that their remuneration includes compensation for availability. However, the employment agreement must specify this. Waged employees who perform work on-call will now require an additional payment to compensate them for their availability, and this needs to be specified in their employment agreement. The Employment Relations Act 2000 sets out factors relevant to the compensation that is required, such as the number of hours which the employee is required to be available, and the nature of the restrictions on the employee from being available. However, at this stage, there is little further guidance on determining what a reasonable amount of compensation is. This will be guided by case law. For both salaried and waged employees who perform work ‘on-call’, it is imperative that their employment agreements contain guaranteed hours plus valid availability provisions. For salaried employees, their employment agreements should refer to their salary including reasonable compensation for being ‘on-call’. For waged employees, their employment agreements should specify an additional component of “reasonable compensation” to compensate them for their availability (for example, an availability allowance of a set amount each time additional hours are required). Compensation for shift workers There is now an obligation to pay reasonable compensation to shift workers if their shift is cancelled without the required notice, and employment agreements should be tailored appropriately. An employer must not cancel a shift unless the employment agreement specifies the following: (a) A reasonable period of notice that must be given before the cancellation of a shift; and (b) Reasonable compensation, which must be paid to the employee if the employer cancels a shift without giving the specified notice. In cancelling a shift, the employer must give the employee the notice specified under the employment agreement, or pay the employee the specified compensation as provided. The period of notice to be given must be determined having regard to all relevant factors including: (a) The nature of the employer’s business; (b) The nature of the employee’s work; and (c) The nature of the employee’s employment arrangements, including whether there are agreed hours of work in the employment agreement and if so, the number of guaranteed hours of work among those agreed hours. Matters which must be considered in determining the amount of compensation to be specified are as follows: (a) The period of notice specified in the employee’s employment agreement; (b) The remuneration the employee would have received for working the shift; (c) Whether the nature of the work requires the employee to incur any costs in preparing for the shift. If the shift is cancelled and the employment agreement does not comply with these requirements, or the employee was not notified of the cancellation until the start of the shift, or the shift has begun but is cancelled, an employee is entitled to what they would have earned for working the shift. Concluding comments If you have any questions about the above or how you may be affected in your particular circumstance, please contact a member of Holland Beckett’s employment team to discuss. We would be happy to review your current employment agreements to ensure they are up to date and reflect best practice.

As an employer you’ll want to assist your migrant employees so they can start work and transition into your workplace and their new community as easily as possible. At the same time, you’ll need to ensure that your interactions with potential migrants and any migrants currently working for you are within the law. As an employer, you have an obligation under the Immigration Act 2009 to check if a potential employee has the legal right to work for you in New Zealand before they commence employment. The Immigration Act is clear that employers must not hire migrants who are not entitled to work for them. The onus and obligation is placed on the employer. Candidates do not need a valid visa to be to be offered a job – but they must have one that allows them to work in New Zealand by the time they begin working for you, sign an employment agreement, and start their employment. It is easy to check whether your prospective employee is allowed to work for you. But it is important for applicants to give their authority for you to use their information for the purpose of confirming work entitlement and identity. There are penalties for hiring a person who is not entitled to work for you. It is important to check and keep records to show you that you completed a check. The maximum penalty under the Immigration Act 1987 for employing a foreign national who is not entitled to work in New Zealand is a fine of NZD $10,000. The maximum penalty for allowing or continuing to allow a foreign national to work while knowing that person is not entitled to is a fine of NZD $50,000. The maximum penalty for exploiting a foreign national who the employer has allowed to work while knowing that person was not entitled to work, is imprisonment for seven years or a fine of NZD $100,000, or both. Employers cannot: Say “I didn’t know they didn’t have a valid visa to work in New Zealand” – it is legally your responsibility to check all your staff can legally work in New Zealand; Give immigration advice to a candidate unless you are a Licenced Immigration Adviser, or exempt from being licenced for example being a lawyer; Hire a migrant with a temporary visa to provide commercial sexual services; Hire migrants and pay them less or offer them conditions below New Zealand’s workplace minimums - they have the same rights as New Zealand citizens and residents; You can legally offer a job to an overseas candidate who doesn’t have a work or residence visa. If you find a candidate who requires a visa to be able to start working for you, they will need a little more time for this to take place and some assistance from you. The first step is to provide them with an offer of employment, which includes a clause saying something like “Subject to immigration criteria being met”. Your migrant candidate can then use this offer of employment in support of their visa application Some visas restrict migrants to the: Number of hours they may work; Industry or occupation they work in; Region that they can work in; Employer they can work for. New Zealand Employment law applies equally to migrants and New Zealand citizens and residents. You must offer work conditions to migrants that are no less than the legal minimums for New Zealanders. These minimums include: A  written employment agreement; Minimum pay; Break entitlements; Annual and public holidays; Sick, parental and bereavement leave; A safe workplace; Accurate pay and holiday records. If you’re employing migrants, you must offer the same pay and conditions that you would offer a New Zealand citizen to do that job. The information contained in this article is general information only, and does not constitute specific legal or other professional advice and should not be relied on as such.  Readers should obtain specific advice before making any decisions or taking any action based upon information contained in this document.

Deciding whether an individual who carries out a task for money does so as an employee or in some other capacity is fundamental to the application of employment law.  In an employment relationship, an individual agrees to provide his or her service to another in exchange for a wage usually exclusively. An independent contractor works under a contract for services often to multiple parties. A lot hinges on whether someone is an employee or contractor. Employees are covered by the Employment Relations Act 2000 (ERA), have minimum legislative entitlements such as annual leave, public holidays, sick leave, and bereavement leave (as provided by the Holidays Act 2003), cannot be lawfully dismissed unless there is substantive justification and a fair process is followed and fulfil their tax and ACC obligations through their employers (eg. through PAYE). Independent contractors are not covered by the ERA or the Holidays Act 2003, can (generally) be terminated by giving them notice, are responsible for their own ACC and tax payments; and may need to be GST registered. In determining whether or not a person is an employee or contractor, the Employment Relations Authority must determine the “real nature” of the relationship between the parties, and will consider all relevant matters/factors, including the intention of the persons involved.  However, just because the parties have expressed in the written documentation that it is an employment relationship, does not make it so; it is simply one of the factors to take into consideration. An individual is very likely to be an employee in the following circumstances: Where the work performed by the individual is an integral part of the business and the individual has become part and parcel of the organisation and is represented to the outside world as being an employee; The individual is not required to provide their own equipment needed to do the required job, have no control over the person’s work and the manner in which it is to be done, works under close supervision and does not have an opportunity to profit from his or her own endeavors in performing the services that have been engaged to. Often at times, employers amend an existing employment agreement by changing the title and removing clauses referring to employee statutory entitlements and call it an independent contractor agreement. This is where legal advice becomes important. An experienced employment lawyer would be able to advise on how the relationship an employer intents to create will be viewed in light of the two legal tests outlined above. Holland Beckett Lawyers has an experienced group of employment lawyers who are able to assist employers in relation to all employment matters.  If you require any assistance please contact a lawyer in the Employment Team at Holland Beckett. The information contained in this article is general information only, and does not constitute specific legal or other professional advice and should not be relied on as such.  Readers should obtain specific advice before making any decisions or taking any action based upon information contained in this document.

All employees must be paid at least the minimum wage for every hour that they work. Minimum wage requirements apply equally to salaried employees. Problems can arise where salaried employees are employed in circumstances which require them to be available, or on call all day 6-7 days a week, and sometimes in to the evening or throughout the night. Problems may also arise with the process of averaging, a process commonly adopted in the dairy industry. Averaging does not preclude the obligation to pay the minimum wage for each hour worked. The consequences of getting it wrong can be costly. In a 2014 Employment Relations Authority case (Hill v Shand, [2014] NZERA Christchurch 66), the manager of a motor camp was awarded some $69,000.00 in unpaid wages. The question is what an employer requires of an employee, and whether that constitutes work. Factors considered include: what constraints were placed on the employee’s freedom, i.e. would he/she have  otherwise  been able to do what he/she pleases; the nature and the extent of an employee’s responsibilities; what benefit there is to an employer by the employee performing that role. The Employment Relations Authority’s determination is made on the individual facts of the particular case. If what an employer requires constitutes work, an employee must receive the minimum wage for that work. If accommodation is provided, the value of the accommodation (for minimum wage purposes) should be agreed and recorded in the employee’s Individual Employment Agreement. If it is not, the default provisions of the Minimum Wage Act will apply. A wage and time record is required for each employee, recording: the name of the employee; the employee\'s age, if under 20 years of age; the employee\'s postal address; the kind of work on which the employee is usually employed; whether the employee is employed under an individual employment agreement or a collective agreement; in the case of an employee employed under a collective agreement, the title and expiry date of the agreement, and the employee\'s classification under it; the number of hours worked each day in a pay period and the pay for those hours; the wages paid to the employee each pay period and the method of calculation; details of any employment relations education leave taken; such other particulars as may be required. A wage and time record must be in written form, or in a form easily converted to written form. Records must be kept for six years and must be provided to a person authorised to request them. This article is only a general overview of the law in this area. If you require specific advice or assistance, please contact one of the lawyers in the Employment Team at Holland Beckett on 07 578 2199. This article does not constitute legal advice. Readers should obtain specific legal advice before making any decisions or taking any action based upon information contained in this article.