stuarts-accountants-v1

Employment Relations Amendment Act 2026

Wed, 11 Mar 2026 00:40:00 GMT

Employment Relations Amendment Bill 2026 Highlights – Effective 21 Feb 2026

The 'Specified Contractor' Gateway Test

If you hire someone as a contractor and you want them to be a "Specified Contractor", the engagement MUST meet a specific set of criteria. As such this then exempts them from later challenging the fact and from arguing they were an employee all along:

A statement of intent (written agreement) stipulating that the worker is an independent contractor, or 'not an employee';

The party has no restriction on other work. They have the freedom to work for any other party other than during the time in which they are engaged with you, unless if the agreement is to complete a specific project or task

Has the flexibility to arrange their working time/hours OR has the ability to subcontract the work;

The worker will not be terminated from the arrangement if they decline additional work; and

Is proven to have had a reasonable opportunity to seek independent advice before entering the commencement.

The important point with all this is that if all the above are not met the worker IS able to challenge the status of their engagement as we have seen for many years.

It has been made clear that this provision will not apply retrospectively therefore our recommendation is that if you wish to consider a worker a 'Specified Contractor' going forwards we strongly recommend reviewing your contract with them and vary or re-sign accordingly.

Personal grievance remedy awards

If an employee brings a personal grievance against their employer, and it is proven that the employee's behaviour has given rise to the issue in the first place, reinstatement of employment may be off the table, and/or financial compensation to the employee may be reduced by up to 100%, and particularly so in the instance or serious misconduct.

$200,000.00 remuneration limit on unjustified dismissal grievances

An employee who earns over a certain income threshold (currently set at $200k per annum) cannot bring a personal grievance against the employer for unjustified dismissal. This potentially means that in such cases an employer can 'fire at will' without following a good faith process.

This threshold figure includes all wages/salary, commissions, bonuses etc, and will be revised periodically by the Government.

The amendment does allow for parties to explicitly opt out of this provision, meaning if agreed an employee on more than that threshold could bring a grievance against their employer. Why an employer would opt into that remains to be seen!

For new employees this position is effective immediately. For existing employees you have 12 months to negotiate this point before the default position applies, being that an employee earning $200,000 or more per annum cannot raise a personal grievance for unjustified dismissal.

90-Day Trial Period

Further protection for employers is now available. It is a technical point legally, but previously a compliant 90-day trial period provision and associated termination gives an employer legal protection against a personal grievance for unjustified dismissal.

However, it is common knowledge and practice that lawyers & savvy advocates turn such challenges into claims of unjustified disadvantage instead, thus potentially circumventing the legal protection for the employer under the Act.

This avenue is now blocked. Under this Amendment Act an employee (or representative) cannot claim unjustified dismissal or unjustified disadvantage relating to the dismissal.

30-day rule abolishment

For businesses where collective employment agreements (CEA) are in place, previously any new hire whose work would normally fall under the scope of a CEA scope of such must be hired at least for 30 days on the CEA before even negotiating with the person the option of an individual employment agreement (IEA).

Employers Assistance 17.2.2026

Protection for company directors’ residential addresses

Tue, 10 Mar 2026 21:40:51 GMT

In November 2025, the Companies (Address Information) Amendment Act 2025 was passed into law.

This Act enables directors who have safety concerns regarding the publication of their residential address to opt to provide an alternative address instead.

The existing position under the Companies Act 1993 is that a company must publish the residential addresses of its shareholders and directors on the Companies Register. Long-standing concerns about personal safety and broader privacy concerns related to the public availability of such information have been addressed by this Amendment Act.

Process for substituting a residential address

It is important to note, however, that the ability to substitute a director’s residential address must be carried out by application to the Registrar of Companies. The application seeking approval must:

- Be made by the director in the prescribed form;

- Include a statutory declaration by the director verifying that the public availability of their residential address is likely to result in physical or mental harm to the director or a person they live with;

- Specify an eligible alternative address; and

- Include the prescribed fee (if any).

Alternative addresses must be physical New Zealand addresses. The alternative address cannot be the company’s registered office or address for service, nor a postal centre or document exchange service. Where the alternative address is the office of an accountant, law firm etc, this must be specified.

Coverage for shareholders

The Act does not generally include alternative options for shareholders’ addresses.

However an alternative address for shareholders may be allowed when the applying director is also a shareholder of the company, or lives with a shareholder of the company and consents to the use of the alternative address.

If your application is approved

Where the Registrar has approved an application for the use of an alternative address, they will take reasonable steps to prevent public access to the director’s residential address, including redacting the address from historic filings and other documents that previously disclosed the address.

In summary

While the Amendment Act has been passed, it will not come into force until a date set by Order in Council. In the event that the Act has not come into force by 18 November 2026, it will do so on that date. Directors will not be able to submit applications until the Amendment Act is in force.

It remains to be seen what threshold of harm will be considered sufficient to have an application succeed under the alternative address regime, and whether any supporting documentation will be requested as part of the application.

Our commercial team is closely following this, as well as the wider reforms to the Companies Act 1993 currently being considered by the government. If you need assistance, we recommend seeking support from an experienced commercial lawyer.

Rainey Collins Feb 26

Entertainment Expense Items

Wed, 26 Nov 2025 00:40:02 GMT

ENTERTAINMENT EXPENSE ITEMS

Here is a list of common travel and entertainment expense items and their tax treatment

- Food and drink while out of town on business when eating alone or with other team members 100% deductible and no FBT

- Food and drink while overseas on business eating with team members, customers, suppliers, prospects etc. 100% deductible and no FBT

- Food and drink with customers, suppliers, prospects etc. either in or out of town on business 50% deductible and no FBT

- Non-taxable meal allowances paid to employees working overtime 100% deductible and no FBT

- Morning and afternoon teas 100% deductible and no FBT

- Lunches and more than incidental food & beverages for employees 50% deductible and no FBT

- Samples provided for advertising 100% deductible and no FBT

- Food & beverages as part of training seminars, conferences, trade displays that are at least 4 consecutive hours 100% deductible and no FBT

- Rugby, show, movie tickets etc. for staff and used when staff member chooses 100% deductible and subject to FBT*

- Sporting, cultural or other recreational activities, e.g. golf or corporate box 50% deductible and no FBT

- Hire of boat to entertain customers, suppliers, prospects etc. 50% deductible and no FBT

- Friday night drinks, staff parties and other social functions (whether at the office or elsewhere) e.g. Christmas parties, reception for existing or potential customers, suppliers etc. This includes any supporting expenses i.e. transport (taxis), crockery hire, glasses, waiters, music, etc. 50% deductible and no FBT

- Gift for client, employee, supplier etc. which contains food and drink 50% deductible and no FBT

- Gift for client, excluding food and drink 100% deductible and no FBT

- Gifts for employees (or spouse) 100% deductible and subject to FBT*

- Gift for non employee who helped with job 100% deductible and no FBT

- Gym membership for an employee paid by the employer 100% deductible and subject to FBT*

- Gift cards/vouchers (no GST claim as GST triggered when voucher used) 100% deductible and subject to FBT* or PAYE**

* FBT applies to "closed loop" gift cards (cards that are limited to where they can be used e.g. Farmers, Countdown, Mitre 10 etc). You are only subject to FBT if you are over the exemptions. These are $300 per quarter per employee, or $22,500 per annum for all employees. If you reach either of these in any period, you are required to pay FBT on the total amount. Note there is a $1,200 per employee per annum threshold if you are filing FBT on an annual basis.

** PAYE applies to "open loop" gift cards (cards that can be used almost anywhere e.g. Prezzie Card, Visa/Mastercard prepaid cards etc). These cards are treated as cash equivalent and PAYE must be withheld on the grossed up value of the card. There is no value exemption on these cards.

This list is designed to be an overview of the tax treatment of common entertainment expenses. If you have a question relating to this list, or you have another expense you would like clarification on, please contact us.

GST is not claimable on 50% portion.

Employment Relations Amendment Bill

Tue, 19 Aug 2025 00:38:50 GMT

Key Proposed Changes

1. “Specified Contractor” Gateway Test

The Bill proposes a clearer test to distinguish independent contractors from employees. If all of the following criteria are met, a worker qualifies as a specified contractor, and is excluded from the legal definition of an "employee":

1. A written agreement specifies they are an independent contractor.

2. They are not restricted from working for others (except when engaged with the contracting party).

3. They are not required to work at specified times or days, or can subcontract their work (subject to vetting/statutory compliance).

4. The contract does not terminate if the contractor declines additional work.

5. The contractor had a reasonable opportunity to obtain independent advice before entering into the arrangement.

Implications: This aims to increase business flexibility and clarity. Contractors who meet the test cannot challenge their status in the Employment Relations Authority or Courts.

2. Remedy Assessment in Personal Grievances

The Bill would narrow remedies available in personal grievance cases if the employee is found to have:

* Committed serious misconduct (no remedies available).

* Contributed to the grievance situation (no reinstatement or compensation for hurt, humiliation, or loss of benefit; other remedies may still apply but can be reduced by up to 100%).

* Additionally, adjudicators (Authority or Court) must consider whether the employee’s conduct impaired the employer’s ability to act fairly, and raise the bar for procedural error claims.

3. High-Income Threshold for Unjustified Dismissal Claims

Employees earning over NZD 180,000 per annum (base salary only—excluding bonuses, allowances, commissions, overtime, superannuation) would not be eligible to raise personal grievances for unjustified dismissal —unless they explicitly opt in via their employment agreement.

* Key details:

* A 12-month transitional period will apply for existing employees (unless they opt in earlier).

* The income threshold will automatically adjust annually based on average weekly earnings, which introduces complexity in ongoing compliance.

4. End of the “30-Day Rule” for Collective Agreements

* The “30-day rule”—which required terms of a collective agreement to apply to new employees for their first 30 days before they could move to an individual agreement—is to be repealed.

* Under the proposed change:

* Employers would provide new employees with information about collective agreements and unions.

* Employees can immediately choose to sign an Individual Employment Agreement (IEA), which may include a **90-day trial period** if agreed.

Additional Context & Commentary

* Intent and Government Rationale: The Bill is positioned by the Government as a means to enhance labour market flexibility, reduce compliance costs, boost business innovation, and rebalance employer-employee interests, particularly in the personal grievance sphere.

* Current Status: As of July 2025, public submissions were open (closing 13 August 2025), and the Bill was advancing through the select committee and readings.

* Notably, in June 2025 the Parliament rejected amendments proposing to delay commencement to June 2026, keeping an earlier timeline —perhaps December 2025—for enactment.

Summary Table

Key Change - Description & Effects

“Specified Contractor” Test - Workers meeting five criteria are excluded from employee status—limiting legal challenges

Remedy Restrictions - Serious misconduct or employee contribution reduces or eliminates remedies

$180,000 Threshold - High-earning employees excluded from unfair dismissal claims unless they opt in

Repeal of 30-Day Rule - Allows immediate use of IEAs and 90-day trials for new hires, bypassing collective terms

What to Watch Next

Select Committee Process: Ongoing debates, public submissions, and possible amendments.

Threshold Adjustments: Details on how the automatic salary threshold updates will work.

Implementation Timeline: While December 2025 is possible, it depends on the legislative process and Royal Assent.

Sources:

[1]: https://www.bellgully.com/insights/the-employment-relations-amendment-bill-has-landed-and-it-has-the-potential-to-transform-employment-relations-in-new-zealand/?utm_source=chatgpt.com "The Employment Relations Amendment Bill has landed"

[2]: https://www.dentons.co.nz/en/insights/articles/2025/june/19/employment-relations-amendment-bill-2025?utm_source=chatgpt.com "Employment Relations Amendment Bill 2025"

[3]: https://www.laneneave.co.nz/news-events/era-four-key-changes/?utm_source=chatgpt.com "Explained: Employment Relations Amendment Bill"

[4]: https://www.parliament.nz/en/pb/hansard-debates/rhr/combined/HansDeb_20250624_20250625_52?utm_source=chatgpt.com "Employment Relations (Pay Deductions for Partial Strikes) ..."

[5]: https://knowledge.dlapiper.com/dlapiperknowledge/globalemploymentlatestdevelopments/2025/significant-amendments-to-the-employment-relations-act?utm_source=chatgpt.com "Significant amendments to the Employment Relations Act"

[6]: https://www.lexology.com/library/detail.aspx?g=b905b99b-6503-4444-b0a3-be27a0d206fa&utm_source=chatgpt.com "Key insights into the new Employment Relations ..."

[7]: https://www.parliament.nz/en/pb/sc/committees-press-releases/public-submissions-open-on-the-employment-relations-amendment-bill/?utm_source=chatgpt.com "Public submissions open on the Employment Relations ..."

[8]: https://www.mbie.govt.nz/dmsdocument/30958-employment-relations-amendment-bill-2025-approval-for-introduction-proactiverelease-pdf?utm_source=chatgpt.com "Employment Relations Amendment Bill 2025: Approval for ..."

[9]: https://www.humankind.nz/blog/an-update-on-employment-law-changes?utm_source=chatgpt.com "An update on employment law changes - Humankind NZ"

Income Protection Insurance

Thu, 22 May 2025 02:57:06 GMT

What is Income Protection Insurance?

Your income is often your biggest asset and losing it can turn life upside down. If you’re unable to work—either temporarily or permanently—because you’re sick or injured, Income Protection Insurance will provide you with money to live on as a monthly payment while you’re not receiving your salary or wage.

Income Protection Insurance benefits:

Income support

Pays you a monthly benefit if you’re unable to work because of illness or injury

Rehabilitation & retraining support

Helps you with your rehabilitation and retraining costs

Recurrent disability

Pays you a monthly benefit if you suffer the same sickness or disability within a year

Return to work

Pays you a bonus benefit if you are able to return to work

Family assist

We’ll pay for a nurse or family member to look after you at home for up to 6 months

Accommodation support

Pays for your family to be with you if they live more than 100km away

Disability reset

Allows you to claim again if you suffer a related sickness or injury

Elective surgery

Pays you a monthly benefit if you are disabled due to an elective surgery

Payment while overseas

Pays you a monthly benefit if you are disabled while overseas

Funeral assistance

We reimburse your family up to three times the monthly benefit for your funeral costs if you die

Grief support

Helps with the cost of professional grief support to cope with sudden changes

Overseas assist

Reimburse you and one support person for travel back to New Zealand if disabled overseas

New parent premium waiver

We’ll pay your premiums for six months while you’re on parental leave

Ref: Asteron Life

Shareholders Agreements

Thu, 22 May 2025 01:05:33 GMT

What is a shareholders’ agreement?

A shareholders’ agreement is essentially a contract between company shareholders. It regulates and guides decision-making.

Shareholder agreements deal with matters such as:

Who the company directors and shareholders are (plus their rights and responsibilities)
Voting rights (i.e. which shareholders – or what percentage of shareholders – need to approve various activities and transactions)
Restraints of trade that apply to directors and shareholders
Sale of company assets
Funding, guarantee and insurance arrangements

Shareholder agreements also provide a process for complicated situations, for example:

Where one of the shareholders dies or becomes totally and permanently disabled
If a shareholder-employee leaves employment of the company
Where one of the shareholders wants to sell their shares
If a dispute crops up between shareholders

Shareholder agreements bind shareholders to the agreed terms. They also provide guidance when navigating business issues that aren’t covered by the Companies Act 1993.

A shareholders’ agreement can be prepared for a new company or an established business that has traded extensively. If necessary, the agreement can be amended to account for company growth and capital funding

Why prepare a shareholders’ agreement?

Shareholder agreements aren’t mandatory, but we strongly advise having one. As with all relationships, a business relationship is likely to have its ups and downs.

To demonstrate the importance of a shareholders’ agreement, let’s consider an example scenario where an agreement would be helpful:

Two business partners form a company as 50/50 shareholders. They decide not to enter into a shareholders’ agreement.

The pair successfully trade for several years and enjoy a healthy working relationship, managing company affairs as a team and resolving disputes amicably.

Shareholder A dies suddenly. Without a shareholders’ agreement in place, Shareholder A’s 50% shareholding transfers to his wife by virtue of survivorship. His wife is now an equal shareholder of the company.

The Companies Act 1993 doesn’t cover this type of situation, so Shareholder A’s wife isn’t obliged to sell her shares to Shareholder B. The company continues to trade while Shareholder A’s wife enjoys the fruits of the company’s success, without materially contributing to the running of the business.

A tailored shareholders’ agreement can determine a share sale procedure in the event of shareholder death or incapacitation, ensuring a fair outcome for everyone involved.

Most people enter into business arrangements thinking they’ll always be able to work through issues amicably. Unfortunately, that isn’t always the case, particularly when the personal relationship becomes difficult or if one of the shareholders dies and suddenly the remaining shareholders are finding themselves dealing with the deceased person’s family or representatives.

A shareholders’ agreement can help you reach a satisfactory resolution to problems efficiently and at minimal cost, compared to the cost of trying to resolve issues without a shareholders’ agreement.

Ref: 1 August 2022 • Commercial law

Selling your business - When to tell staff

admin@stuarts.co.nz (Stuarts Accountants) — Wed, 26 Feb 2025 00:53:49 GMT

An area of uncertainty for employers when contemplating restructuring & redundancy processes concern obligations associated with disclosing relevant information.

The law requires employers provide employees who are adversely affected by any formal processes, for example - a redundancy process - with access to all relevant information (in writing) before any decisions are made. This is a requirement that employers often completely overlook and/or fail to do their due diligence on before commencing change processes with their employees.

The important point to make here is: That failure to provide employees with relevant information in these situations can be fatal to defending subsequent personal grievance claim(s). Namely, a claim for unjustified dismissal premised on employer failing to provide access to all relevant information.

Problems associated with this area of law can be illustrated in a recent judgment by the Court of Appeal in Birthing Centre Ltd v Matas [2024] NZCA 139, which dismissed an appeal from the Employment Court in Birthing Centre Ltd v Matas [2023] NZEmpC 162 that was in favour of five ex-employees who were employed as midwives.

In this case, Birthing Centre Limited (‘BCL’) transferred its services to MidCentral District Health Board (‘MDHB’). The commercial agreement between the parties had a condition that the arrangement be strictly confidential. After the transaction was completed, announcements followed, and concerns subsequently picked up by Midwifery Employment Representation and Advisory Services Union (‘the Union’).

In summary, employees were informed they would be transferred to MDHB – but the deal had already been completed by that stage. Five midwives who worked for BCL raised personal grievance claims for unjustified dismissal. Their claims centred on the lack of consultation and provisions of information occurring prior to being notified of their employment transferring. BCL attempted to argue that it was exempted from consulting with employees because there was a good reason to maintain confidentiality in terms of the commercial agreement between BCL and MDHB.

The Court of Appeal declined the application for leave to appeal - essentially confirming the ruling of the Employment Court which was:

". . . A fair and reasonable employer could in the circumstances have considered options for exploring whether it could maintain the integrity of BCL’s commercial position as well as the DHB’s commercial position, while informing its employees of the proposal in a confidential way".

The Employment Court determined that there had been a failure by the BCL to consider:

Options for exploring whether the integrity of their commercial position could be maintained while informing employees of a potential sale in a confidential way.
Whether providing information to the Union was viable on embargoed basis.
Direct employees not to share information during the consultation process.
Include a condition of sale that employees be consulted on a conditional basis and their views sought before the sale agreement became unconditional.

As a result, remedies previously imposed in by the Employment Relations Authority (‘the Authority’) were required to be paid by BCL to the midwives. The total value of the claims exceeded $35,000.00 across each of the employees, including compensation payments for injury to feelings and four weeks wages equivalent for each of claimant. This is not to mention the legal costs and time which would have been incurred that were associated with three sets of separate legal proceedings, i.e. a determination in the Authority, the Employment Court and the Court of Appeal, which would have been significant.

The outcome associated with this case is a chilling reminder to employers to ensure they do their due diligence when contemplating restructuring processes, including business transfers and sales. Failure to sufficiently plan and understand an employer’s legal obligations can translate to successful legal challenges. It is vital an employer does careful due diligence, along with understanding any specific areas of legal risk (and plan for contingencies – if necessary) before embarking on these sought of processes. If an employer is going to attempt to rely on confidentiality to withhold information from affected employees, then it must be able to show & explain why confidentiality is necessary to protect its commercial position.

More importantly, employers who are considering withholding relevant information need to understand that the legal threshold for not disclosing information on grounds of ‘confidentiality’ and/or ‘commercial sensitivity’ is extremely high (and open to challenge).

Accordingly, the ‘least risky’ approach is for an employer to consider making provision of all relevant information available to the affected employees via a formal consultation process before any decisions are made.

Source: Employers Assistance Ltd 7.10.24

Employers’ 7 common mistakes in the disciplinary process…

Wed, 26 Feb 2025 00:07:32 GMT

Disciplinary processes are difficult and stressful for all concerned. From my experience the 7 common mistakes employers make are:

1. Failure to tell the employee what the allegations are. Tell the employee what the allegations are and provide copies of statements from witnesses and relevant material. Also advise at the start of possible outcomes of the investigation if the allegations are proved to be correct.

2. Failure to give the employee a chance to respond to the allegations. Provide a reasonable opportunity for the employee to respond. Give them a fair amount of time to prepare. Also, before making a decision on suspension the employee should be informed that is being considered and invited to provide their views on the proposed suspension. If the allegations are proven give the employee an opportunity to comment on any proposed outcome.

3. Failure to allow for a support person or representative. The support person must be allowed to speak for and represent the employee.

4. Failure to carry out a fair investigation. It is the responsibility of the employer to establish what (if anything) has occurred. Keep an open mind and do not predetermine the outcome. Interview all relevant witnesses.

5. Failing to come to fact-based conclusions. What evidence is there to find the facts?

6. Getting the seriousness wrong. If the allegations are correct, how serious is the event? Finding serious misconduct, when it is not serious enough, happens too often.

Misconduct should be dealt with at the appropriate level. What should the proposed outcome be? Should it be a warning or dismissal?

7. Failing to act consistently. How have others been dealt with (in the past or in this same event)? Outcomes do not have to be the same, but you need to be able to justify why you acted differently.

The disciplinary process must be carried out correctly. Failure to do so risks businesses facing costs and disruption that would otherwise have been avoidable, and employees being subjected to processes that are unfair and do not give them a reasonable opportunity to answer the allegations.

Source: Rainey Collins Employment Issues 5.2.25

Entertainment Expense Guide

Mon, 02 Dec 2024 22:19:34 GMT

How can I try to prevent a personal grievance being raised against me?

Wed, 11 Sep 2024 02:26:25 GMT

An employee can raise a personal grievance if they feel they have been treated unfairly or unreasonably. For example, if an employee thinks they have been unfairly dismissed or unjustifiably disadvantaged by their employer.

Personal grievances handled incorrectly can result in significant costs for an employer. It is therefore important to know your obligations and to take steps to prevent such grievances.

Employers have an obligation to act fairly and reasonably. This obligation is really important when an employer undertakes a disciplinary and/or dismissal process, as the employee will feel under real threat at those times, and potentially likely to challenge what has happened and how processes were conducted.

When undertaking these processes, it is vital to first look at the employee’s employment agreement. It is likely that the agreement will provide specific steps to take during a disciplinary procedure. If that is so, an employer is required to follow those steps otherwise they will have breached the employment agreement.

You should also be sure to communicate with the employee. This is important in all contexts. For example, you should communicate with the employee even if their misconduct was minor. Though this can be informal, it ensures the employee is aware of your expectations.

Having a discussion with the employee may also get ahead of the problem and resolve it short of a personal grievance. Make sure that you have a relevant person with you in the discussion who can confirm what took place if needed, and ask them to record a note of what happened that can be referred to later.

The employee must also be fully informed if any disciplinary process is being undertaken and they should be aware of its potential outcomes. This includes being informed of any complaints or investigations against them.

Employees must also be allowed to have their say throughout any process and be given a chance to explain their side of the story. An employee must also be informed they are allowed a support representative at any formal meetings with the employer.

During any of these processes a decision must not be made until all factors are considered. This requires a genuine investigation into any alleged behaviour by the employee, as well as any evidence from the employee themselves.

A few extra tips include remaining calm and polite, even when a personal grievance is being raised by an employee. Escalating the situation risks making matters worse.

It is absolutely vital not to take short-cuts throughout this process. Personal grievances can result in large costs for an employer who gets the process wrong, even if the employee’s behaviour was serious. The employment landscape is literally littered with employers who reasonably had problems with an employee but got key elements of the processes wrong.

It is recommended to implement clear and effective procedures before those processes are required. This ensures that there is a step-by-step process to follow and there are likely to be less issues during the process.

It is also recommended to keep a record of any serious interactions or conversations with employees, and that all paperwork is accurate and well organised. These documents will likely be required if a personal grievance is eventually raised against you.

Being able to refer the employee to them might show them that the correct processes have been followed, and avoid a personal grievance being raised at all.

If you are confused about your obligations or wish to clarify how you can prevent a personal grievance, it is best to seek legal advice from a professional with experience in the area.

When can I dismiss an employee without notice?

Wed, 11 Sep 2024 02:19:48 GMT

The process of dismissing an employee usually includes several steps such as:

 investigating behaviour,

 raising concerns with an employee and,

 giving notice.

However, there are some limited circumstances in which not all of these requirements are needed.

An example of such a case is when an employee’s behaviour is so serious that their employer is not required to give the employee notice. This is known as “summary dismissal” and may be appropriate when an employee has behaved in a way that amounts to serious misconduct.

Serious misconduct is conduct which has destroyed the trust and confidence in an employment relationship.

Examples of serious misconduct may include (but are not limited to):

 theft,

 violence,

 use of illegal substances,

 dishonesty,

 bullying and,

 workplace harassment.

A dismissal without notice is contrasted with a dismissal with notice.

For example compare an employee who is to be dismissed without notice for serious misconduct for fraud with an employee who is to be dismissed after another finding of misconduct following a final warning for a breach of timekeeping.

Dismissing an employee “without notice” merely means that an employee can be forced to leave the workplace instead of being given their notice period, and the employer is able to cease paying the employee from the date of dismissal as there is no notice period that has to be paid.

Not having to give notice does not mean that an employer can dismiss an employee immediately when an issue arises.

It is important not to be misled by the term “without notice”.

Employment agreements generally include a notice period. This includes the notice period if an employee chooses to leave their job, and/or if they are dismissed from the job.

Employers are always required to follow a fair process. Whether there has been serious misconduct or not an employer is required to undertake a number of steps before dismissing an employee.

These steps include:

1. Raising any concerns with the employee along with the possibility of dismissal if the concerns are correct;

2. Investigating claims against the employee before making a decision on the facts;

3. Providing the employee with relevant material so they can prepare their response;

4. Advising the employee of their right to have a support person attend meetings and assist with their response;

5. Allowing the employee a reasonable opportunity to respond to the allegations;

6. Considering all the facts, including the response from the employee;

7. Advising the employee of the decision on the allegations, the level of misconduct found, and any preliminary view as to the penalty outcome;

8. Allowing the employee to provide feedback on the preliminary proposed penalty and genuinely considering that feedback; and

9. Advising the employee of the penalty outcome.

Failing to undertake these steps is a breach of an employer’s good faith obligations. This can lead to serious and expensive consequences for the employer.

Dismissing an employee without notice can be used when the behaviour amounts to serious misconduct that justifies a dismissal without having to give the notice period. However, it is important that employers remain aware of their overall obligations during the dismissal process.

If you are confused about your obligations, it pays to seek advice from a professional.

Source: Rainey Collins Employment Issues 21.8.24

FBT exemption on certain public transport

Wed, 11 Sep 2024 02:03:58 GMT

Generally, public transport fares that are subsidised by an employer mainly for the purpose of their employees travelling between their home and place of work are subject to FBT.

However, in order to align FBT outcomes of travelling to work via car and public transport, and in an effort to encourage a more environmental choice to transport for employees an exemption from FBT has been introduced.

An exemption applies to the above rule. For the exemption to apply the following criteria must be met:

The transport fare is paid by the employer
The transport is for the purposes of getting to work, or going home from work
The transportation mode is public transport (bus, train, ferry, tram or cable car)

Transport subsidised by an employer is still subject to FBT if the transport does not meet the requirements above.

If an employer provides an employee with any of the following forms of transport (in order to travel between work and home), the cost of the transport is excluded from being a fringe benefit and therefore does not attract fringe benefit tax. This exclusion applies when the vehicle is one of the following:

a bicycle
an electric bicycle (e-bike)
a scooter
an electric scooter
any other vehicle declared under s 168A of the Land Transport Act 1998 to be—
a mobility device, or
not a motor vehicle.

Multiple employers fined after employee suffers life threatening injuries…

Mon, 10 Jun 2024 02:31:47 GMT

The District Court has fined multiple employers after their health and safety failures lead to an employee suffering life threatening injuries.

The injury occurred during a construction project which was operated by a lead contractor. Two sub-contractors were also involved in the project.

The victim, an employee of one of the sub-contractors, was undertaking instructions given to him. While undertaking the instructions heavy machinery gave out and the employee was pinned beneath it. The crush resulted in multiple life-threatening injuries and the employee was hospitalised for two weeks.

The Court found that:

 The lead contractor and first sub-contractor had a duty to ensure, so far as reasonably practicable, the health and safety of their employees.

 The second sub-contractor had a duty to, so far as reasonably practicable, consult, co-operate, and co-ordinate activities on-site with the other contractors.

Each company failed to take steps in relation to planning, communicating, executing and overseeing the health and safety systems on the worksite. The Court noted that these failings exposed the employees to a risk of serious injury or death.

The employers failed to ensure that the hazards and risks associated with the work were identified and assessed, they failed to provide and implement safe systems of work, and failed to ensure work operations were safe and effective. The contractors also failed to consult, co-operate with each other, and co-ordinate their work activities.

The second sub-contractor failed to supervise, monitor, and train their workers effectively for their work activities. The health and safety processes were also undocumented.

The Court described these failings as a, “…significant blind spot in their health and safety systems”, which lead to a “readily foreseeable” consequence. Effective safety measures could have been put in place at a cost-effective price to the employers.

The Court fined the lead contractor $400,000 and ordered the employer to contribute to $45,000 in reparations to the victim. The first sub-contractor was fined $10,000, and the second sub-contractor was ordered to contribute to the $45,000 in reparations to the victim.

It is vital to ensure that you are meeting your health and safety obligations, especially when there are multiple parties involved. If you are confused about your obligations, it pays to seek early advice from a professional with experience in the area.

Source: Rainey Collins Health & Safety Issues - May 2024

Personal liability for breaches of employment standards

Thu, 06 Jun 2024 02:21:33 GMT

The director of a company and his wife, a manager, have recently been held liable to pay over $90,000 in reparations to an employee after the company breached minimum employment standards.

The employee worked for the company for just over 12 months. The company went into liquidation at the end of 2020, but the employee claimed that he had not been paid for many of the hours that he worked. The employee also claimed that he had not been paid his annual leave and public holiday entitlements.

Despite the company being in liquidation, the Employment Relations Authority was able to look into the issue as the director and manager of the company could be held personally liable for the breaches.

The Authority first had to determine whether the employee’s claims were accurate.

Evidence showed that the employer had failed to keep wage and time records. The director provided various reasons for this failure such as the device that kept the wage records had been stolen. The director did not provide sufficient evidence to support these reasons.

In any case, the Authority held that the employer had failed to keep accurate wage and time records, regardless of the reason. Keeping wage and time records is a legal requirement for employers in New Zealand and the director therefore breached minimum employment standards.

The director had also failed to pay the employee his annual leave and public holiday entitlements. This was accepted by the director.

The Authority ordered the company to pay the employee $29,990 in minimum wages, $10,240 in annual leave entitlements, $1,970 for work on public holidays and $1,720 for alternative holidays for public holidays worked.

However, the company had been liquidated and therefore could not pay the Authority’s orders.

The Authority held that both the director and his wife could be held personally liable to pay the orders made against the company, because they were persons involved in the employment breaches.

As director of the company, the director had a strong influence over the operations of the company. Further, the wife had sufficient influence over the management and administration of the company in her role as manager. The employee had raised various issues with the wife as manager, which she had failed to address.

The director and manager were therefore ordered to personally pay the Authority’s orders against the company. The director was also ordered to pay a penalty of $20,000 for his involvement in the breaches, while his wife was ordered to pay a penalty of $10,000.

The director was also ordered to repay a $21,000 premium that had been paid by the employee.

It is important to be aware of minimum employment standards, both as an employee and an employer. This case emphasises that individuals can be held personally liable for breaches of employment standards.

If you are confused about these standards or believe you have been treated unfairly, it pays to seek advice from a professional with experience in the area.

Source: Rainey Collins May 2024

Be careful when purchasing a property at Auction...

Tue, 28 May 2024 00:06:36 GMT

A young couple had pre-approval for finance from their bank and went to an auction. They were excited when they were successful with their bid. Only after their success at the auction did they decide to engage the services of a Solicitor.

When their Solicitor asked the couple for a copy of their unconditional letter of finance from their bank, the couple did not have this. They had relied on the bank’s pre-approval letter, thinking this was their offer for finance. Upon closer reading of their pre-approval letter, they realised that the bank needed to approve the property the couple were looking to purchase.

As it transpired, the bank did not approve of the property on account of building issues that had been disclosed in the Agreement for Sale and Purchase. The bank therefore would not provide finance. However, the couple were bound to a contract to purchase the home.

After several stressful weeks they eventually secured finance with a second tier lender at a significantly higher interest rate than what would have been obtained through a bank.

Reminder... an Auction Agreement is unconditional. When you are purchasing at an auction, you are essentially entering into an Agreement to purchase a property unconditionally. This means you have to have undertaken all of your due diligence checks on the property prior to going to the auction. This includes the following:

 Finance – You need an unconditional offer of finance to purchase this property. This is a letter from your bank that records the address of the property and your full legal names. You need to advise the bank that you are wanting to purchase at an auction.

 Insurance – You need an unconditional offer of insurance that records the address of the property and your full legal names.

 Title – Your Solicitor should undertake a review of the Record of Title including easements and land covenants amongst other registered instruments on the title.

 Building Report – You should have the property inspected by a qualified builder who will check for structural integrity and any building problems such as leaks and non-complying additions.

 LIM Report – You should have obtained a LIM report from the local Council for the property that will record the building permits, building consents, and Code Compliance Certificates for works undertaken at the property, and also drainage, zoning, and any resource consents affecting the property, amongst other relevant property matters.

 Toxicology Report – You may consider obtaining a toxicology report, particularly for methamphetamine contamination, if the property has a rental history – although the problem in New Zealand is not exclusive to rental properties.

It is important to seek legal advice prior to submitting an offer to purchase a property. This is particularly a necessary step if the property is being sold by auction.

Rainey Collins General Issues Autumn 2024

Medical certificates for employee related absences

admin@stuarts.co.nz (Stuarts Accountants) — Tue, 12 Mar 2024 22:26:36 GMT

A frequent area of frustration for employers are medical certificates that are provided by Doctors and/or health professionals for employee related absences. The main concern that employers face in this context relates to the often lack of detail and/or vague information contained in medical certificates.

Medical certificates tend to say very little, or nothing about the actual cause for an employee being declared medically unfit, or unable to work, to the point where sometimes it looks like the employee themselves have written the medical certificate. For example, words to the effect of ‘the patient has advised me that they are sick, therefore they are sick from this period until this period’. These sort of certifications are not particularly helpful in terms of verifying the genuineness and/or reason regarding an employee’s absence from work.

The Medical Council of New Zealand, which is the professional body that regulates Doctors has guidelines regarding medical certifications. In summary, the guidelines set out standards that ‘must’ be followed when a Doctor completes a medical certificate. Medical certificates are legal documents and the guidelines require that they be completed ‘promptly, honestly, accurately, objectively, and based on clear and relevant evidence’.

The guidelines also provide for specific guidance on the content of medical certificates and include things like:

• The information should be accurate and based on clinical observations;

• Provide necessary information required by the receiving agency, i.e. the employer;

• Consented to by the patient;

• Any comments on fitness for work;

• Identify the examination date and time period of treatment;

• Clearly identifying retrospective medical certificates (if issued).

Based on the Medical Council guidelines there is a clear argument to be made in favour of employers potentially pushing back on vague and/or unspecific medical certificates, and attempting to seek further information, or clarification in appropriate circumstances.

Given the relevance of the guidelines, and in the event the circumstances warranted it – there is a legitimate basis to push back on vague medical certificates and request from the employee through their Doctor to provide more detailed information in accordance with the guidelines.

In the event that a Doctor refuses to provide that information and/or clarification, then that may constitute grounds for raising the matter with the Medical Council, for example – via a formal complaint that the Doctor has not followed the Medical Council’s guidelines. However, whether or not the Medical Council progresses the matter further, or requires any form of corrective action would be for it to determine.

Putting the above aside, there appears to be a level of merit in an employer citing the guidelines and asking for more detailed information and/or clarification regarding the specific reasons why a Doctor has certified an employee as unfit to work in situations where that information is lacking.

If you didn't want to call a Doctor's professionalism into question, a good check is to get medical certificates verified by the Practice for authenticity. Given the availability and capability of computers and phones these days we often see self-authored medical certificates being presented to employers as 'evidence' for sick leave, be willing to verify them with the alleged issuing party.

New 12 month time limit for a personal grievance arising from sexual harassment…

Tue, 12 Mar 2024 22:17:17 GMT

From 13 June 2023 employees have 12 months to raise a personal grievance arising from sexual harassment, if the event occurred on or after 13 June.

The 90 day time limit will continue to apply to all other personal grievances.

Also from 13 June 2023 all employment agreements (individual and collective) need to insert new clauses explaining the 12 month time limit. This requirement to insert new wording is mandatory and a failure to have the correct wording in new agreements could lead to dire consequences such as being grounds to extend the time limit for personal grievances for sexual harassment even further (as an exceptional circumstance justifying an extension) or the imposition of penalties.

Agreements entered in to before 13 June do not have to have the wording inserted, but the new time limit will apply to those older contracts if the event was on or after 13 June. If older contracts are not upgraded it might open the door to a claim for exceptional circumstances, so updating older contracts may be a good idea anyway.

Employment law firms will be able to advise you on the required wording for new agreements and recommended wording for older agreements.

Source: Rainey Collins Lawyers 21.6.23

90 Day Trial Periods are open to all employers again

Tue, 12 Mar 2024 22:05:08 GMT

As per their pre-election promise the new Government have reopened the 90 Day Trial Period legislation to all employers. As from (23rd Dec 2023) there is no longer the restriction to companies with only 19 staff or fewer employees.

It's worth noting this does NOT change the Immigration New Zealand (INZ) policy of not being permitted to use a 90 Day Trial Period for migrant workers.

In December the Ministry of Business, Innovation & Employment (MBIE) released their 'impact statement' citing that between 2015 and 2023 75% of all 90 Day Trial challenges which ended up at the Employment Relations Authority (ERA) went against the employer. The figure for those being settled at mediation and privately would undoubtedly be even higher than that.

We strongly urge employers to double check their processes when implementing and enforcing termination of a 90 Day Trial Period.

Employment law firms will be able to advise you on matters in relation to 90 Day Trial Periods.

Source: Employers Assistance Ltd December 2023

Can't hide behind a Trust

Tue, 12 Mar 2024 21:53:39 GMT

Recently the High Court has defined its position on individuals or companies potentially hiding behind trusts and avoiding accountability in the context of Health & Safety. In the case of WorkSafe New Zealand Mhi Haumaru Aotearoa v RH & Jury Trust [2023] NZHC 3871, the High Court rendered a significant decision regarding the liability of trusts and trustees under the Health and Safety at Work Act 2015 (the Act) following a tragic incident on a dairy farm owned by the RH & JY Trust, where a young child visiting his grandfather suffered a fatal accident due to unprotected machinery. Following the child's death WorkSafe filed charges against both the Trust and its trustees.

Initially, the District Court dismissed charges against the trust, citing that a trust did not fit the definition of "person" under the Act. However, WorkSafe appealled and the High Court took a broader perspective, emphasising the Act's intent to hold entities accountable with higher penalties compared to that against individuals. Justice Harvey highlighted the Act's silence on whether a trust falls under the definition of "person" advocating for a wide interpretation of "person conducting a business or undertaking" (PCBU). Consequently, the court ruled that trustees collectively constitute a PCBU, thereby subjecting them to potential charges under the Act.

Despite this, the court acknowledged complexities within trust law, such as trustees' limited liability for co-trustees' actions, suggesting potential limitations on prosecuting trusts directly under the Act. Additionally, the court clarified that prosecuting either the trust or the trustees collectively would result in similar maximum penalties, thus eliminating any practical advantage to prosecuting the trust separately.

Moreover, the ruling recognised the possibility of trusts indemnifying trustees based on specific circumstances and applicable trustee indemnity laws. In summary, the decision underscores the expansive interpretation of a PCBU to include trustee bodies collectively and provides insights into the complexities of holding trusts accountable under health and safety laws.

This case underscores the significant health and safety obligations trustees bear, particularly when trust assets encompass businesses or commercial undertakings. It emphasises that trustees must diligently ensure workplace and operational safety for any operations under their governance. This latest High Court decision firmly establishes that trusts cannot serve as a means to evade health and safety responsibilities. It reiterates the paramount importance of maintaining a safe workplace, irrespective of the organisational structure of a business.

Employer Takeaway: This case demonstrates the wide application of health & safety obligations in terms of “PCBUs” and their duty to eliminate and minimise risk. In particular, the case shows how the courts will apply a wide interpretation to how legal entities are structured, and them being considered “PCBUs” for the purposes of the Health and Safety at Work Act 2015. Specifically, in appropriate cases the courts will uphold liability against trusts where harm, injury or loss of life has occurred and there are corresponding health and safety failures. Trusts throughout New Zealand will need to consider the impact of this court decision against their individual circumstances and where appropriate ensure compliance with health and safety obligations.

Source: Rainey Collins

The Future of Directors' Liabilities

Wed, 06 Mar 2024 23:50:30 GMT

The Supreme Court has recently released the long-awaited Mainzeal judgment, awarding damages totaling $39.8 million against the four directors, and setting a strong precedent for directors’ personal liabilities in New Zealand.

Mainzeal was a prominent construction and property developer until it went into liquidation in 2013 while owing $110 million to unsecured creditors.

The liquidators had brought a series of claims against the company’s directors, alleging a breach of duties to the company and its creditors.

The High Court found that the directors had breached duties by continuing to operate while the business was in a vulnerable and delicate state. In an appeal, the Court of Appeal agreed that the directors had breached those duties, but disagreed that the breach led to any losses to the company.

This judgment was further appealed to the Supreme Court, which has taken a comprehensive look at New Zealand’s legal framework for directors’ liabilities and duties while trading insolvent.

The Supreme Court broadly cited five main aspects of the directors’ breaches:

 Continuing to trade while being balance sheet insolvent for many years.

 External advice cited that extra capital was required, yet was not provided by directors.

 Little, if any, profit was generated from 2008 (noting that liquidation was entered into in early 2013).

 Directors’ awareness of the delicate position the company was in.

 Unreasonable reliance on the holding company’s assurances, which were not legally or practically enforceable.

With an award of damages totaling $39.8 million the judgment provides a stark warning to directors of their obligations and responsibilities, with a recurring theme of protecting creditors, namely:

 To continually monitor current and future performance and solvency.

 To consider the interests of creditors if the company is facing insolvency or likely to be insolvent soon.

 To protect creditors if liquidation is unavoidable.

The bottom line is that professional advice and guidance is key to avoiding situations where directors’ liabilities and obligations may be unclear while a company is trading insolvent.

Source: Rainey Collins

GST Treatment of Credit Card Fees

Thu, 22 Feb 2024 01:35:08 GMT

What is the GST treatment of the fee that suppliers charge their customers for using a credit or debit card to purchase goods or services?

Where suppliers charge their customers a fee for using a credit or debit card to purchase goods or services, that fee will form part of the consideration for the goods or services being supplied where:

 the supplier supplies the payment facility directly to the customer;

 the supplier arranges for an agent to supply the payment facility to the customer on the supplier’s behalf; or

 the supplier contracts with a third party to supply a payment facility to the customer.

The fee will have the same GST treatment as the goods or services being supplied. If the goods or services are taxable, output tax must be returned on the amount of the fee.

Source: Inland Revenue QB 18/14