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The Employment Relations Authority (Authority) recently escalated the first determination on the new hours of work legislation to the Employment Court (Court) for decision and we have been eagerly awaiting the outcome in the hope it would give us all some guidance particularly in the area of compensation. Unfortunately we will have to wait a little longer for direction as the Court instead determined there was no availability provision within the Applicant’s employment agreement and therefore compensation was not payable in this instance.

The Case
Applications were lodged by two workers employed in two different McDonalds restaurants. Both employees sought to resolve concerns relating to availability provisions in their individual employment agreements (IEAs), and the requirements of section 67D of the Employment Relations Act 2000 (Act), which was introduced to regulate against so-called “zero hour contracts”.

The Decision
The Plaintiffs submitted that the sole question before the Court was whether the employment agreements contained an availability provision, but the Court refused to consider this question within a “vacuum”, instead preferring to consider this in light of the parties’ approach to their employment relationship.

The Court determined the IEAs did not include an availability provision. This was because the employees, when applying for a position, indicated when they could be available to work. Shifts were rostered only within these times. The IEAs provided for guaranteed hours within the periods of pre-indicated availability (as indicated by the employee not the employer) and any extra hours to be worked by mutual agreement. It was noted that this approach worked well for not only the employer but also for the employees, many of whom had maximum hours thresholds due to studying or work visas.

In the absence of an availability provision the Court did not need to consider the question of remedies.

What this means for you
It has been confirmed by the Court that while the existence of an availability provision requires guaranteed hours, a guarantee of hours in itself does not necessarily require an availability provision.

What is adequate compensation for waged workers’ availability remains to be determined, but for now, employers should ensure that advice is sought regarding their specific work needs, with compensation to be assessed against the following factors:

The number of hours the employee is required to be available;
The proportion of those hours to the agreed hours;
Any restrictions that arise from the availability provision;
The rate of pay for work available for; and
If paid by a salary, the amount of the salary.
If you’re unsure how to manage your obligations regarding availability, please contact us. You can read more about changes to the law regarding hours of work here:

https://www.copelandashcroft.co.nz/news/have-you-updated-your-employment-agreements-yet

https://www.copelandashcroft.co.nz/news/recent-employment-law-changes-faqs-hours-work-shift-cancellation-secondary-employment-and

https://www.copelandashcroft.co.nz/news/zero-hour-contract-restrictions

https://www.copelandashcroft.co.nz/news/employment-standards-legislation-bill-passes

Disclaimer: We remind you that while this article provides commentary on employment law and health and safety topics, it should not be used as a substitute for legal or professional advice for specific situations. Please seek legal advice from your lawyer for any questions specific to your workplace.

August 2017

Injured worker recieves $336,300 following workplace accident

WorkSafe New Zealand v Wai Shing Limited

Background
In the health and safety space, WorkSafe NZ v Wai Shing Limited is our first glance at a Court topping up the difference between ACC payments and what the worker could have earned were they not injured.

When a company is found guilty of breaching of health and safety legislation, the Courts generally order payment of a fine and reparation. Reparation is a payment a Court can order a defendant to pay to the victim for loss, damage or cost suffered due to the offending. In this case, a total of $336,300 was ordered to be paid to the victim by Wai Shing Limited.

Until 2014 the case law was fairly settled that ACC entitlements were governed by the ACC scheme and Accident Compensation Act 2001 and that the Courts could not “make up” the difference. In 2014 an amendment to the Sentencing Act 2002 (which contemplates the principles of reparation) allowed the Court to consider these “ACC top ups” when deciding on an amount of reparation.

Facts
Wai Shing Limited, a horticultural company, was prosecuted after a worker was paralysed in a workplace accident. He was struck on the back of the neck by a harvester used to collect pumpkin. The worker was working alone at the time of the event and lay undiscovered for several hours after the accident. The result of the accident was that the worker was left a tetraplegic, paralysed from the neck down, and now requires around-the-clock care.

The Offending
There were a number of failings by the company including failing to adequately train, provide sufficient PPE including a hardhat, and failure to implement a system to identifiy the vehicle had not returned at the end of the working day. Wai Shing Limited was found guilty of breaching the Health and Safety in Employment Act 1992 and fined $37,500, with the Director personally fined $12,500.

Reparations Calculations
The Court looked at both consequential financial loss and emotional harm suffered by the victim when calculating reparation.

Here, in terms of consequential financial loss, the Court looked at the difference between the worker’s ACC payments, and the amount he would have earned had he not been injured, assuming he would have worked until he was 65. The Court also made an assessment that his income would have “increased annually by the labour cost index [but made] no allowance for promotional increase or change of hours.” 20% percent of those earnings (i.e., difference between ACC’s payments and his normal rate) came to $462,400.

The Court subtracted $9,800 already paid by the Company to the worker. The Court further reduced the sum by 50%. The reduction was to take into account the ACC scheme, its principles, and its benefits. i.e., if it were not for the ACC scheme, injured persons would have the time, cost and stress of pursuing litigation to seek damages against those responsible for the injury.

The end result was an order of $226,300 for consequential financial loss.

In terms of emotional harm, the worker suffered severe emotional trauma from the accident and the resulting injuries. Whilst the Court said the worker’s partner couldn’t be assessed it did comment that “it is clear that the impact of the accident on [the worker’s partner] is very much tied into the emotional harm being experienced by [the worker]. It would be artificial to fail to acknowledge the impact on [the worker’s partner] even if [the partner] does not strictly fall within the definition of “victim”.

An emotional harm payment of $110,000 was ordered, making a total reparation order of $336,300.

Comments
This figure is at the top end of reparation sums previously ordered by the Courts. This case was not determined under the new Health and Safety at Work Act 2015 however, we expect to see further increased in these sums given the new legislation which allows for higher maximum penalties. This also acts as a good reminder to check your statutory liability insurance levels; you cannot insure a company against fines, but you can for reparation.

If you require any further information on Health and Safety law please contact us.

August 2017

The Employment Court and then the Court of Appeal recently considered the issue of pay equity following a claim under the Equal Pay Act 1972 (Act) by aged care workers, where the workforce is predominantly made up of women.

In essence, pay equity means gender doesn’t affect what people are paid and women receive the same pay as men for doing the same work, and also for doing work that is different, but of equal value. The value of work is assessed in terms of skills, knowledge, responsibility, effort and working conditions.

Although the Act is not new, it has not been well utilised, so this was a test case which triggered the Government’s appointment of a Joint Working Group on Pay Equity Principles. The Working Group reported back with recommendations last month.

In summary, the Working Group recommended a process by which pay equity claims could be raised with employers, including requiring notification by the employer to other potentially affected employees, and a requirement to respond within a reasonable timeframe. It also provided that the parties would then bargain to resolve the claim, in line with pay equity principles, and with recourse to the Employment Relations Authority if the claim was not accepted by the employer or resolved between the parties.

The Working Group recommended consideration of the following elements to determine whether pay equity exists:

Is the work mostly performed by women?
Has remuneration for the work been undervalued?Assessment includes consideration of factors including:Features of the market, industry or sector, including for example one main source of funding, and/or lack of effective bargaining; and
Any failure to properly assess remuneration that should be paid taking into account the nature of the work, its level of responsibility, work conditions and the degree of effort it requires.
The assessment required to make sense of pay equity claims represents a complex equation which will create a challenge for employers in many industries, unless the Government takes further steps to clarify this tricky area.

The Government will now consider the Working Group’s recommendations and respond to them. If they are adopted, the Act and the Employment Relations Act 2000 would need to be amended to provide for the recommended claims process.

These considerations are particularly relevant for employers operating in workforces dominated by women such as the early childcare and caregiving sectors – if you would like to discuss what this could mean for your workforce, please contact one of our team

Disclaimer: We remind you that while this article provides commentary on employment law topics, it should not be used as a substitute for legal or professional advice for specific situations. Please seek guidance from your employment lawyer for any questions specific to your workplace.

Since 2011, Labour Inspectors have been able to issue what is known as an “enforceable undertaking” to an employer in order to force them to rectify breaches in employment legislation. This tool was introduced as an alternative option to litigation and was considered a proactive option to get employers to address issues under related employment legislation instead of seeking remedies for employees through the Courts.

The use of this tool was recently extended to certain health and safety breaches under the Health and Safety at Work Act 2015.

Enforceable undertakings are being utilised more by Government bodies and we consider this is likely to continue. They are just one of the tools in the Labour Inspectorate and WorkSafe’s toolbox, which can be used as an alternative to prosecution.

What is an enforceable undertaking?
An enforceable undertaking is a legally binding document between the employer and relevant Government body. The agreement is entered into by the parties on a voluntary basis. The purpose of the document is to outline, in writing, what the employer will do to rectify the breach/es of the relevant legislation as well as to prevent a similar breach from occurring in the future. Breaches may relate to the Employment Relations Act 2000, Minimum Wage Act 1983, Holidays Act 2003, Wage Protection Act 1983, Parental Leave and Employment Protection Act 1987, or the Health and Safety at Work Act 2015 (HSWA).

When could an enforceable undertaking be used?
Labour Inspectors can agree to an enforceable undertaking with the employer whereby the employer agrees to:

Rectify any breach of minimum standards;
Pay money owed to an employee; or
Take any other action that the Labour Inspector determines is appropriate.
WorkSafe may also agree to an enforceable undertaking with a person or PCBU relating to the HSWA or associated regulations. An enforceable undertaking in this instance may be negotiated between the parties, with exceptions such as for an offence of reckless conduct in respect of any duty.

Enforceable undertakings will also specify timeframes for compliance with what is agreed.

What are the benefits?
The primary benefit of using an enforceable undertaking is to avoid protracted litigation for both parties to resolve breaches in the legislation. However, it is not a ‘get out of jail free’ card, nor it is necessarily a more cost effective option for employers, as the employer still has to rectify breaches usually through financial means as well as giving assurances that the issue will not occur in the future.

Another benefit is the opportunity to have some involvement by the parties in negotiating the terms of the enforceable undertaking, rather than having a decision imposed.

Also, for breaches in employment legislation, unlike with prosecution, the company/person name is not typically published. Unfortunately, this is not the case if parties are entering an enforceable undertaking under the HSWA, as the actual undertaking is published on the WorkSafe website, so members of the public can review what has been agreed. An example of the first enforceable undertaking agreed to by Worksafe in April this year can be found here.

What are the consequences for breaching an enforceable undertaking?
Breach of an enforceable undertaking is likely to result in penalties. In the employment context, the Employment Relations Authority can order a penalty up to $10,000 for an individual and $20,000 for a company. Under the HSWA, non-compliance can incur penalties of up to $50,000 for individuals and up to $250,000 for a company.

Summary
An enforceable undertaking is a great option for in certain circumstances, however it is important for an individual or company to carefully consider their options before agreeing to these, and seek advice.

Should this be necessary, our team can assist.

The Health and Safety at Work Act 2015 (the Act) and its regulations set out a raft of infringement offences, with associated fees, which essentially provide for small instant fines for specific breaches of duty. If WorkSafe believes on reasonable grounds that a person is committing or has committed an infringement offence it can issue an infringement notice setting out the time, place and nature of the offence and the amount of the infringement fee.

For example, there are regulations for infringement offences and penalties for asbestos, general risk and workplace management, and worker engagement, participation and representation, such as for failing to keep a record of a notifiable event, and failing to pay all expenses relating to health monitoring of a worker. Infringement fees reflect the seriousness of the offending and range from $300 to $1000 for an individual and $1,500 to $6,000 for an entity.

More information about specific infringements under these regulations can be viewed here.

In addition, a raft of new infringement offences and penalties relating to hazardous substances will come into effect on 1 December 2017.

Hazardous Substances
Many industries use hazardous substances, including agrichemicals, explosives, general manufacturing chemicals, cleaning solutions and fuel.

The Health and Safety at Work (Hazardous Substances) Regulations 2017:

Set out general requirements for all hazardous substances for storage, use, handling and manufacture of classes of hazardous substances in the workplace and for plant and equipment that contain hazardous substances; and
Allow WorkSafe to oversee and ensure sites, equipment and people are certified to safely work with hazardous substances.
Examples of infringement offences under these regulations include failing to display hazardous substance signage, or to keep a record of training and instruction.

You can read more about hazardous substances here.

What this means for you
All employers and PCBUs need to ensure compliance with their health and safety obligations, and you need to be aware of the regulations that relate to your business. WorkSafe has significant power to investigate and take action, including by issuing infringement notices, where it considers that obligations are not being met. We can assist with advice relating to WorkSafe investigations, and act on your behalf in engaging with WorkSafe where necessary.

If you would like to discuss this, or the impact that the regulations may have for your business, please contact us.

The High Court in WorkSafe New Zealand v Talley’s Group Limited has scrutinised WorkSafe’s approach to the detail contained in their charging documents. The case sets out that WorkSafe must include details of all alleged failings in their charging documents.

Facts
A Talley’s employee was stacking empty bulk bins using a forklift at a vegetable processing plant in Ashburton. Bins on the forklift toppled off and struck another employee, causing severe injuries that have left her in a wheelchair.

WorkSafe’s charging document was served on Talley’s days before the six month time limitation was up (Note: the Health and Safety at Work Act 2015 (Act) allows WorkSafe a 12 month time period from the date of the event to decide whether it will prosecute).

The charging document simply said Talley’s failed “to take all practicable steps to ensure that [the employee] was not exposed to hazards arising out of the operation of a Yale forklift.” WorkSafe attached a summary of facts with the four steps that the company allegedly failed to take, relating to hazard assessment, forklift/pedestrian separation, the forklifts stacked five bins high and the methodology of the stacking.

Eight months later WorkSafe amended the charging document and served Talley’s with a much longer, more detailed set of steps it allegedly hadn’t taken. Talley’s claimed that the new document represented a ‘vastly different and substantially increased series of allegations.”

Talley’s applied to the Court to have the prosecutions dismissed on the basis that to allow this approach from WorkSafe was to amount to a possible miscarriage of justice.

District Court
In the District Court Talley’s was successful in having the prosecution dismissed.

The District Court said the offence that was alleged including the particulars, must be clearly identified. These could be an act or an omission. “The vague wording of the charging document results in an outcome where [Talley’s] is not informed as to what they are required to defend; they must either guess the alleged failings or attempt to defend perfection. [Talley’s] must be informed of the particular failings so that they are able to prepare their case and identify any defences relevant to each failing.”

The Judge said WorkSafe expansive/wide scope of the first charging document, leading to a more detailed approach later on was a “deliberate tactic” on the part of WorkSafe to get the prosecution laid within the required time frame. She confirmed that it was undesirable that the prosecution can in effect lay further charges, indefinite in number and scope at any time up to the hearing, by taking deliberate advantage of its own non-specific wording in the original charge laid.

High Court
WorkSafe appealed the decision.

In its decision the Judge agreed that WorkSafe’s approach had been flawed but that the charge should not have been dismissed and that the threshold to grant a dismissal of the proceedings had not been met. He commented that there was public interest in having such serious alleged failures by the company brought to Court.

In the future, the Court commented that if WorkSafe wants to amend or extend the particulars in a charging document, it is necessary that it seek the Court’s leave to do so.

The Judge said that the charge would be confined to the document originally served and its attached summary of facts. The case has been sent back to the District Court to be heard.

Outcomes
WorkSafe’s approach received a fair amount of criticism by the Courts. WorkSafe must include a detailed description of the alleged failings in the charging document itself so the company being charged can decide how to plead and prepares its arguments. Further, WorkSafe cannot simply amend their charging documents and re-serve these, it can only do so with the Court’s leave.

We expect that the result of this decision is that PCBUs and people facing possible prosecution will get more detail of charges at an earlier stage, which will assist in preparing an appropriate defence.

For help in dealing with WorkSafe, our team can assist.

The Copeland Ashcroft Law Team recently presented a seminar around the country on “Getting it right from the start giving “need-to-know” tips on fundamental employment documentation and processes.

Key take-away points are summarised below:

Employment or contractor?
Obligations to employees are very different to those owed to independent contractors, yet many businesses are not entirely clear on the differences between the two. Most notably, contractors are not subject to the Employment Relations Act 2000 (Act), Minimum Wage Act 1983 or the Holidays Act 2003.

In determining whether an individual is an employee or a contractor, the Employment Relations Authority or Court will always look to the “real nature” of the relationship, the test set out in the Act. In making this assessment the Authority and Court will consider:

The control test: the greater the level of control exercised over the individual, (including in relation to the hours of work, start and finish times, when holidays can be taken etc) the more likely the person is to be an employee.
The integration test: if the individual is integral to the business (rather than just an accessory to it), this points towards an employment relationship.
The fundamental test: is the individual conducting business on their own account? Do they have a set fee for their work, pay their taxes directly and have the ability to work for multiple businesses? If so, this would indicate the individual is an independent contractor.
The risk of getting it wrong is that a business can be penalised for breaching minimum employment standards if an individual, who in reality is an employee, is treated as a contractor. In such cases the business could also be subjected to litigation if the individual raises a personal grievance for unjustified disadvantage or dismissal.

Entering into an employment relationship
When entering into an employment agreement, care should be taken to ensure that the correct company or entity is identified as the employer (otherwise there is a risk of personal liability).

Employers have a duty to bargain fairly with the existing or prospective employees. As best practice, we suggest providing an employee with the proposed agreement and a cover letter which sets out the key terms of the offer of employment, and which puts the employee on notice of important provisions such as a trial period. (This will also help ensure that a trial period is valid. You can find more information about trial periods here.) The letter should also encourage the employee to seek independent advice, request that they sign and return the agreement to indicate their acceptance of the offer within a reasonable timeframe to allow an opportunity to seek that advice, and invite the employee to discuss any queries they might have.

Employment agreements
Knowing what type of employment relationship (fixed term, casual or permanent) suits your workplace and staff forms a crucial consideration when first engaging staff.

Using the right type of employment agreement is key to ensuring that expectations are managed from the outset of the employment relationship, and reduces the risk of misunderstandings or grievance claims. You can find more information about choosing the right agreement here.

If you have a question about whether to engage an individual as an employee or contractor, or require advice on employment agreements, our team can help.

All employees are entitled to paid rest breaks. This is set out in the Employment Relations Act 2000 (“the Act”) and seems a relatively clear entitlement. But what rate are employees to be paid over their rest breaks? And what happens if the employee is on a variable pay rate when they take their rest break? The Court of Appeal (CoA) recently answered this question in the case Lean Meats Oamaru Limited v New Zealand Meat Workers And Related Trades Union Incorporated [2016] NZCA 495.

Case Summary
Some employees of Lean Meats Oamaru Limited are paid at an hourly rate while others are paid at piece rate and/or bonus rates (variable rates). The relevant collective agreement provided for daily payment of $7.00 to cover employees’ rest breaks. The Union claimed this did not comply with the Act, and that the employees should have been paid as usual for taking rest breaks.

The CoA considered the collective agreement in light of the Act, and determined “paid” means to be paid at the same rate as if the employee was still working,. The Court interpreted the wording in the Act with the purpose of these minimum standards for rest breaks, expressed as being “to benefit employees by providing for a better work-life balance”. It held that it would be contrary to the purpose of the Act for employees to take a paid break, as entitled, but be financially disadvantaged because of it.

The Court determined that employees must be paid for the breaks at the same rate as if they had worked through, regardless of how they are paid (ie, if their pay rate is variable, the applicable variable rate must be calculated in order to determine what is to be paid for any particular break).

What does this mean for you?
The key point from the decision is that employees should be paid for any “paid rest breaks” at the same rate they were paid immediately prior to taking the break. This is likely to require adjustments to payroll systems to ensure the appropriate calculation can be made.

The Act provides, in summary, that rest and meal breaks must be reasonable, leaving real flexibility for employers to determine when and how these occur during the working day. Meal breaks may also be unpaid, and where breaks cannot be provided, compensatory measures may be provided instead. If you’re unclear about what break arrangements to provide for your employees, or how this should be recorded in your employment agreements, talk to one of our team.

The Christmas period can be a challenging time of year for employers trying to manage the minefield that is the Holidays Act 2003 (Act), but it pays to get it right!

Transfer of public holidays
This year, Christmas and New Year’s Day fall on a Sunday. This means that for employees that normally have Sunday off, the public holiday will transfer to the following Tuesday. This only occurs if the employee doesn’t normally work on the calendar date of the holiday. If an employee normally works on the day the public holiday falls there is no transfer. Using Christmas Day 2016 as an example, if an employee normally works Sundays then that is the public holiday. For everyone who doesn’t work Sundays, the public holiday is Tuesday (employees can’t “double dip” and claim two public holidays if they work both the Sunday and Tuesday.)

You can agree to observe public holidays on different days if you agree in writing which public holiday is being transferred and the new date it is being transferred to, although the new date can’t be another public holiday and must be a normal working day for the employee.

Who is entitled to public holidays?
An employee is entitled to be paid for a public holiday even if they don’t work, if the day on which the public holidays falls would “otherwise be a working day”.

Not sure if your employee would have otherwise been working? The Act lists a number of factors to consider, including what the employment agreement states, what the work patterns are, any rosters or systems in place, whether the employee works only when work is available, and the reasonable expectations of the parties.

Working public holidays
If your employee works on a public holiday they are entitled to be paid their normal pay (relevant or average daily pay), plus half that amount again for hours actually worked. If the public holiday falls on a day the employee would otherwise have worked, they will also be entitled to an alternative holiday.

In summary, alternative holidays can either be used, by agreement or at the employer’s direction, or may be cashed out if agreed with the employee on their request after 12 months have passed since accrual.

It pays to ensure you know when and what your employees are entitled to this festive season. If you get things wrong, you could be liable to a penalty, and backpay for the entitlement owing.

If you would like advice regarding public holidays, please contact our team.

Disclaimer: We remind you that while this article provides commentary on employment law, it should not be used as a substitute for legal or professional advice for specific situations. Please seek legal advice from your lawyer for any questions specfic to your workplace.

Over recent weeks a number of businesses in Queenstown have been receiving visits from the Labour Inspectors (Ministry of Business, Innovation and Employment), Immigration New Zealand and Inland Revenue Department. Some or all of the above departments are targeting business owners to ensure they are meeting their employment, immigration and tax obligations.

Labour Inspector Visits in Queenstown

If the Labour Inspector pays you a surprise visit, under the Employment Relations Act 2000 they have the following powers:

to enter a place of work at any reasonable hour;
to interview any person at any premises in order to investigate alleged breaches of legislation about minimum employment standards;
to require and copy any wages, time and holiday records or any other documents which records remuneration; and
to question any employer about compliance with legislation.

It seems that the Labour Inspector’s main focus is on whether business owners have correctly determined the relationship with their workers. In particular, the labour inspector is looking at the nature of the relationship between the business owner and the worker to determine whether it is one of an independent contractor or employee. It is important to ensure that business owners are aware of the distinction and that there is an agreement in place that captures the true nature of the relationship.

As an employer you are legally obligated to have a written and signed employment agreement in place for all of your current employees. The Labour Inspector will most likely ask to sight all employment agreements to ensure these are in place.

The other main focus area is statutory minimum entitlements. This includes ensuring breaks are taken, public holidays worked are being remunerated correctly, annual leave is accruing and that the employee is being paid at least the minimum wage.

The Difference – Contract for Service or Contract of Service?

A “contract of service” or an employment agreement signifies an employment relationship. Under a contract of service, the employer must deduct PAYE and provide the employee with minimum statutory entitlements such as annual leave, sick leave, statutory holidays, break entitlements etc.

In general terms an independent contractor is someone who is in business on their own account, they are engaged pursuant to a “contract for services” to provide services to the other party. A contractor is someone that has a large amount of skill in their particular role and doesn’t require training or supervision. Under such a work arrangement, there is no employment relationship, and therefore the Employment Relations Act and Holidays Act do not apply and the contractor has no right to leave entitlements and grievance remedies.

We can’t emphasis enough the importance of ensuring that all of your employees are on the correct employment agreement that captures the true nature of the relationship. There can be a fine line between whether a worker is an employee or a contractor and if in doubt make sure that you seek legal advice on the matter.

If you are worried that you might be falling short on meeting your legal obligations, i.e., no agreement in place or you are a bit worried that your public holiday calculations are not correct, we would be happy to assist you.

Disclaimer: We remind you that while this article provides commentary on employment law topics, it should not be used as a substitute for legal or professional advice for specific situations. We recommend that you obtain legal advice specific to your situation before proceeding and would be happy to help in this regard.