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The Court of Appeal recently considered what is required of an employer who investigates an employee’s alleged misconduct. The good news is the decision indicates that the standard expected of employers conducting an investigation does not equate to a judicial enquiry.

Case summary
In this case, Ms C, a 19 year-old flight attendant alleged that Mr H, a 51 year-old pilot, had sexually harassed her, after entering her bedroom when they were away overnight on duty together, and touching her inappropriately. After conducting an investigation to Ms C’s complaint, the employer preferred her account of events and decided to terminate Mr H’s employment for contravening the company’s sexual harassment policy. Mr H challenged this decision and claimed that the dismissal was unjustified.

The Employment Court found a number of procedural defects in the enquiry the employer had conducted, and criticised it heavily for failing to interview witnesses in the same way. On that basis, the court held that the decision to dismiss was unjustified and reinstated Mr H.

This decision was then challenged in the Court of Appeal.

The Court of Appeal confirmed that employers are required to act in a substantially fair and reasonable manner, which necessitates an even-handed approach but does not require an employer to question every witness in the same way.

The Court of Appeal noted that a range of fair and reasonable options are available to an employer in any given situation. An employer’s actions or the way they acted will be justified if their conduct was “what a fair and reasonable employer could have done in all the circumstances” under s 103A of the Employment Relations Act 2000.

The Court held that the employer’s actions should not be subject to “minute and pedantic scrutiny” in order to identify failings. In this case, the procedural defects relied upon by the Employment Court did not affect the accuracy of the information collected and were deemed to be insignificant.

The Court of Appeal concluded that the Employment Court failed to apply the correct statutory test to the process followed by the employer. It held that the employer was entitled to structure its approach based on the “inherent implausibility” of Mr H’s explanation as to why he entered Ms C’s bedroom and his claim that the touching was accidental in the circumstances.

Case learnings
Despite these findings, employers should be very careful when investigating allegations made against its employees. Employers are required to carry out a fair process and genuinely consider an employee’s explanation. There may also be circumstances where an employer is required to scrutinise and challenge an allegation vigorously.

Best practice is to plan the investigation carefully, including considering using an independent investigator where facts must be established from a number of witnesses, and make sure the investigation is well documented. The findings should be put to the alleged perpetrator for response, in a full and fair disciplinary investigation before a decision as to what action to take is made.

If you would like advice regarding disciplinary investigations, please contact us.

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.

PCBUs have a primary duty to ensure, as far as reasonably practicable, that the health and safety of workers, and others at the worksite, is not put at risk by its work. But what happens on a building site where multiple contractors and subcontractors are working at the same time. Who does this duty fall to? Simply put, both risk and responsibility lies with each PCBU, and overlapping duties arise.

Each PCBU has a duty to ensure the safety, so far as is reasonably practicable, of not only their workers but of anyone else on site who may be affected by any potential risks that each PCBU creates by its work. This does not mean that each PCBU needs to duplicate hazard identification and risk management steps – a collaborative approach involving consultation, co-operation and co-ordination with each other is required, to ensure the duties collectively are being met.

PCBUs should consider not only their immediate work tasks but also how they will be affected by another PCBU carrying out works on the same site, and in turn, what effect their work will have on the other PCBUs.

Using first aid as an example, provided PCBUs consult and co-operate regarding first aid requirements, by successful collaboration, agreement may be reached about adequate availability of first aid kits and first aiders being provided by a single PCBU on site rather than duplicated and required for each PCBU.

All PCBUs need to meet their duties by:

Planning ahead and identifying how the work they do could affect other PCBUs, workers and other people;
Identifying health and safety hazards and associated risks that need managing;
Consulting other PCBUs to agree how to control each risk;
Consulting other PCBUs to decide which PCBUs are best placed to control each risk;
Putting in place those controls;
Clearly defining roles, responsibilities and actions, and communicating about these; and
Continuing to communicate, co-operate, and co-ordinate with other PCBUs throughout the work, and carrying out reasonable and proportionate monitoring, to make sure good health and safety is maintained.
Following these steps and keeping accurate records will assist PCBUs to meet their duties and to demonstrate the steps taken to consult, co-operate and co-ordinate with other PCBUs. The extent of a PCBU’s duties is limited by their ability to influence and control the matter and what is reasonably practicable in the circumstances. It is expected that PCBUs leading contracting chains set the standard in terms of leadership and promotion of good health and safety practices throughout the chain. The intent of a collaborative approach is that larger, better resourced PCBUs will assist smaller PCBUs to build capacity and better discharge their duties, making worksite health and safety management simpler, and creating a safer worksite overall.

WorkSafe NZ’s website has useful, reader friendly information on how to work out the extent of each PCBU’s duty, and we can provide advice about what this means for your business.

All employers need to update their employment agreements for recent legislative changes – have you done yours yet? Our team has been delivering seminars nationwide on employment agreements and the finer points relating to these changes, as well as how to avoid common pitfalls in relation to tricky agreement clauses.

The seminars also focused on the application of trial period, hours of work and restraint of trade clauses, which we are regularly fielding queries on and assisting clients with. We discuss these in more detail below.

Employment agreement basics – what must an IEA include?
We often get asked for a “one pager”, “basic” or “brief” employment agreement, and as discussed in the seminars, at a bare minimum an employment agreement must set out:

the parties names;
a job description;
job location and hours of work;
remuneration;
reference to time and a half for work performed on public holidays;
an explanation as to how to go about resolving an employment relationship problem;
an employee protection provision for the sale, transfer and contracting out of the agreement.
IEA best practice – recommended clauses
While we like to think our employment agreements are drafted in an easy to read “plain English” manner, because we need to provide for good risk management, they will never be a “one pager”!

This is because a number of other clauses to those needed as a bare minimum are included to ensure that expectations of each party to the employment relationship are clear, and to allow the employer maximum flexibility to take action as appropriate in whatever circumstances that arise.

For example, we recommend consideration of clauses addressing at least the following additional points:

trial period;
restraint of trade;
entitlements to leave and holidays;
disciplinary procedure and suspension;
health and safety obligations;
protective clothing and equipment;
abandonment of employment
medical examination and/or termination;
termination notice period;
lawful deduction;
business interruption;
secondary employment; and
availability provisions
If you’re unsure of what clauses to include or why particular clauses have been included in your employment agreements, we can help you make sense of this.

Trial periods
Trial periods are a useful provision for employers seeking to take on new employees with less risk – used properly, they allow employers to dismiss new employees within the first 90 days of employment with no right to bring as unjustified dismissal claim. By using a trial period properly and dismissing within it, employers need not point to misconduct or some other reason to justify dismissal.

All other employment rights continue during the trial period, including employees’ ability to raise personal grievance claims for unjustified disadvantage, sexual harassment or discrimination.

As trial periods strip employees of legal entitlements, courts have applied a strict interpretation to enforcement of these, and employers need to be cautious to make sure their use of trial periods complies with the latest legal requirements. See our Inform article on requirements for an effective trial period here: https://www.copelandashcroft.co.nz/news/updated-trial-periods-what-required-and-how-safely-dismiss.

Changes to “zero hour” arrangements
A “zero hour” contract is an agreement where no hours of work are guaranteed but the employee must work at the employer’s request. Recent changes to the Employment Relations Act 2000 have significantly restricted the ability to use zero hour contracts.

Employment agreements must provide an indication as to hours of work. Further, if an employer wants to require an employee to work particular hours, then the employment agreement must specify at least the minimum, guaranteed hours the employee will work. Conversely, an employee on a “zero hour contract” does not have to work any hours offered and cannot be treated adversely for refusing to accept the offer of work.

For more information on “zero hour” arrangements, see our Inform article here: https://www.copelandashcroft.co.nz/news/zero-hour-contract-restrictions.

Availability provisions
In addition, where an employer needs employees to be available to work outside of their minimum agreed hours of work, the employer must have genuine reasons based on reasonable grounds to require that availability. If it is practicable to meet business demands without an availability provision, this test will not be met.

Where genuine reasons do exist, the employment agreement will need to contain an availability provision which makes the employee’s ability to work conditional on the employer making work available, and requires the employee to accept any work that the employer makes available. It must also specify what period/s of availability is required.

Finally, the employee must be “reasonably” compensated for their availability. Salaried workers can agree that their remuneration includes compensation for availability; however, reasonableness of compensation for salaried and waged workers will depend on the number of factors including:

the hours for which the employee is required to be available;
the proportion of the hours worked;
the nature of any restrictions resulting from the availability provision (i.e. whether the employee cannot drink, must not be more than 30 minutes away from the workplace etc.);
the current hourly rate; and
if the employee is remunerated by way of salary, the amount of the salary (i.e. salary will not be reasonable compensation where, based on hours worked/required to be available, minimum wage requirements are not met).
In order to avoid the cost of paying additional availability compensation to employees, many employers have chosen not to include an availability provision, and instead leave additional work up to agreement. Employees may refuse to work outside of the agreed hours and cannot be treated adversely for their refusal.

We can provide advice regarding what these changes mean for your workforce, to find a solution that fits for you.

Restraints of trade
Restraints of trade provide some protections to employers from an employee’s post employment activities, recognising that during the employment relationship, employees access the employer’s commercially sensitive material and form relationships with clients, customers, suppliers and other employees such that these things are jeopardised when employment ends.

Restraints of trade can be used to prohibit employees from, for example:

competing with their employer (setting up in business or commencing employment in the same industry);
soliciting or dealing with the employer’s customers/clients; and
soliciting the employer’s employees to work for them.
The starting point for all restraints of trade is that they are unenforceable because they are seen as anti-competitive and therefore, against the public interest. However, provided that a restraint is reasonable in terms of scope, including the duration and geographical area it covers, and seeks to protect a legitimate proprietary interest (for example, the employer’s trade secrets), it may be enforced.

The Court has power to modify restraints so that they may be enforced, but is increasingly reluctant to do this where the original restraint is unreasonably broad. Employers should not rely on assistance in revising a restraint being available, and are strongly advised to carefully consider drafting of restraints for the particular employee it will apply to at the commencement of the employment relationship.

For more information on restraints of trade and a discussion on what may be considered “reasonable” see our inform article: https://www.copelandashcroft.co.nz/news/restraint-trade.

If you would like advice regarding your employment agreements or any of the matters discussed in this article, please contact us.

The Vulnerable Children’s Act 2014 (Act) was introduced to prevent people with relevant serious convictions from working alone with children. The Act prescribes new requirements for all government funded employers to conduct specified background checking called ‘safety checks’ on all new and existing employees and contractors who have regular and unsupervised contact with children, “children’s workers”. Children’s workers are defined as “core” or “non-core” workers, depending on the type of contact they have with children.

Safety checks involve:

confirming the person’s identity;
Police vetting;
collection and considering additional information including verification that any professional membership and practice certificate held is current, and information about the person’s work history; and
Any other information considered relevant to an assessment of risk (such as any prior traffic offences or health problems that would reflect poorly on the person’s ability to work with children safely).
Once the safety check has been conducted, the employer will need to conduct a risk assessment on the prospective children’s worker to determine what, if any risk this individual would pose to the safety of children if they were appointed, and make a decision about their employment accordingly.

Irrespective of the outcome of the safety check, if a “core worker” has been convicted of a specific offence, the employer is not able to employ or continue to employ them, unless they have been granted an exemption through the Ministry of Social Development. The Act provides for steps that must be taken to immediately suspend core workers who have been convicted of these offences, and for termination of their employment, deeming the dismissal to be justified per the Employment Relations Act 2000 in those circumstances.

The specified offences are listed in Schedule 2 of the Act.

The new requirements to conduct safety checks come into effect in a staggered way:

From 1 July 2015, all employers have had to safety check new core workers;
From 1 July 2016, all new non-core workers must be checked;
From 1 July 2018, the requirement to safety check will be extended to cover all existing workers, and repeated three yearly thereafter.
If your business or organisation employs or contracts children’s workers, our team can provide advice regarding your requirements to conduct safety checks.

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.

Parliament is considering the Employment Relations (Allowing Higher Earners to Contract out of Personal Grievance Provisions) Amendment Bill (Bill), which proposes that employees who earn over $150,000 gross may contract out of the personal grievance provisions provided by the Employment Relations Act 2000.

A personal grievance is a legal claim an employee can bring against their employer if they believe they have been dealt with unfairly or unjustifiably. The Bill provides that any contracting out provision would be void unless:

The employment agreement contains the provision, and is signed by both parties;
The employee has taken legal advice before signing; and
The lawyer who gave the advice:
explained the effect and implications of the provision;
witnessed the employee’s signature; and
gave a certification to this effect.
It is not yet clear whether employees who contract out of the personal grievance regime could still challenge their dismissal by a claim for wrongful dismissal, as was the case under the Employment Contracts Act 1991, but they would be able to take action in the Human Rights Review Tribunal for claims related to discrimination, sexual harassment, racial harassment, or privacy principles.

The rationale for the Bill is to purportedly help focus employment law provisions on those who have the most need of employment protection. Public submissions are being invited on the proposed changes. The closing date for submissions is Friday, 5 May 2017.

We will keep you informed of progress. In the meantime, if you need to know more about personal grievance provisions then please contact us .

Copeland Ashcroft recently wrote about the changes to legislation in 2016 which have seen an increase in penalties sought by the Labour Inspectorate for breaches of minimum employment standards.

The Minister of Immigration recently announced increased punitive consequences for employers recruiting migrant workers who breach these minimum standards.

The Ministry of Business, Innovation & Employment (MBIE) have identified migrant workers as a vulnerable class of employee and will, through the Labour Inspectorate, team up with Immigration New Zealand (INZ) to work together to reduce the exploitation of workers through employers breaching the minimum standards such as paying less than the minimum wage.

The Labour Inspectorate will be responsible for maintaining and providing a list to INZ of those employers who have breached the minimum standards and employers who meet the threshold for non-compliance will be subject to a stand down period before being able to hire migrant workers again. The stand-down period will vary from six months for penalties up to and including $1000 and 24 months for penalties of $50,000 and above. Employers who are taken to the Employment Relations Authority or the Employment Court independent of the Labour Inspectorate will also be subject to these stand-down periods.

Migrant workers employed by employers who become subject to the stand-down periods do not have to be concerned in the immediate. They will be able to work out the duration of their work visa, but will be required to find an alternative employer if they need a further visa prior to the stand-down period expiring.

What does it mean for Employers?
It is critical that employers take minimum employment standards seriously and that you seek advice where a Labour Inspectorate makes allegations. If you are unsure what these standards mean for you, or how to comply with them, please contact us.

Kate Ashcroft spoke at the Conferenz 31st Annual Industrial and Employment Relations Conference recently, on creating and implementing an effective drug and alcohol policy. This article summarises key points from her presentation.

Drug and alcohol testing is viewed as intruding on an individual’s freedom, in respect of their conduct outside of work, and the law relating to testing is still developing. Numerous laws, including but not limited to, the Health and Safety in the Workplace 2015 Act (HSWA), the Privacy Act 1993, the Bill of Rights Act 1990, and the Employment Relations Act 2000, must be considered and applied in drafting and implementing a drug and alcohol testing policy.

Key considerations in any policy are as follows:

What will be the policy’s purpose, and who will it apply to? Eg employees only, or employees and contractors?
What type of testing will be conducted? Options include pre-employment, reasonable cause, post-incident and/or random testing. Random testing may only be conducted for “safety sensitive” roles, and you will first need to determine whether your workplace is safety sensitive.
How will you decide when to test? If doing reasonable cause testing, you will need to specify reasonable cause indicators, and if doing post incident testing, you will need to specify who this will cover in relation to an incident.
Who will carry out the testing? A reputable agency should be used.
What will the testing procedure involve?
How will you address employee privacy?
What will you do if the employee does not consent to testing?
What will you test for?
What will be the “cut off levels” for positive tests?
Will you provide rehabilitation opportunities for positive test results?
Implementing an effective drug and alcohol policy requires consultation with existing staff, and in summary, involves providing them with a draft policy, advising them of the reasons for implementing the policy and inviting them to provide feedback which is considered before the policy “goes live”. Consultation also assists employee engagement with the policy.

Should an employee return a positive test, all employment law obligations in respect of fair process, good faith, and justification apply, and employers must ensure strict adherence to their own policy. A positive test result does not automatically mean a decision to terminate will be justified.

If you need advice on creating and/or implementing drug and alcohol policies and reducing the hazard caused by drugs and alcohol in your workplace, please contact us.

The Copeland Ashcroft Law Team recently presented a seminar roadshow around the country on “Hiring and Firing”, giving “need to know” tips on undertaking disciplinary processes. Highlights are summarised below.

In summary, to justify disciplinary action, you must have a good reason and follow a fair process.

When to take action
In weighing up whether to commence a disciplinary process, the starting point is your own documentation – that is, the employee’s employment agreement (agreement) and relevant company policies (policy) to identify whether the employee has breached a specific provision. You should also ensure that any process set out in the agreement in relation to disciplinary or performance management is strictly adhered to.

Examples of misconduct and serious misconduct
Categorising concerns correctly is important to ensuring the process you follow and any resulting disciplinary action is appropriate and justifiable, and very much depends on the circumstances.

For behaviour to amount to serious misconduct, which can justify the most severe disciplinary sanction – termination of employment without notice – generally what is required is conduct that destroys the trust or confidence essential to the employment relationship. Examples may include unauthorised possession of the employer’s property (i.e. stealing), refusals to follow reasonable instructions and breaching health and safety requirements.

Misconduct is less serious, and can justify disciplinary action up to and including warnings, or ultimately termination on notice if behaviour is/warnings are repeated. Examples of misconduct can include lateness, time or material wasting, unprofessional behaviour or minor breaches of work rules or policy.

Performance concerns must be dealt with by a performance management process, and the requirements are different than for a disciplinary process, so being clear about the nature of the concern is crucial.

Carrying out a fair process
Good faith duties apply to disciplinary processes, and require that before making a decision that might have an adverse effect on an employee’s employment, an employer must provide the employee with all the information relevant to that decision, and an opportunity to comment.

In summary, fair process involves:

Writing to the employee setting out the allegations in detail, including times, dates, names and why the alleged behaviour is of concern.The employee must also be notified of the seriousness of the matter and the possible consequences that may result in the absence of a satisfactory explanation, inviting them to attend a disciplinary meeting with a support person, to give their response.
At the meeting, the decision maker should outline the allegations and possible consequences then invite the employee’s response and listen to their explanations.They can, and should, ask clarifying questions.
The decision maker must then consider the response and put preliminary findings to the employee before reaching and communicating their final decision.
Risk management
Ensuring that fair process is followed, and that there is good reason for disciplinary action will manage the risk of personal grievance action by employees. If you have a question about disciplinary action, our team can help.

In 2016, the Government made changes to the Shop Trading Hours Act 1990 (Act) to enable city and district Councils to make decisions on whether shops in their districts could open on Easter Sunday or not.

Many Councils have decided to allow shops in their district to open on Easter Sunday, and we encourage you to contact your local Council Body if you are unsure whether you are entitled to open or not.

What is a Shop?
Section two of the Act defines a shop as a building, place, or part of a building or place, where goods are kept, sold, or offered for sale, by retail; and includes an auction mart, and a barrow, stall, or other subdivision of a market; but does not include—

(a) a private home where the owner or occupier’s effects are being sold (by auction or otherwise);
(b) a building or place where the only business carried on is that of selling by auction agricultural products, pastoral products, and livestock, or any of them; or
(c) a building or place where the only business carried on is that of selling goods to people who are dealers, and buy the goods to sell them again.

Are there any other restrictions to be aware of?
If an employer wants to open their shop on Easter Sunday, they are obliged to give employees at least four weeks notice in writing of this, and must also notify employees that they can refuse to work on Easter Sunday.

If a shop employee intends to refuse to work on Easter Sunday, they must give the employer 14 days written notice of this. Employees are not required to provide a reason for their refusal.

Employers cannot force employees to work on Easter Sunday nor treat them adversely because of their refusal to work on Easter Sunday. If they do so, the employee can take out a personal grievance.

You should also be aware that Easter Sunday is not recognised as a public holiday under the Holidays Act 2003, therefore an employee will not be entitled to time and a half and/or an alternative holiday unless specified in the relevant employment agreement.

If you would like to know more about Easter Sunday shop trading or how this might impact your business, please contact us.

A recent case in the Human Rights Review Tribunal (HRRT) between former conservative party leader, Colin Craig and his ex-press secretary, Rachel MacGregor highlights the financial implications an employer may incur if they fail to abide by the terms of a confidential settlement.

It also supports our view as discussed here that the HRRT is likely to become a more popular forum for employee claimants given the higher awards that have been made, compared with those awarded in the employment jurisdiction, including the Employment Relations Authority where the average award for hurt and humiliation compensation continues to be around $5,000-$6,000.

Case summary
Ms MacGregor was employed as Mr Craig’s press secretary. Throughout her employment, Mr Craig sent a series of text messages of a sexual nature, including that he wanted to kiss and hug her and thanked her for subsequently dressing ‘modestly’ after she had worn a low cut top.

There were also a series of other inappropriate actions of a sexual nature that Mr Craig took throughout her employment that resulted in Ms MacGregor resigning from her position.

Ms MacGregor raised a claim of sexual harassment against Mr Craig. The matter was heard at a mediation facilitated by the Human Rights Commission.

Ms MacGregor’s claims were settled at mediation and as part of this process both parties signed a settlement agreement. The settlement agreement stated that the contents of the agreement were not to be disclosed to any third party.

Mr Craig repeatedly breached the settlement agreement publicly by discussing Ms MacGregor and the sexual harassment claims.

Ms MacGregor raised a claim in the HRRT alleging that Mr Craig had breached the Human Rights Act 1993 (Act) through his repeated and deliberate breaches of the settlement agreement and the mediation process.

The HRRT found that Mr Craig had deliberately and repeatedly breached the settlement agreement and Act and acknowledged the impact these breaches had on Ms MacGregor. She was awarded $128,780.00 in damages. The damages in this case were substantial in recognition of the hurt, humiliation and injury to feelings Ms MacGregor has suffered over a two year period.

Case learnings
Any employer who attends mediation and/or signs a settlement agreement under either the Act or the Employment Relations Act 2000 needs to ensure that they adhere strictly to the terms of that agreement. Failure to adhere to these requirements may result in financial penalties.

If you would like to know more about your obligations in relation to harassment, mediation or settlement agreements, please contact us.