How to Pay Employees for Upcoming Public Holidays

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Christmas Day and New Year’s Day fall on a Monday this year with Boxing Day and the Day after New Year’s falling on a Tuesday. Labour Day is always on a Monday and falls on 23 October this year.

If you are unsure how your employees should be paid over these statutory holidays, first refer to their individual employment agreement to check that it doesn’t provide for any terms in addition to the statutory minimum requirements. Then establish which of those stat days would normally be a working day for them.

When a public holiday falls on a day that your employee would usually work, regardless of how long they’ve been working for you, then they’re entitled to a paid day off.

Employees are only required to work on a public holiday if it’s a condition written into their employment agreement. If they agree to work, you must:

–          pay them at least time and a half and

–          give them an additional paid day off (a day in lieu).

Next the following applies:

When the Public Holiday would normally be a working day for the employee:

If the Public Holiday that falls on the Monday or Tuesday is ordinarily a working day but the employee does not work then they are paid for that Public Holiday the same as for a normal working day i.e. at their relevant daily pay.

If the Public Holiday that falls on the Monday or Tuesday is ordinarily a working day and the employee does work on those days, then they are paid time and a half for the hours they work, and they are also entitled to an alternative day off (lieu day).

When the Public Holiday is not usually a working day:

If the employee does not normally work on the Public Holiday, in this case the Monday or Tuesday, then they do not get paid at all for those days.

If the employee does not normally work on the days the Public Holiday falls but then does work on those days, they are entitled to be paid time and a half for the hours they work, and not entitled to an alternative day off (lieu day)

If you require further information regarding paying employees for Statutory Holidays click here.

 

Huge Fines for Categorising Employees Incorrectly as Contractors

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The sole director and shareholder of Direct Auto Importers and Cheap Deals on Wheels, Vishaal Sharma, had claimed that his employees were contractors and had denied owing them their minimum entitlements.

Following a Labour Inspectorate investigation however, the Labour Inspectorate disagreed. The failure to categorise his employees correctly resulted in fines of $65,000 to his two businesses.

The ERA found that both Direct Auto Importers and Cheap Deals on Wheels had not only failed to pay minimum wage or correct holiday pay to their employees, but had also failed to provide employee agreements and didn’t keep accurate records of employment.

A Labour Inspectorate manager, Loua Ward, said “An employer cannot avoid their obligations by simply calling their employees ‘contractors’, and any attempts to do so will not be tolerated by the inspectorate. All employees in New Zealand must be provided with written employment agreements and their minimum employment entitlements, such as the minimum wage and holiday pay,” She also added. “If an employer cannot meet these basic obligations, then they should not be an employer.”

Ms Ward also noted that this incident was not the first offence for one of the organisations, Direct Auto Importers. They were taken to the ERA last year by an employee who was able to successfully claim $17,996 in arrears.  She emphasised that as a result of that claim the employer should have known their obligations.

The responsibility lies with employers to provide their employees with all their correct minimum entitlements and ignorance is no excuse.

Direct Auto Importers were penalised to the tune of $50,000 for not paying holiday pay, providing written employment agreements, or keeping wage, time holiday or leave records, and a further $726 in arrears was ordered to be paid to two staff members for holiday pay owed and working on public holidays.

$15,000 was the penalty for Cheap Deals on Wheels for similar breaches and the ERA also set aside an amount of $10,000 in penalties to be arranged for three former employees of the businesses.

This case sets a serious precedent that employers should take note of. If you are in any doubt as to whether your contractors and/or employees are categorised correctly, please contact us for clarification.

This post is supplied by Chapman Employment Relations

Changes to Parental Leave Payments

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There are two main changes to parental leave payments that have taken effect as of 1 June 2017.

 The start of the parental leave payment

Employees may use up their leave entitlements prior to the start of their 18-week parental leave payments starting, even if this takes them past the baby’s arrival. Leave entitlements include annual leave, alternative days, special leave or time off in lieu that accumulated during employment. Before 1 June 2017, the parental leave payment period couldn’t start later than the baby’s arrival.

Pre-term baby parental leave payment

If a baby is born before the end of 36 weeks and the employee is eligible to parental leave payments, they could also get pre-term baby payments.

Employees with a pre-term baby now have more flexibility around returning to work and parental leave payments. Previously, when an employee with a pre-term baby returned to work after they started getting payments, their payments would stop. However, as of 1 June, employees can still get their parental leave payments when they go back on parental leave, as long as it’s no later than the expected date of birth.

For more information regarding the in’s and out’s of parental leave, please contact one of our knowledgeable consultants at Chapman Employment Relations.

Test Your Knowledge – The Privacy Act 1993

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The purpose of the Privacy Act 1993 is to promote and protect individual privacy – in particular to establish principles on: collection, use, and disclosure of information relating to individuals and access by individuals to information held about them.

Below are some common misconceptions and facts about your Privacy, rights and requirements courtesy of the Privacy Commissioner NZ.

Q 1. True or False: if your profile on a social network is set so that only your friends can see it, your profile is completely private.

Click here to find the answer

Q 2. True or False: You always have control over the pictures you post online.

Click here to find the answer

Q 3. The Privacy Act protects your personal information. Personal information consists of:

A. Your name, age, weight, height, home address and phone number.

B. Your blood type, DNA code, fingerprints and medical records.

C. Your education, purchases and spending habits.

D. All of the above.

Click here to find the answer

Q 4. It’s really easy to share pictures and stories with your friends on social networking sites. When you’re posting items you should:

A. Post everything that you think is funny and interesting – your friends will love these things!

B. Don’t post anything – it’s a creepy world out there.

C. Think first. Would you be comfortable if your parents, teachers or bosses saw what you are posting?

Click here to find the answer

Q 5. When you’re surfing online, websites can collect this information about you:

A. My personal preferences.

B. My approximate location.

C. The software I’m using.

D. All of the above.

Click here to find the answer

Q 6. You’re buying an item of clothing at the mall. As you’re about to pay for them, the shop assistant asks for your address and phone number. You:

A. Give it to him. The shop probably needs it in case I want to return the jeans.

B. Ask why he needs it. Once you know what the shop plans to do with your information, you can decide whether to hand it over.

C. Refuse. It’s none of their business!

Click here to find the answser

Q 7. Under the law, you have a right to complain if:

A. You think your personal information was improperly collected, used or disclosed?

B. You run into difficulties trying to get your personal information from an organisation, or to get your personal information corrected when it’s wrong?

C. All of the above.

Click here to find the answer

Q 8. Can an employer contact a job applicant’s past employer for a reference?

Click here to find the answer

 

Other Privacy breaches/concerns that Chapman ER have seen of late are:

 

Q 9. Birthdays. Is it OK to email ‘All staff’ notifying them of an employee’s birthday so they can congratulate them or buy them a card or present?

A. It’s only OK if it’s a special birthday for example a 40th or 60th

B. It’s only OK to send to the employee’s immediate team

C. It’s only OK if the employee gives you permission

D. It’s never OK

E. It’s always OK

Click here to find the answer

Q 10. Resignations. Is it OK to send an email to all staff notifying them of the resignation of an employee and communicating where the staff member will be moving to or what they will be doing next?

A. Only OK if the staff member agrees to the communication

B. It’s always OK. The role is being vacated, the employee is leaving and the staff have a right to know.

C. It’s never OK and the staff will find out soon enough when the job is advertised.

Click here to find the answer

Q 11. Work emails. Can you monitor any information on your company’s computer system i.e. Information accessed and saved on your employee’s desk top?

A. No that is an invasion of your employee’s privacy.

B. You can only monitor work related information.

C. You can only monitor information on an employee’s computer if an alarm alerts you to pornography or inappropriate material being accessed

D. It is your system and you can monitor and access any information stored or accessed on an employee’s desktop, laptop, or other device

Click here to find the answer

 

Q 12. Which answer applies to information gathered from an employee during a workplace investigation e.g. Health & Safety, Bullying:

A. The employee can withdraw their statement at any time through the process

B. The employee cannot withdraw their statement once communicated

C. The employee can correct the information provided if it is recorded inaccurately

D. The employee cannot refuse to participate in an investigation process

Click here to find the answer

Employment Agreements Require Updates Now

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We encourage you to update your employment agreements immediately as last years amendments to the Employment Relations Act are due to come into force for existing employees very soon. The new requirements, which relate to working hours, cancellation of shifts and restrictions on secondary employment, will apply from 1 April, 2017. The wording of some clauses in your current employment agreements may become ineffective from this date.

Below is a summary of the changes or please contact us if you would like assistance with reviewing your employment agreements.

Zero Hours Contract

There are a number of changes to the Employment Relations Act, which address zero hour contracts, cancelling shifts, making deductions from employee pay, and prohibitions on secondary employment. Below is an article from the Ministry of Business, Innovation and Employment which summarises the changes.

It is likely existing Employment Agreements will require updating to reflect these changes, particularly if you have Agreements with no minimum number of hours guaranteed. Please let us know if you would like your Agreements reviewed or having any questions on how these changes affect your workplace.
 

Addressing zero-hour contracts

The Employment Standards Legislation Bill includes a package of measures to prevent unfair employment practices in the New Zealand labour market, such as “zero-hour contracts”.

The changes aim to retain flexibility where it is desired by both, employers and employees, but also increase certainty by ensuring that both parties are aware at the beginning of the working relationship of the mutual commitment that they have made.

The changes mean that where the employer and employee agree to hours of work, they will be required to state those hours of work in the employment agreement.

The changes also prohibit the following practices:

  • employers requiring employees to be available to work for more than the agreed hours without having a genuine reasons based on reasonable grounds
  • employers requiring employees to be available to work for more than the agreed hours without paying reasonable compensation for the number of hours the employee is required to be available
  • employers cancelling a shift without the provision for reasonable notice or reasonable compensation
  • employers putting unreasonable restrictions on secondary employment of employees
  • employers making unreasonable deductions from employees’ wages.

When hours are agreed, these must be stated in the employment agreement

Where the employer and employee agree to set hours of work, they will be required to state those hours in the employment agreement. This includes agreement on any or all of the following:

  • the number of guaranteed hours of work,
  • the start and finish times,
  • the days of the week the employee will work
  • any flexibility in the above.

What if there are no agreed hours?

The employer and the employee do not have to agree on hours, times or days, but when they do, anything that is agreed must be recorded in the agreement. This will ensure employers and employees are clear in their commitments to each other.

In cases where no hours were agreed to, the employer must provide an indication of the arrangements relating to the employee’s working times. This is consistent with the current law.

Employees will be able to apply to the Employment Relations Authority for a penalty against their employer, if they agreed on hours, but have failed to record these in the employment agreement.

Preventing employers requiring employees to be available without a genuine reason based on reasonable grounds and providing reasonable compensation

The changes will prohibit employers from requiring employees to be available above the agreed hours of work stated in their employment agreement unless employees are reasonably compensated for that availability as agreed in the employment agreement. Employers will not be obliged to offer work that is above the agreed number of hours. Employees will be free to decline extra work unless they agreed to an availability provision and they are provided reasonable compensation for that availability.

What about availability provisions?

Availability requirements and compensation rates will need to be agreed and stated in the employment agreement. An employer can not include an availability provision in the employment agreement, unless there are some guaranteed hours in the agreement.

The employment agreement should also indicate the amount of availability the employer requests.

Employers will also need to have a genuine reason based on reasonable grounds to require employees to be available above the agreed hours. Employers also need to have a genuine reason based on reasonable grounds for the number of hours of availability.

When considering whether there is a genuine reason based on reasonable grounds, employers must consider:

  • Whether it is practicable for them to meet their business demands without using an availability provision
  • How much availability they’re requiring and the proportion of the availability to the number of agreed hours of work

What is considered reasonable compensation for availability?

When establishing what compensation an employer offers to an employee in exchange for their availability, employers must consider:

  • The number of hours they are requiring an employee to be available
  • The proportion of the availability to the number of guaranteed hours
  • Any specific restrictions the availability provision requires (e.g. must not drink while on call)
  • The employee’s regular pay rates
  • If the employee is paid by salary, the amount of the salary

Cancelling a shift only with reasonable notice or reasonable compensation

Reasonable notice and reasonable compensation for cancelling a shift will need to be specified in the employment agreement. When a shift is cancelled, the employer will need to give either reasonable notice or reasonable compensation before the commencement of the shift. If the employment agreement does not specify these, then the employee must be paid the full amount they would have earned, had they worked the shift.

What is a reasonable notice period?

When considering whether the notice period is reasonable, employers must consider:

  • The particular nature of business
  • The ability of the employer to control or foresee cancellations
  • The nature of the employee’s work and the likely effects of a cancellation on employees
  • The nature of the employee’s employment arrangements including whether they have guaranteed hours and if so, the number of guaranteed hours

What is considered reasonable compensation for shift cancellation?

When considering whether the compensation is reasonable, parties must consider:

  • the length of the notice period stated in the employment agreement
  • the remuneration the employee would have received for working the shift
  • likely costs incurred by the employee in preparation for the work

Prohibiting unreasonable restrictions on secondary employment

Employers will be prevented from restricting secondary employment for employees, unless they have a genuine reason based on reasonable grounds to do so. Those grounds won’t be prescribed but will be related to:

  • the risk of loss to the employer of knowledge, property (including intellectual property) or competitive reputation.
  • Preventing a real and unmanageable conflict of interest

Employers must not restrict employees to a greater extent than is necessary. They should consider whether particular cases warrant restrictions instead of putting blanket restrictions on secondary employment.

Prohibiting unreasonable deductions from employees’ wages

The current law already requires employee consent to deductions from wages. The new legislation will mean the employer must consult with the employee on each specific deduction, even where the employee has given general consent to lawful deductions in their employment agreement. This obligation does not extend to lawful deductions for things like Kiwisaver or student loan repayments etc.

The changes will also mean that even where there is consent, a deduction must not be unreasonable. For example a deduction to cover losses caused by a third party through breakages or theft may be unreasonable, particularly if the employee had no control over the third party conduct.

Payroll – End of Year & Start of New Year

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Employer monthly schedules and ir-files filed with IRD are based on the payment date of the pay run (not the pay period end date). After you have finalised the last pay for March and printed your end of year reports (make sure this includes leave liabilities/balances), go ahead and file your ir-file with IRD as usual.

The next step is to review and update your employees’ salary and wage information. Ensure all employees on minimum wage have their rates updated to the new minimum wage of $15.75. The new rate needs to be applied from 1 April. If 1 April falls in the middle of a pay period, you can either pay different rates by inserting an extra line with the different rate, or apply the new minimum rate for the whole pay period.

If you have contractors using the WT tax rates on schedular payments (including those hired by labour-hire firms), they are from 1 April able to choose their own tax rate, subject to minimums. New contractors, existing contractors (if they need to change tax rate or starting a new contract) and those opting in to the schedular payments rules need to complete the IR330C Tax Rate notification for Contractors form.

ACC levies, ACC threshold and student loan repayment threshold are automatically updated if you are using payroll software.

Want to read more?

Tax and Contractors

IRD Contractor Changes 

 

Migrant Worker Exploitation Cases Becoming More Prevalent

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A migrant worker who was forced to pay her employer a premium to secure herself a job has been awarded $42,813 by the Employment Relations Authority.

Kapilaben Patel was employed as a chef by Curry Pot on Lincoln Ltd for three years from 2011 until mid- 2014.

The ERA found that Patel and her husband had made payments of around $15,000 in return for a job offer with Curry Pot Indian restaurant in Lincoln and assistance and support with a work visa and a residency application. Evidence showed that $5,000 was paid to the Curry Pot Indian restaurant four months before Patel started working there and 11 days before an employment agreement was signed and submitted to Immigration New Zealand.  Patel stated she also paid the directors of the restaurant cash payments.

Patel was awarded $31,413 for unpaid wages, working on public holidays and holiday pay from 2011 until 2014 plus $11,400 in reimbursement for the premium paid to secure her employment.

The company accepted there may be some statutory holiday pay owing to Mrs Patel but disputed all the other amounts claimed. They claimed she did not work all the hours claimed or that she paid them premiums.

“Advances may have been made from Mrs Patel to staff at Curry Pot but these, aside from one payment of $5,000 into the Curry Pot account, were personal in nature and not premium payments and they have nothing to do with Curry Pot” it said.

Minimum Wage Increase from 1 April

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

Cafe Deducted Pay for Breaks Worker Was Never Allowed to Take

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Natalie Cornelius was employed as a crew member in a café in Napier. She became concerned by her employer’s practice of deducting 30 minutes wages from her pay each day. This was allegedly to cover breaks which she is adamant she was never allowed to take.

Ms Cornelius tried to raise her concerns in writing and verbally however she says her employer inevitably reacted in a rude and belligerent manner and failed to address her concerns. Things got to a point where Ms Cornelius felt she had no choice but to resign.

Ms Cornelius subsequently raised a claim of unjustified dismissal, albeit constructively, by her employer, HPG Private Ltd (HPG). The claim was heard in the Employment Relations Authority in May 2016 where Authority Member Loftus agreed with Ms Cornelius that she had been constructively dismissed and awarded her the sum of $4,000 as compensation for hurt and humiliation.

In regards to the 30 minute deductions from Ms Cornelius’s pay each day for her breaks that she said were not taken, Member Loftus accepted Ms Cornelius’s calculations and awarded her $2,080. In all Ms Cornelius was awarded a total of nearly $12,000 for lost wages, inappropriate pay deductions, hurt and humiliation, plus costs.

Under recent changes to the Employment Relations Act, the duration and time of breaks is no longer strictly regulated. In the past, stringent rules governed how long rest and meal breaks had to be, and when they had to be given. For example, one 10-minute paid rest break during a work period of between 2 hours and 4 hours; one 10-minute paid rest break and one 30-minute meal break (unpaid unless agreed otherwise) during a work period of between 4 hours and 6 hours and so on. Now there are no specific rules for how long, or when, rest and meal breaks should be.

Employers and employees should bargain in good faith over the timing and length of breaks. All employers are required to provide employees with rest and meal breaks which give employees a reasonable chance during their work period to rest, refresh and take care of personal matters.

Under this legislation, some employers may be exempt from giving breaks. For example when employees agree to reasonable compensation in exchange for breaks, or where the employer cannot reasonably give the employee rest and meal breaks because the workplace environment or position make it impractical (for example, emergency medical staff, a sole charge customer service position, etc). However, the employer will always be required to compensate the employee if this situation arises. Compensation could be alternative time off equivalent to the missed break (i.e. finishing 15 minutes earlier but being paid until the end of the shift), or extra remuneration.

Could your Volunteer or Woofer be an Employee?

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Did you know, that anyone working in return for food and accommodation is likely to be an employee? This means they are entitled to the same minimum employment rights as a paid employee and you need to register as an Employer, file Employer forms with IRD and pay PAYE, check they are allowed to work in New Zealand, keep time and wage records and enroll them in KiwiSaver if they are eligible. You need to make sure they receive minimum entitlement including that the value of what they are getting is not less than minimum wage, and pay sick leave and accrue holiday pay! If you do not deduct PAYE, you still need to calculate the amount of PAYE on the market value of accommodation etc provided and pay it to IRD.

This is not an exhaustive check list, please contact us if you need further information or have any queries.