Tag Archive for: Chapman ER

Minimum Wage Increase is Just the Beginning

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This article was published on the 2nd November by Chapman ER and sets out some of the employment related financial issues employers are going to face under the new Labour Government.

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The minimum wage is increasing. It already feels like old news, particularly in view of the stream of new government announcements. However, that is just the start of measures likely to increase wage costs. The Labour led government has also stated they will change the Equal Pay Bill the previous National government had proposed to prevent a case similar to the $2b aged care workers’ settlement. They are also introducing ‘Fair Pay Agreements’ which will set out minimum employment conditions across industries and sectors for terms such as wages, allowances, weekend and night rates, hours of work and leave arrangements. It sounds like reverting to old Award days to me.

If you are already gulping for air and deciding you will only engage contractors, be aware of the fish hooks of that approach. Within the first 12 months in government Labour has set out to extend the right to bargain collectively to contractors who primarily sell their labour, and investigate measures to improve job security for people in ‘precarious forms of employment’ which includes contracted and sub-contracted workers.

If you are now thinking you will engage youth workers as a more affordable option, there is no respite there. The Labour manifesto states they intend to abolish youth rates within 12 months.

To recap briefly on the minimum wage – it will increase to $16.50 from 1 April 2018. That’s a 4.8% increase.

In the Coalition Agreement it has also been stated that the minimum wage will increase to $20 per hour on 1 April 2021, with incremental steps in between. That is a 27% increase over 4 years. For a full time employee on minimum wage that is an annual salary of $41,600.

What does this mean for employers? To state the obvious, it will increase costs. For employers with proportionally more employees at or near the minimum wage level, that increase in cost will be proportionately higher. Industries that traditionally pay in the lower pay brackets are accommodation & food, wholesale & retail trade, and healthcare & social assistance. (Data source: Treasury)

If you currently have a wage differential between positions, for example a junior line operator, a senior line operator and a supervisor, your employees will want to maintain the differential. As such it is not only minimum wage earners who will expect a significant wage increase.

Unfortunately increasing minimum wage does nothing to improve productivity. I have yet to see employees working harder or smarter as a result of a pay increase. So you are not going to get better outputs as a result.

Some of the key options are:

  1. Absorb the increased costs by accepting lower profits (or in many cases operate at a loss).  One impact of lower profits is a reduction in investment in capital (as return on capital is reduced).
  2. Reduce costs. As labour costs have increased, reducing staff may be the necessary answer, particularly if wages is a high percentage of costs.
  3. Pass on the higher wage cost to customers through increased prices.
  4. Implement productivity improvements (e.g. technology, systems) so you can reduce employee numbers, and/or improve profit margins.
  5. Explore the possibility of changing to a high wage, high value business model.
  6. Sell up, leave the country or hide under a rock for the next three years.

It is important employers start to consider the impacts on their organisation now, and plan for it in advance. Increasing prices incrementally is often more palatable to customers than one large increase. Putting in place plans to increase productivity needs to happen before the business is in trouble. If you need to restructure your staffing this takes time, and again is better done before the business is in distress. Just keep in mind Labour has also stated they want to begin consultation on improving minimum redundancy protection for employees.

And the changes keep on coming.

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

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.

Chapman ER courses we can recommend

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The Ultimate Team Leader

This workshop is our most popular and develops your team leaders and supervisors in areas that enable them to be better than average; they can become the ultimate team leader.

Date:  Wednesday 15 June 2016
Venue: Chapman Employment Relations, 56 Waimea Road, Nelson
Time: 9am – 12.30pm
Cost: $265 + GST (discounts apply for more than one delegate)
Enquiries: please email katrina@chapmaner.co.nz or call 03 545 0877

 

Successful People Management 

This series of 6 x 2hr sessions have been specially developed for people who want to learn the principles of effective and successful people management.  The series provides an opportunity for short but regular training, which can improve learning for busy leaders and managers.

In this series you will develop skills for effect communication, ways to manage difficult people, the disciplinary process as well as strategies to approach and prevent bullying in the workplace. There is also a 2hr session on Health & Safety to ensure you are meeting your minimum legal obligations in this area.

6 x 2hr Sessions, 2.30pm – 4.30pm at Chapman Employment Relations, 56 Waimea Road, Nelson

Session 1: August 10
Session 2: August 24
Session 3: September 7
Session 4: September 21
Session 5: October 12
Session 6: October 26

Cost: $795 + GST (early bird special – register before 1 June) Post early bird $845 + GST
Enquiries: please email katrina@chapmaner.co.nz or call 03 545 0877

 

Performance management vs disciplinary issues

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You are aware of an issue with an employee but are unsure how to deal with it – is it a performance issue or a disciplinary issue? Does it even matter?

Yes, it matters. There are two distinct processes – one for managing poor performance and one for dealing with bad behaviour – and it is important to start off down the right path.

A gym manager who lost his job after returning from holiday to find several complaints had been made against him has been awarded $6,000 compensation for unjustified dismissal.

The Employment Relations Authority (ERA) found his employer, Snap Fitness, was unfair in firing Mathew Milne as the complaints made were about performance, rather than serious misconduct.

Eight allegations against Mr Milne were raised, among them that Mr Milne had been rude to customers, to have failed to take seriously a number of complaints made about the safety of the gym and he was accused by another trainer of taking four hour lunch breaks. On this count the ERA found no basis for the allegation, noting the trainer who made the complaint “clearly did not get on” with Mr Milne.

Korey Gibson, Mr Milne’s boss, said in a letter to Mr Milne, “as a manager there is a high level of trust and confidence that is required: my trust and confidence in you to remain in the role has been seriously eroded.” Mr Gibson summarily dismissed Mr Milne for serious misconduct.

The ERA found that, with one possible exception, the accusations were “matters of performance, not matters of serious misconduct.”

Mr Milne was a young and inexperienced manager in a sole charge position. The ERA said Snap Fitness were unfair to Mr Milne and warnings or further training would have been the appropriate course of action rather than dismissal.

It is an employer’s obligation to try to resolve problems in good faith. In cases of poor performance, good faith means giving an employee a real opportunity to improve their performance and assisting them to do so. In cases of misconduct this means conducting a fair and full investigation and giving the employee the opportunity to be heard.

Your actual treatment of any given situation will depend upon the specific circumstances, your Code of Conduct and policies and procedures, and past practice. If you are in any doubt, specific employment advice should be sought. Early clarification can save significant cost down the line.

Chapman Employment Relations provides employment law and HR advice exclusively to employers.

Any questions regarding this column can be e-mailed to christine@chapmaner.co.nz