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Edition 5 | September 2019
Building business confidence through Employment Law insight
EmploymentNews
Welcome to Anderson Lloyd’s spring edition of the
Employment Newsletter. It still seems too early
to predict the effect of the recent changes to the
Employment Relations Act. However, we are finding
increasingly that we are advising clients about their
obligations for the first 30 days after an Individual
Employment Agreement has been entered into.
Section 62 was enacted on 6 May this the terms of the Individual Employment has had its first reading. This Bill will
year and applies to a new employee who Agreement would need to be agreed make it clear that the unplanned death
enters into an Individual Employment with the employee rather than of a foetus constitutes grounds for
Agreement with an employer that is also unilaterally imposed. bereavement leave for the mother and
a party to a Collective Agreement which her partner or spouse.
We are also increasingly advising clients
covers the work the employee performs.
about availability provisions and what, in WorkSafe have established a Data Centre
For the first 30 days the new employee
fact, constitutes work. which provides the latest WorkSafe data
is subject to the terms and conditions in
relating to various industries including
the Collective Agreement plus additional The Employment Relations (Triangular
fatalities and injuries. Click here to visit
agreed terms that are no less favourable. Employment) Amendment Act 2019
the website. In addition, WorkSafe has
is scheduled to be enacted sometime
One of the significant issues is what published a good practice guideline for
before June 27 next year. This legislation
terms and conditions you include in PCBUs working together entitled ‘Advice
allows an employer on the receiving end
the Individual Employment Agreement When Contracting’. This details PCBUs
of a personal grievance to join other
when presenting it. Inevitably the duties in contracting situations.
businesses which exercise control over
employee will compare terms of the
the employee. The Amendment Act Happy reading and happy spring.
Individual Employment Agreement
will also allow an employee to notify a
with the Collective. If the terms are
grievance against a business other than
less favourable than the Collective, the
their employer. Rachel’s article below
employee may consider joining the
provides more detail.
Union. However the terms also need to
be carefully considered in the event that The review of the Holidays Act is still
the employee does not choose to join ongoing. It will be interesting to see what
the Union after the first 30 days and is amendments to the legislation flow from
bound by the Individual Employment that review. The Holidays (Bereavement John Farrow
Agreement. At that time, any variation to Leave for Miscarriage) Amendment Bill Partner
.1
Employment News Employment News
Edition 5 | September 2019 Edition 5 | September 2019
Employment On 27 June 2019, 11 years after the bill was first introduced to Parliament, the
Relations
Employment Relations (Triangular Employment) Amendment Act (the Act)
received Royal Assent. The Act amends the Employment Relations Act 2000
and comes into force on 27 June 2020, or earlier if a date is appointed by the
(Triangular Employment) Amendment Act 2019 Governor General.
Background to the bill a) has a contract or other arrangement If the Triangular Employee is successful
with an employer where one of its in its personal grievance, remedies may
The Act aims to provide more robust employees performs work for the be awarded against the controlling third
Employees in
protection to employees in triangular benefit of that person; and party and the employer. Remedies will
employment relationships. It reflects be apportioned between the employer
New Zealand’s changing employment b) exercises, or is entitled to exercise,
and the controlling third party to
control over the employee in a way
triangular
environment, which has experienced a the extent that each party’s actions
growing number of employees entering that resembles the control that the
contributed to the grievance, and may
into triangular arrangements. employer has over the employee.
include reimbursement for lost wages,
employment
A triangular employment arrangement The definition clarifies who is captured and/or compensation under s 123 of the
typically arises where an employee under the Act as a controlling third party Employment Relations Act 2000.
is employed by one company or and indicates that Parliament will no
relationships
organisation, such as a hire or longer allow controlling third parties Implications for employers
recruitment company, but works under to avoid liability by hiding behind the
The Act represents an increase of liability
the control or direction of a third party employee’s primary employer.
for those employers who regularly
are afforded new
(Triangular Employees). Currently enter into labour hire arrangements
Triangular Employees cannot easily Personal grievances
with recruitment agencies, or take
claim a personal grievance against the The most significant change introduced on employees on secondment. While
protections under
controlling third party, which can result by the Act is the framework under employers are always encouraged to
in unfair employment practices and which Triangular Employees can raise engage in sound employment practices,
the deprivation of certain employment a personal grievance against the employers should be aware of their
rights. While an application can be made
new employment
controlling third party. enhanced obligations under the Act and
to the Employment Relations Authority the resulting increased accountability.
The Triangular Employee must first
for a determination that an employment
raise a personal grievance against
relationship exists between the
legislation.
its primary employer in accordance
employee and the controlling third party,
with current employment legislation
this can be a complex process. The
requirements. The Triangular Employee,
Act’s amendments simplify the personal
or the primary employer, can then apply
grievance process and increase access Rachel Pfahlert
to the Authority or the court to join the
to justice for Triangular Employees. Solicitor
controlling third party to the grievance
claim. An application will be granted
Amendments to the where two requirements can be satisfied:
Employment Relations a) the controlling third party has been
Act 2000 accurately notified of the personal
There are two key changes that the Act grievance claim; and
introduces to the Employment Relations b) an argument is made out that the
Act 2000: the definition of a controlling third party is a controlling third party,
third party, and expanding the definition as defined by the Act, and its actions
of a personal grievance to allow Triangular have caused or contributed to the
Employee’s to join controlling third parties personal grievance.
to a personal grievance claim.
Interestingly, the Act gives the
Definition of controlling third party Authority or Court the discretion to join
a controlling third party to a personal
The Act introduces the definition and grievance claim at any stage of a
interpretation of a controlling third party, proceeding, without any application.
being a person who:
.3
Employment News
Edition 5 | September 2019
Restructuring generally
A brief overview of the restructuring process is as follows: need to be taken to ensure these vulnerable employees are
able to engage in the process in a way that is equal to other
1. The employer creates a restructuring proposal setting out employees.
the proposed changes, the business reasons behind these
proposed changes, and the evidence to support these “Active consultation” will differ depending on the reasons for
reasons; the restructuring, however there are a few key things to keep
in mind.
2. Affected employees (including those who are indirectly
affected) are presented with the proposal and invited to
attend a meeting and/or to submit about the proposal; Provide them with the necessary information
When an employee is on parental leave they may not be
3. Affected employees then have a reasonable period of privy to the state of the business in the same way that
time to consider the proposal, seek advice, and provide the employees actively engaged in work are likely to be.
feedback to the employer about the proposal; Due to this lack of day to day contact with the business
they may need to be given additional information so
4. The employer genuinely considers all feedback provided by they have a full understanding of the alleged need for
employees; their role to be made redundant. Care should be taken
to provide the employee with holistic and up to date
information.
5. The employer makes a decision about whether they will go
Redundancy
ahead with the restructuring proposal;
Give enough time to provide feedback
6. The employer notifies employees of their decision. Employees on parental leave are more likely to need to
and parental
request further information as they won’t necessarily
have an up to date understanding of the current state
Failure to follow these steps is a failure to follow fair process of the business. They also are likely to have a limited
leave – mutually
and can leave employers vulnerable to personal grievances. ability to speak with other staff members and seek
When these types of personal grievances are successful, independent advice. Therefore they may need to be
employers are often ordered to heavily compensate the given extra time to consider the proposal and provide
exclusive?
employee and in some cases reinstate them to their previous their feedback.
position.
Rights of employees affected by
restructuring when on parental leave Considering or affected by a restructure?
Can someone be made Sometimes the needs of a business change and therefore
restructuring must occur. This restructuring often includes
Persons on parental leave should be afforded the same rights
as all other employees affected by restructuring. They should
Restructuring a business can be difficult at a procedural and
at a relationship level. To ensure an appropriate and legitimate
redundant when they are on making roles redundant. be given a real opportunity to be actively involved in the outcome it is important employers follow a fair process,
parental leave? This article
restructuring consultation process and employers must take particularly where affected employees are not present in the
In accordance with the Parental Leave and Employment
extra precautions to ensure this happens. workplace due to parental leave. Whether you are an employer
Protection Act 1987, employers cannot terminate the
looks at when this can occur, employment of any employee during their absence on The leading case in this area - Lewis v Greene [2004] 2 ERNZ
or an employee, our experienced team is well placed to help
you avoid pitfalls and assist you throughout the process.
parental leave, or during the 26 weeks beginning with the day
the obligations of employers,
55 – states at [121]:
after the date on which any period of parental leave ends.
and what is considered fair However a legislated exception to this is where there is a “… an employer who is contemplating the redundancy
legitimate redundancy situation. of an employee on parental leave is bound to take extra
process during restructuring While it is legally possible to terminate an employee’s
precautions to ensure that she has an opportunity to
be actively involved in the consultation process in a
when an employee is on employment by making their role redundant while they are on
parental leave, employers need to take a cautious approach
meaningful way that is at least equal to that of the Siobhán McArthur
Solicitor
employees who remain at work.”
parental leave. and be vigilant to ensure they follow fair process. Due to
parental leave legislation and New Zealand’s international The rationale goes back to the old adage “out of sight, out of
obligations, there is a higher standard on employers to mind”. When an employee is not present in the workplace it
ensure both procedural fairness and genuine reasons for the is much easier to fail to actively consult with them and to take
restructuring where the employee is on parental leave (as their feedback into account. By nature of not being present
compared to the employee not being on parental leave). they are more vulnerable and therefore there is an increased
obligation on the employer to actively consult. Extra measures
.4 .5
Employment News Employment News
Edition 5 | September 2019 Edition 5 | September 2019
Calculating payment
Employees are entitled to be paid for date a sale and purchase agreement was This was consistent with the purpose
Other Leave at a rate of either “relevant declared unconditional (this could be on of the Act which is to ensure that
daily pay” (RDP) or “average daily pay” a day on which a defendant took Other an employee is paid fairly and is not
for public holidays,
(ADP). Leave). Because of the commission financially disadvantaged. The Court also
payments, the defendants’ daily pay noted that an employer might need to
RDP means “the amount of pay that the varied within each pay period. change between paying ADP and RDP as
sick leave, bereavement
employee would have received had the employment circumstances change.
employee worked on the day concerned”: If Other Leave was calculated as RDP,
section 9 of the Holidays Act 2003 the defendants would receive a sum It must be noted of course that if an
leave and domestic
(the Act). RDP includes productivity or equivalent to the daily portion of their employment agreement contains a more
incentive-based payments (including base salary (annual base salary, divided favourable calculation for calculating
commission) and payments for overtime, by 52 weeks, divided by 40 hours Other Leave than the Act, then the
violence leave.
if those payments would have otherwise per week x 8 hours per day), plus any employment agreement must prevail.
been received had the employee worked commission payment that would have
on the day concerned1. been received had they worked that These provisions are tricky and are
day (i.e. any commission that accrued subject to the review of the Holidays
ADP is calculated by dividing (a) the on the day of the Other Leave due to a Act Taskforce. Please contact us if you
employee’s gross earnings for the sale and purchase agreement becoming require advice on your specific situation.
preceding 52 calendar weeks by (b) unconditional on that day).
The Employment Court has recently the number of days during which the
employee earned those gross earnings If Other Leave was calculated as ADP,
clarified how employers should calculate (i.e. the total number of days worked, the employee would receive an average
paid holidays and paid other leave): of their annual gross income including
an employee’s remuneration for public section 9A of the Act. the base salary plus commission paid in
the preceding 52 years. There was also
holidays, alternative holidays, sick
Sarah McClean
a possibility of double counting as the Associate
Section 9A of the Act states that:
leave, bereavement leave and domestic (1) An employer may use an employee’s
ADP calculation resulted in defendants
receiving a portion of the commission
violence leave (Other Leave).
[ADP] for the purposes of calculating payments in their average pay, as well as
payment for [Other Leave] if: any commission payment that accrued
(a) it is not possible or practicable on the day of the Other Leave.
to determine an employee’s RDP
Historically the defendants had been
under section 9(1); or
paid ADP for Other Leave. Upon a
(b) the employee’s daily pay varies change in management, the correctness
within the pay period when the of this was questioned and GD began
holiday or leave falls. paying employees RDP for Other
Leave. Because of the understandable
A Full Court in GD (Tauranga) Ltd v Price controversy this caused, GD made an
& Others2 was asked to consider whether application to the Employment Relations
an employer had to calculate other leave Authority for a ruling on which rate of
at the rate of ADP when an employee’s pay was correct. The case was removed
daily pay varied within the pay period to the Employment Court and heard by
when the Other Leave was taken, even the Full Court as a test case.
though it was possible and practicable to
The defendants argued that as their daily
determine RDP. In other words, the Court
pay varied, GD had to pay Other Leave
was asked to consider whether “may”
at the rate of ADP, even though it was
should be read as “must”.
possible and practicable to pay RDP.
GD Tauranga Limited (GD) was a
The Full Court rejected this argument 1 It also includes the cash value of any board
building company selling house and land or lodgings provided to the employee but
and held that there was no basis to read
packages under the Generation Home it excludes any payment of any employer
“may” as “must”, as the defendants contribution to any superannuation scheme
brand. The defendants were employed
had contended. If it is possible or for the benefit of the employee.
as sales consultants. The defendants An employment agreement may also specify
practicable to calculate RDP, even when
were paid a base salary equivalent to a special rate of calculating RDP if it is more
an employee’s daily pay varies, then
the minimum wage based on 40 hours generous than the entitlement otherwise
an employer retains a discretion as to calculated under section 9.
per week. The defendants were also
whether it pays Other Leave as ADP or
paid commission which accrued on the 2 GD (Tauranga) Ltd v Price & Ors [2019]
RDP. NZEmpC 101, 19 August 2019.
.7
Employment News Employment News
Edition 5 | September 2019 Edition 5 | September 2019
Fixing your fixed Premiums paid
term agreements for employment
The law requires that employment may only be “fixed The Wages Protection Act wished to sell her interest in the client in the client register. There was no
prohibits an employer from register for a purchase price equal to the ongoing benefit to Ms Kazemi once
term” if the employer has genuine reasons based lower of the client register value and the her employment ended and she was
receiving payments to effectively
on reasonable grounds for specifying why the term secure employment. These
initial buy-in price. constrained by the provisions of the
employment agreement from working
is fixed. The recent Employment Court decision of payments are called ‘premiums’. The guaranteed value of Ms Kazemi’s with the clients including in the client
Morgan v Tranzit Coachlines has shed light on what is The decision of Kazemi v RightWay
client register reduced over the course of register. The Court found that, in
James Cowan Jessica Frame her first year’s employment. essence, Ms Kazemi paid $125,000.00
a genuine reason for employment being fixed term. Senior Solicitor Senior Solicitor
Limited dealt with an argument that Ms
to obtain the right to receive monetary
Kazemi had paid a premium in respect Ms Kazemi claimed that the buy-in fee
reward for her work. Everything she
of her employment. The Court described was a premium, contrary to the Wages
received was as a result of her efforts as
the arrangement at issue as ‘unlike any Protection Act. Section 12A of the Wages
an employee.
other it had previously considered’. Protection Act provides that ‘no employer
What happened in Tranzit What does this mean shall seek or receive any premium in While the Court described this
Ms Kazemi was employed as a Regional
Coachlines? for you? Partner with RightWay Limited. Prior to
respect of the employment of any person’. arrangement as ‘unlike any that it
had previously considered’, it is not
In Morgan v Tranzit Coachlines, Mr (c) There was no evidence before Employers need to properly turn their starting with RightWay she paid $125,000 The Court found that the responsibilities
uncommon for employers with limited
Morgan was employed for over 18 years the Court as to Tranzit’s financial minds to the reasons why they are (the buy-in fee) to join RightWay’s described in the position description for
funds to look at alternative fund-raising
on a series of fixed-term employment circumstances, the value of the bus making an agreement fixed term rather Regional Partner Programme. employment were intertwined with the
methods. These may include the use of
agreements. Mr Morgan’s employment driving funding agreement to it, or than permanent. Some ‘red flags’ to look expectations to build a client register.
Ms Kazemi signed an Employment employees’ funds. This case certainly
agreements asserted the reason for them the potential losses it would suffer if out for in light of Tranzit Coachlines:
Agreement, the Deed Poll and the Ms Kazemi subsequently resigned from signals that where an employer in any
being fixed-term was because of Tranzit’s it lost that contract.
(a) Do you have fixed-term agreements Deed of Adherence. She incorporated her employment. During her notice way links an employee’s investment to
school bus driving contract with the
(d) The redundancy provisions in the that have been renewed (or extended) a company which she understood was period she attended to the handover that employee’s employment, it is at risk
Ministry of Education. The bus driving
agreement undermined Tranzit’s multiple times? required by the Deed. of her work, including her client list, of that investment being found to be a
funding agreement expired on the last
reasons as it dealt with the exact which she did professionally. She did premium.
day of the year – along with Mr Morgan’s (b) Is your reason for making an
situation of the company losing the The Programme that Ms Kazemi not receive any payment for her client
employment – both just happened to agreement for a fixed term because
bus driving funding agreement. bought into was intended to enable register or repayment of her buy-in fee.
be renewed consistently over an 18 year of financial uncertainty?
accountants to develop a base of clients In her proceedings before the Court
period. (e) Mr Morgan’s work was not directed
(c) Do you have fixed-term agreements which became their client register and, she claimed that her buy-in fee was a
at only a specific project of an
Tranzit’s position was that the funding with no supporting evidence for the according to RightWay, created a joint premium and she should recover that
anticipated limited duration.
agreement (and the revenue it reason why they are fixed? property right. amount from her employer as a debt due.
guaranteed the business) was uncertain. (f) The Employment Court also set out John Farrow
(d) Can you point to a specific end- When Ms Kazemi started at RightWay Partner
It said the risk of the loss of funding two basic principles on determining The Court found that the employment
date that is properly linked to your there were no clients in her client
meant it could not be sure it could whether fixed-term agreements had agreement expressly provided that
genuine reason? register except for one firm that she had
permanently employ Mr Morgan. been entered into for genuine reasons the employment was subject to prior
The Employment Court did not agree (e) Do any of your fixed-term employees previously worked with. placement of the buy-in fee and therefore
based on reasonable grounds:
that was a genuine reason based on complete work tasks unrelated to that her employment was conditional
• It is relevant to consider whether The employment agreement referenced
reasonable grounds. Why? the reason why their employment is on her paying the buy-in fee. RightWay
the stated ‘genuine reasons’ were the buy-in fee and contained a non-
fixed-term? argued that Ms Kazemi benefited from
(a) “Financial uncertainty” in and of itself sincerely held and were for a proper solicitation clause. It prohibited
the payment by obtaining a share of
cannot suffice as a genuine reason purpose. (f) Is there anything speculative about involvement in any other business or
the revenue generated and the ability
based on reasonable grounds. the terminating event (what might employment that may compete with
• If another mechanism (e.g. a to grow the client register and sell or
cause it not to occur)? RightWay. It also included a restraint of
(b) Mr Morgan’s fixed-term employment permanent role) was reasonably transfer it for a capital gain.
trade clause.
agreements were following a “lengthy available to the employer there may (g) Has the reason for the fixed term
history of contractual stability”, and be an argument that fixed-term is changed since the employment The Court was required to decide
The Deed provided that if there was an
“the pattern of rollovers tends to inappropriate. agreement was entered into? whether these benefits were separate
early termination event, such as the
suggest that there has been little from the benefits of employment. It
If you have any questions about fixing end of the employment relationship,
(specific) financial uncertainty.” found that the commission payments
your fixed-term agreements, do not Ms Kazemi’s rights to the client register
The risk of the funding agreement were simply another element of Ms
hesitate to get in touch. would be suspended indefinitely and
not renewing was “speculative”. Kazemi’s reward for work and that
she would be taken to have given an
she had no legal proprietary interest
irrevocable transfer notice that she
.8 .9
Employment News
Edition 5 | September 2019
Our Employment and
Health & Safety team
John Farrow
Anderson Lloyd has Partner, Dunedin
nationally recognised
p: 03 467 7165
john.farrow@al.nz
expertise in all areas of
employment and health
and safety law. We act for Fiona McMillan
large employers, small and Associate, Dunedin
medium-sized enterprises p: 03 471 5433
fiona.mcmillan@al.nz
and individual employees
covering the full spectrum
of legal issues. Frazer Barton
Partner, Dunedin
These include:
p: 03 467 7161
• drafting and reviewing employment agreements frazer.barton@al.nz
• collective bargaining
• redundancy
• disciplinary procedures
• representation in mediation and court appearances Malcolm Couling
Senior Associate, Dunedin
• restraints of trade and protection of confidential information
p: 03 471 5495
• employment implications of business sales and purchases malcolm.couling@al.nz
• development of employment policies
• compliance advice
• obligations of employers, workplace occupiers and the
operators of activities
Melissa Hammer
• health and safety plans, guidelines and statutory Senior Associate, Queenstown
requirements p: 03 450 0733
• health and safety investigations and prosecutions melissa.hammer@al.nz
We have represented clients in hundreds of accident
investigations, and in prosecutions for serious harm incidents,
often involving fatalities, across a range of industry sectors, Sarah McClean
including construction, agriculture, adventure tourism and Associate, Dunedin
mining. Our specialist lawyers appear in the Courts at all levels
p: 03 467 7164
and have been involved in some of New Zealand’s leading
sarah.mcclean@al.nz
health and safety cases.
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