It seems in recent years, we have, in a series of waves, realised how tricky the Holidays Act is to interpret and apply. We now know many employers, including many government departments, have historically got it quite wrong. In my practice now more than ever I am having to examine and assess holiday payments that might not have been right. In this post I want to explore one simple concept: holidays accrue by weeks.

The Holidays Act 2003 provides that after 12 months of continuous employment, an employee is entitled to 4 weeks annual leave. The Act goes on to provide that the employer and employee can agree on how that is assessed, based on the employee’s usual work pattern. When an employee takes leave, they are to be paid “at a rate that is based on” the greater of the employee’s ordinary weekly pay at the beginning of the holiday or average weekly pay in the 12 months before.

Many (all?!) payroll systems tend to account for annual leave on an hourly basis or sometimes at the rate of 8%. Often this figure is shown on payslips so employees know what their current ‘accrual’ is and can manage their leave entitlement around planned holidays etc. It is an approach which is usually convenient for both employees and employers, but also, almost always wrong.

Consider this particular scenario: an employee is employed on a part time basis working 20 hours per week over three days. At the end of one year, she has 80 hours of annual leave showing as accrued. Then, due to changes in the business, she takes on a full time role, working 40 hours a week over five days. Two months into the full time role, she wishes to take an extended holiday. How much leave does she have available to her?

I can tell you that her annual leave entitlement is much more than the 80 hours showing on the payslip. Her untaken annual leave entitlement is four weeks. The rate of pay for that leave is calculated at the time it is taken, based on her ordinary rate of pay at the start of the leave. She is entitled to take four weeks of annual leave at the rate she is paid for her 40 hour per week arrangement because she becomes entitled to annual leave by weeks, and rate of pay is calculated at the time of the holiday.

How does this play out in reverse? An employee has worked 40 hours per week over five days for 12 months and becomes entitled to four weeks annual leave. Then, in order to take up a course of study, he negotiates a part time arrangement whereby he works 20 hours per week over three days. In the lead up to exams, he wants to take annual leave to assist with his preparation. This employee’s leave is paid based on his average earnings in the preceding 12 month period - so if the leave is taken at the start of the part-time period, the rate of pay will be fairly close to his full time rate of pay. However, if it is taken say, 11 months into the part time period, it will be very close to his 20 hour rate of pay.

How then should an employer treat an employee who takes one day of annual leave? My suggestion is that it is incorrect to reduce the annual leave balance by a day or a number of hours. Rather the annual leave balance should be reduced by the portion of a week that the day represents for that employee - for a 5 day a week employee, that is 1/5th of a week, if the employee usually works six days a week, it is 1/6th. For a 3 day a week employee it is 1/3rd of a week. And the pay for that day should be “based on” - ie the same proportion of - the weekly pay or average pay for the week at the day on which the leave is taken.

For both employees and employers - beware the impact of moving from part to full time or vice versa. You may be able to prevent disappointments down the track by having a clear conversation at the time of the change.

Seems a long time ago that I blogged about the huge bulk of information that an employer might gather about an employee, and the issues that both parties need to be aware of in dealing with such information. I promised to write some more about what an employer could do with that information.

In my earlier blog, I used the example of a company vehicle with a GPS tracker, and data collected by the tracker outside of working hours which appeared to suggest the employee was spending inordinate time at a casino. What is an employer to do about that?

In an ideal situation, the employee’s use of the company car would have been initiated in accordance with some written policy that sets out the company’s expectations of the employee while using the vehicle, and deals with the fact of GPS tracking. It might contain a clause advising the employee of the use of GPS tracking devices, and explaining the reasons why the vehicle might be tracked (to ensure it is used lawfully, to monitor employee safety, to assist with accounting etc). A great policy would provide that the GPS may also record activities outside of working hours, and the employee would consent to that in return for the privilege of a vehicle.

In reality, that almost never happens. More often, the employer forms some suspicion and goes looking for the evidence to address it. Arguably, without consent from the employee, it would be unlawful for an employer to go looking for GPS data about the employee’s use of the vehicle outside of work without the employee’s consent. An employer would then be in the position of having to ask for the employee’s consent to access the information, or risk breaching the Privacy Act.

However, in an employment context, the parties have an obligation of good faith towards each other. This includes a duty on both sides to be “open, honest, responsive and communicative”. So, an employee might be obliged to consent to release of the information.

Let’s say the employer accesses the information, (and put the breach of the Privacy Act to one side). Assuming the employer wants to take action based on the information, it will be provided to disclose to the employee the information it holds. Whether or not that information can be taken into account depends on whether a fair and reasonable employer could use it in the circumstances. That it was obtained in breach of the Privacy Act might be a relevant circumstance, but it would not necessarily prevent use of the information.

Should the employer’s actions come to be reviewed by the Employment Relations Authority, then there is good reason to expect that the information will be considered by the Authority. This is because as an inquisitorial body, the Authority is not bound by the same strict rules of evidence as the Court.

So, employees should be aware that their employer may have a significant body of incriminating data that could be used against them if the occasion arises. Employers should be aware that although they might get away with using such information in a disciplinary context, they may also face consequences in the Privacy jurisdiction for doing so!

The best advice - look at your policies and review them if you think there might be a gap here!

The Privacy Act could be one of the most misunderstood statutes, quoted regularly by people from all walks of life, but frequently quite wrongly. Some, it seems, are reluctant to do anything for fear of Privacy Act consequences, while others have startlingly little appreciation of the limits it might impose on activities.

The Privacy Act starts with a presumption that information about you belongs to you. It deals with “personal information” which is “information about an identifiable individual”. It sets out, in 11 “information privacy principles” the general rules. They include that information about you should only be gathered for a lawful purpose, and it should be collected from you directly, or with your consent. Once gathered, it should be held securely, only for the purpose and as long as necessary, and you should be allowed to access it, or correct it if its wrong. The Act deals in detail with how these principles might be observed, and with a number of exceptions.

In the modern workplace, a huge body of “personal information” can be collected. An employee’s security tag can generate information about when they arrive at work, when they leave and which parts of the building the move to. It may also generate information about how much they print, or when they use company facilities or resources. An employee’s phone is capable of collecting information about how much time the employee spends on calls, emails, social media and other apps. It can register how much exercise the employee gets, where they travel to, where they stay the night, where they shop and who they spend time with.

Some of this information might also be ‘company information’ - information that an employer has some legitimate interest in - say when an employee accesses certain information on company databases, or where employees are during the day. However, it seems that modern technology now delivers the ability to discover information that was previously the employee’s private domain. How and when can an employer access that information?

The Privacy Act says information about employees (identifiable individuals) should only be collected with permission, and only used for the purpose for which it is collected. So, a good starting point is, does the employee know about the information that is being collected?

Take GPS trackers in company vehicles. Does the employee know that such devices are used? What is the employee told of the purpose of those devices? Does the employer have access to information about how the vehicles are used in the evening or the weekend? It is perfectly legitimate to collect that information if the employee consents to its collection for a known purpose. But, it is more challenging to use that information for some other purpose. Say, for example, the employer forms a suspicion that the employee has a gambling problem because the GPS shows the vehicle regularly parked in a casino carpark. Is that a legitimate use of the information? Not only that, but having collected information, the employer needs to hold it in a way that is secure, and prevents unauthorised disclosure. Who in the business can review the GPS data? For what purpose??

In my experience, Privacy policies usually deal with the privacy rights of the business’ clients and customers better than the rights of employees. Significant personal information is collected by employers about workers, and sometimes there is no evidence that employees are aware of the collection, or the purpose of it.

Here is a good thought experiment - what are the devices or processes in your workplace that collect information? Vehicles, security cards, security cameras, machines, smartphones, computer systems etc. What do employees know of these devices? How is the information collected on these devices held and accessed, and by whom? What do employees know of that? Is it time to put a modern policy in place?

In recent times, when employers have been able to use trial periods to swiftly address problems with new employees, old-fashioned probationary periods have fallen out of vogue. However, as from today employers of 20 or more people can not use trial periods, so the time has come to dust off your employment agreement and see if you have a good way of dealing with a bad hire.

It is often common to say that a probation period is nothing more than a performance management process - as to justifiably terminate employment, there needs to be a series of meetings, and support to the employee. While procedural fairness is essential in any employment process, the Employment Relations Act specifically provides for a probation period - so this must be an additional ‘right’ - ie, a probation period is more than just a performance management process.

In my view, in the probation period, the employer can focus on issues such as organisational fit, and whether or not the employee is actually capable at the level they represented themselves to be at interview. Therefore, I suggest a probationary period that specifically focuses on the things the employer thinks essential to a strong ongoing relationship.

The clause might say something like:

The Employee’s employment is subject to a probationary period of four months, pursuant to section 67 of the Employment Relations Act. This period is designed as a time in which the Employee is expected to:

complete required training and inductionlearn and demonstrate adherence to the standards and expectations of the workplaceadjust to the demands of the new job, and deliver on the representations he/she made at appointmentadapt and align to the Employer’s workplace culture

During the probationary period, the Employer will monitor and assess the Employee’s performance against these specific expectations.

It may be that you can be even more prescriptive, and set out specific milestones that the employee agrees to achieve. So long as the milestones are reasonable then the probation provision may have the employee agree that dismissal would be appropriate in instances of failure.

As noted above, procedural fairness requires that the employer’s concerns against the specific expectations to be drawn to the employee’s attention - so a smart employer will develop a monitoring and feedback programme for the first weeks of the appointment to ensure those criteria are discussed with the employee.

There is no doubt that with trial periods off the table, employers will have to work a little harder in the early days of a new employment relationship, and there will be development of case law in this area. Watch this space.

Please do not hesitate to contact me if you need some assistance in developing a new probationary provision.

One of the major challenges of our legal system is that there is almost always a cost associated with achieving recognition of your legal rights. Usually, much of that cost can not be recovered once your claim has been resolved.

You may have followed the recent story about a women who was ordered to pay a significant sum to a man she accused of serious sexual harassment at work. The payment was ordered because the woman was unsuccessful in a civil legal claim against her harasser.

This case serves as a timely reminder that the likely cost position should always be considered in your decision making process. Predictable costs outcomes include:

You win the claim, and the Court or Authority order the other side to pay you costs. That order is unlikely to cover the full legal cost of bringing the claim (generally speaking, it is intended to represent roughly two-thirds of your actual cost - in the Authority it is usualyl set at $4,500 per day). Depending on what is at stake, you might end up financially worse off, despite a positive result.

You lose the claim. If you are an employer you may be required to make certain payments to the employee. Whether you are an employee or an employer, you will probably be required to also make a payment in respect of the other side’s costs. If you are an employee who has a ‘no-win no-fee’ arrangement with your representative, this will not protect you from an order that you pay costs to the other party.

Whatever the outcome, there is a pre-hearing settlement offer (a “Calderbank offer”) which affects the costs position. In such cases, you might win the case, and have money awarded in your favour, but you may be required to pay more than you win to the other side because you failed to settle the claim at an earlier stage – in one recent Employment Relations Authority decision an employee won and was awarded $10,000 in compensation, but required to pay more than $12,000 to the employer in a later costs decision.

The hard truth is that litigation has both a principled and an economic implication, and it is important that both elements are considered when you decide how you will proceed. If you are involved in litigation, you should seek information from your representative both as to what that person will charge you, but also what your overall costs position could be.

Have you ever marveled at those people who have come up with some remarkably simple solution and made a fortune repeating it over and over – the tear tab on your can of drink, the ballpoint pen, the little plastic clip at the top of the bread? Have you ever thought, “if only I were so clever as to invent just one of those things.”

Imagine if there was one simple solution you could implement now that will save you significant time and money in the next year. Well, do I have a deal for you!

In May, a change to the Employment Relations Act will change the legislative approach to meal and rest breaks. The change will see a return to a more regimented approach which requires all employers to give all employees specified breaks, with few exceptions.

A key part of the new legislation is that unless the parties otherwise agree, meal and rest breaks have to be taken so far as practicable and reasonable at certain times in the rest period – so for example, and employee who works an 8 hour shift must be give their meal break (30 minutes) halfway through the shift, and their rest breaks (10 minutes) halfway between the meal break and either the start or finish of the shift.

If that doesn’t work for your business, there is a very simple fix – agree a different schedule of breaks with your employee. Perhaps even easier, have your employee agree, in their employment agreement, that they will take breaks as rostered or directed. The important point is that you should have some agreement – because without one, you are required to observe breaks on the schedule in the Act.

A very simple solution which might not make you as rich as Mr Biro but could very well save you some hassle in the months to come!

I came back to the office on Monday, and organised my space to reflect my good intentions for 2019 (how long will they last?!)

If you are anything like me, as you relax over the holidays, there are little bits in the back of your mind which you know should be improved on in the coming year. Sometimes they make their way into New Year resolutions, and other times they are left to gnaw away for another year.

If you are an employer wanting to start 2019 by putting your HR house in shape, here are some things you might want to consider:

Do all your employees have written employment agreements?Are the agreements you have fit for purpose? Check whether job descriptions and hours of work provisions in particular actually reflect what the employee is doing now (not what you thought they might do when they started). Where employees are on a salary, does the salary meet the minimum requirements for the hours the employee works?Check your trial period provision – the law on these is very prescriptive and there are numerous examples of employers not being able to rely on trial periods because they are not drafter in accordance with current requirements. If your trial period was drafted more than a year ago, you might like to have it reviewed. Remember, if you employ 20 or more people, you will not be allowed to use the trial period after May. Perhaps it’s time to design a good probationary period system to use in your workplace. Also from May, you will be required to provide your employees with regular breaks after four hours of work. This isn’t a big change, but your agreements and systems might need to be refreshed to accommodate this. If there is Union involvement in your workplace, consider the impact of the recent changes, which give Unions greater access, and change some of your obligations in collective bargaining. Bear in mind that you will need to revert to putting new employees on the Collective Agreement for the first weeks of their employment with you. How are your Privacy systems – your processes for collection, storage and release of information? There is an increasing focus on data protection and privacy here and internationally and your obligations in this area will only increase. Reflect on how your managers are coping with HR issues and incidents – is this an area where policies could be reconsidered, or training could be provided?

I know from personal experience that it is easier said than done, but the new year is a good opportunity to take stock and be deliberate about small changes which could improve your workplace. Please do not hesitate to contact me if I can help with some small improvements. Happy New Year and all the best for 2019.

Last week I explained the difference between penalty provisions and liquidated damages clauses. A liquidated damages clause can usually be enforced by an employer against an employee who does not abide their contractual agreement to give a certain amount of notice.

Very often that question gets conflated with another question, which is whether the money owing can be deducted from an employee’s final pay, or holiday pay entitlements. They are in fact two different questions. The ability to ‘set off’ two sums (ie deduct a debt owing by the employee from wages owing by the employer), is convenient and useful, but not always allowed by law.

The starting point is the Wages Protection Act. It provides that an employee’s wages must be paid in “money”, without deduction (did you know you need written consent to pay an employee by direct credit to their bank account?!). The clear intent of the Wages Protection Act is that the payment of wages is of paramount importance, and not to be lightly messed with.

However, the Wages Protection Act allows an employee and employer to agree to certain deductions in writing. So, the parties to an employment relationship frequently agree that an employer will deduct certain amounts from an employee’s pay – for example union fees, or a contribution to a superannuation fund.

Many employment agreements contain various other agreed deductions – a common one is for “loss caused by the employee’s default”, or sometimes an express agreement to deduct where an employee’s notice of termination is deficient.

Consistent with the paramount importance of paying wages, the Act allows the parties to agree to deductions from wages, but requires two things: one, that the deduction is agreed to in writing, and two that the amount of the deduction is agreed to in advance. Even if there is written authority to make deductions, that authority can not be relied on until the employee is aware of the amount of the deduction and agrees to it.

Last week, I suggested a liquidated damages provision in the following terms:

The parties agree that if the employee leaves without giving the notice required in this agreement, the employer will be required to hire a temporary replacement at short notice. The parties acknowledge that such a consequence will incur agency fees of approximately $100 per day in addition to ordinary employment costs. Therefore, where the employee gives less notice than that required by this agreement, the employee will pay to the employer the sum of $100 for every working day by which the notice is short.

That provision agrees the amount of an employer’s loss. It could be supported by a provision such as:

The employee consents to the employer deducting from any final pay owing (including holiday pay), $100 per day for every working day by which notice given by the employee is less than the agreed notice period.

An employer could rely on this provision without any further agreement with the employee. However, if your employment agreement simply provides that the employer may make a deduction for any loss caused by the employee’s default, or any debt owing to the employer, this is more likely to require the employee’s agreement to the specific deduction proposed.

Without an effective agreed deduction clause, or the employee’s consent to the specific deduction at the time it is made, the employer must make an application to the Employment Relations Authority for an order that the relevant sum be paid. To make a deduction without such an order is to risk a penalty for breach of the Act.

Finally, two weeks later, we get to the end of an answer to what seems like a simple question. Feel free to give me a call if you are grappling with this, or any other “simple” employment issue!

Here’s a question I hear a lot: does an employee lose their holiday pay if they resign without proper notice? It seems like a question that should have an easy answer, but surprisingly it does not.

Let’s assume the parties are in agreement as to what constitutes proper notice – usually this is set out in an employment agreement.

Very often, employment agreements also provide that an employer may elect to pay in lieu of notice, but if an employee gives less notice than agreed, the employee will be liable to the employer for an amount equivalent to what the employee would have been paid in the period by which the notice given was short.

On the face of it, such a provision entitles the employer to recover some money when and employee gives short notice. However, there is always a story behind the story. Here it is.

For a long time, the law has had a problem with what are described as “penalty provisions”. They are contractual clauses which penalise a party for breaking a contract. They are not enforceable.

On the other hand, parties to a contract are entitled to estimate the likely losses associated with a particular breach and agree that much will be paid by a party in default. These are called “liquidated damages provisions”. Damages are compensation for actual loss – for example the cost of repairing a car damaged in a crash. In usual circumstances, the actual loss must be proved by evidence in Court, and this can be complicated and costly. To avoid potential costs on both sides, parties to an agreement may agree to a liquidated damages provision in which they, together, make a genuine pre-estimate of the losses associated with a particular breach. So, we might agree that if you crash my car and it is irreparable, you will pay me $5,000, which we both agree is the value of the vehicle.

In the employment context, the distinction between a liquidated damages provision and a penalty is quite fine. There are a number of cases where employers have relied on an agreement that an employee must pay them the equivalent of the employee’s pay in a deficient notice period, and the Courts have responded that this is nothing more than a penalty provision, and therefore not enforceable.

To be enforceable, any agreement about compensation for a short notice period must represent a genuine pre-estimate of the employer’s likely loss should the employee breach this part of the employment agreement. So, the parties might agree that the employee will be required to pay to the employer the additional cost associated with hiring an agency worker to replace the employee, estimated by the parties to be $100 per day. Or there might be agreement that the employer will lose profit of $200 per day for every day the employee is not present, and the employee agrees to compensate the employer for that loss.

While the wages payable in the notice period might be a convenient way to think about likely losses, it is unlikely to be reliable as a genuine, agreed, pre-estimate of actual loss – so it is more likely to be a penalty provision than a liquidated damages agreement. In a 2015 case on this point, the Employment Court noted that the assessment of loss wasn’t on either party’s mind when the employment agreement was signed, so it could hardly be said that the parties had pre-estimated losses.

To confuse the matter, be aware that the Employment Relations Authority or Employment Court may impose a Penalty (capital “P”), which is essentially a fine for breaching an agreement. An employee can be liable for a Penalty for giving short notice, but this fine is paid to the Crown, and can only be imposed following an investigation or hearing by the Authority or Court. Taking proceedings on this point is unlikely to be economic for an employer.

If recovery from an employee in the case of a short notice period is important, then employers should specifically turn their mind to the issue at the outset of the employment, and discuss with the employee how losses might be calculated. The employment agreement should explain what the level of loss is agreed to be, and what that figure relates to. A useful clause might look something like:

The parties agree that if the employee leaves without giving the notice required in this agreement, the employer will be required to hire a temporary replacement at short notice. The parties acknowledge that such a consequence will incur agency fees of approximately $100 per day in addition to ordinary employment costs. Therefore, where the employee gives less notice than that required by this agreement, the employee will pay to the employer the sum of $100 for every working day by which the notice is short.

So, short answer: an employee might in some circumstances be required to pay something to an employer if they do not give appropriate notice. What might be payable must be set out in the employment agreement, and can not be a penalty.

That answers half the question. Next week, I’ll answer the second part – which is whether the money owing to the employer can be deducted from the employee’s holiday pay.

Something you may not know about me – as the mother of two young boys, part of the reason I chose to leave law-firm life and practice as a barrister was that I hoped in doing so I would have greater flexibility in my work, and I might even find the holy grail – work/life “balance”. Because of my personal experiences, and my appreciation of how technology can enable a less rigid approach to work, I really try to embody the modern “flexible worker” and support and encourage clients doing the same. Spoiler alert – it can be tough!

The often-observed benefits of flexible work include cost savings (space, resources, travel costs), efficiency (reduced travel time, fewer distractions), and increased motivation or reduced “presenteeism” – when a worker is only there because they have to be, not because they are producing meaningful work. However, when you put flexible work in an employment context, it is not without its pitfalls. Here are some issues a “flexible worker” or flexible employer might need to consider.

The Legal Position

While an employee with caring responsibilities, and now a victim of domestic violence, has a statutory right to ask for flexible working arrangements, there is no requirement for an employer to offer them, or grant any flexible working request. Therefore, whether any employee (whether or not they are in the two special statutory categories) might work on a “flexible” basis is a matter of negotiation between the parties. The scope and nature of the flexibility can be agreed between the parties – either on an ad-how basis or more formally. For the protection of both sides, it is a good idea to record mutual expectations in writing.

Health and Safety

The fact that an employee is working from home does not negate the employer’s obligations under the Health and Safety at Work Act. This means that the employer may remain responsible for the hazards that could affect an employee while working – think about the ergonomic set up of a work station, or the risks to an employee who is moving stock around their home.

Additionally, risks to mental-health might go unnoticed in a flexible worker – oversight of hours worked, challenging clients or files, and overall wellbeing is harder to maintain without regular in-person contact.

Information Security

When an employee works away from the office, there are a number of things that the employer loses (some) control of. If an employee is working on a personal device, using a home internet connection, or holding stock or client property at home, then there is an additional security risk – both in terms of the employer’s access to its own information, and the protection of confidential information from destruction or disclosure out of the business. Steps may need to make sure that the employer has good access to information, and good visibility over things like physical security, virus protection and virtual document access. Depending on the work, the employer may also need information about the home-work environment, and others present in the home.

Supervision and Management

An employee working out of the office is harder to supervise and manage. You don’t catch snippets of work stories, one end of a telephone conversation or a couple of pages of work on a printer. A formal structure for checking in might not be a sufficient replacement for these more informal methods of monitoring an employee’s performance and production. You might not be aware of problems brewing, and the employee does not have an informal way of working through issues with colleagues.

Hours of Work and Leave

One of the benefits of flexible working is that the work can be done at a time that suits the worker’s schedule. If that happens to be 3am in the morning, who really cares, so long as client needs are met. However, this could have implications in terms of overtime or holiday entitlements – should the employee be entitled to choose to do the work on Easter Sunday, and then be paid time and a half and get a day in lieu. Equally, it may be harder to monitor whether and employee is working too hard (maybe a health and safety risk) or not hard enough.

Flexible Work – Overview

From personal experience flexible work is not the easy option. It requires considerable self-motivation, discipline and compromise in both the professional and family spheres. I am grateful to my clients who sometimes tolerate noise in the background – and am happy to hear your feedback on my service delivery!

None of the issues above should prevent an employer from embracing work-from-home arrangements – they are an excellent way to retain good staff, improve efficiency, and develop a balanced workplace. My most important advice is that you should discuss expectations and clearly agree how the relationship will work, including how the worker will stay in informal contact with the workplace, and how safety and security issues will be managed. Actually – a good mutual understanding of expectations is the foundation of any decent employment relationship, so its simply a matter of same rules, different context!

About the only things that can be guaranteed in a court process is that it will be expensive for both parties, and that someone will lose. The question of who might be the loser is often hotly debated in the lead up to the hearing, and frequently it can not be predicted with any degree of accuracy, despite the best legal advice.

Most sensible advisors will assist the parties to consider the prospect of a pre-hearing resolution of the issues between them. In the employment context this often happens at mediation, but can equally happen before or after with negotiations led by the parties or their advisors. The benefits of settling pre-hearing are at least two fold: saving on legal costs, and certainty of outcomes for both parties.

But settlement offers have a secondary purpose – and this is a very powerful tactic in litigation strategy. They can be used to modify the usual costs position by showing that one party has been responsible for the legal costs incurred. Each New Zealand Court has a specific costs regime. It is some variation on the rule the the losing party should pay a portion of the winning party’s legal costs. In the Employment Relations Authority, the usual costs ‘tariff’ is $4,500 for a 1-day hearing.

Generally, communications between the parties will be put before the Court or Authority to assist it in determining the issues in the litigation. However, to support the parties in attempting self-resolution, the law recognises a ‘privilege’ for communications seeking to resolve a dispute. It is usual practice to mark such communications “without prejudice”, and these communications can not be disclosed to the Court when it is deciding the issues between the parties - they might contain admissions of liability that the parties reserve the right to challenge before the Court.

The Courts have adopted an extension to this principle, known as the “Calderbank” rule – for the case in which it was first observed. A without prejudice communication can be used to determine the allocation of costs after resolution of the substantive issue between the parties. If it is your intention for a communication to be used in this way, it is usual practice to mark it “without prejudice save as to costs”.

Where a Calderbank offer is made pre-hearing, it can be shown to the Court post-hearing to support an argument that the usual costs principles should be modified. To illustrate with an example: you take a claim to the Employment Relations Authority alleging you have been unjustifiably dismissed. You win and are awarded three months lost wages and $20,000 as compensation for hurt. As a matter of usual practice you will also be awarded $4,500 as a contribution to costs.

However, two months before the hearing, you offered to settle your claim and withdraw the proceeding if the employer paid you three months lost wages and $20,000. The employer declined the offer. It may well be that for persisting with the proceedings, it will be ordered to pay additional costs – perhaps up to your full costs from the date of the offer.

Conversely, lets say your pre-hearing offer was three months lost wages and $100,000 as compensation for hurt. The employer rejected your offer, but made a counter offer of three months lost wages and $25,000. Because the employer’s offer was actually better than the outcome in the Authority, the usual costs position might be reversed - that is to say that although you won, you might be required to pay some of the employer's costs, because you could have avoided that cost if you had accepted its reasonable offer.

There are a number of technical considerations when making, and later evaluating, a Calderbank offer, including the costs position of the parties at the time of the offer, and the value of other items included in the offer (for example a reference or a non-disparagement agreement, which can’t be awarded by the Authority), but the essential point is that settlement offers are not only vehicles for resolving matters pre-litigation, they are also an important tactic for producing the best possible outcome post-litigation. Any offers you consider making should be well thought out with both ends in mind.

The legal profession has faced criticism recently for its collective handling of sexual harassment and bullying issues. Apart from prurient interest, the debate surrounding this issue is a useful reminder of how professional regulatory bodies have an enduring interest in the conduct of their members, and the extent to which this factor must be considered when resolving employment issues. The Employment Court has recently confirmed this fact in a decision involving a nurse employed by the Southland DHB.

What is a Profession

A much overused term in modern parlance, the traditional definition of a ‘profession’ relates to a body of practitioners who have developed specialised knowledge by a recognised training process (usually a specific degree), and who self-regulate the right to practice by issuing authorisations to practice if certain criteria are met. Lawyers, Doctors, Nurses, Chartered Accounts, Architects and Teachers are all examples of professions, with a Society, Council, Institute or similar which controls their practice.

Where there is a controlling body, there will be rules for ‘admission’ to practice, and rules about conduct while in practice. In most cases now, these rules are imposed by statute or regulation. They have the force of law. Among other things, the rules relate to character and competence. The professional body is charged with ensuring its members enduring character and competence, investigating any matter that may reflect on these qualifications, and withdrawing or limiting the right to practice if concerns exist in this regard.

Now, here’s the important bit: most professional bodies impose a mandatory reporting obligation on members – a member who becomes aware of an issue touching on another’s character or competence to practice must report it to the professional body, which may conduct an investigation into the subject practitioner.

Consequences in Employment Matters

In the Southland DHB case, a nurse had been investigated by the employer in relation to complaints by colleagues that she had bullied them. A preliminary investigation concluded that there had been behaviour amounting to bullying. The nurse denied the allegations, and after some discussion between the parties, she resigned.

The resignation was recorded in a Record of Settlement which, among other things, provided that it was in full and final settlement of all matters between the parties, that all matters between the parties were to remain confidential unless required by law, and that neither party would disparage the other.

The employer reported the fact of its investigation into bullying complaints to the Nursing Council. The nurse complained that the DHB had breached the terms of settlement in making the complaint, by disparaging her, or failing to hold information confidential.

The Court examined the reporting requirements in the Health Practitioners Competency Assurance Act and concluded that the threshold for a report was ‘low’ (a matter “relating to” competence), and that the mandatory reporting requirements required a report to be made irrespective of other elements to the relationship. The Court even went so far as to indicate that the record of settlement could not have been drafted so as to protect the nurse against a report – it could not defeat the legal obligation to report.

A change to the way things have been done

Of course there is no hard data on this point, but my experience (and I am sure this is mirrored by that of my colleagues), is that we tend to treat a resignation and Record of Settlement as being the end of all risks for an employee. This assumption has suffered considerable criticism in the legal context of late, and the Court has confirmed it is wrong in respect of nurses.

Be very clear: if your professional rules impose a mandatory reporting requirement in respect of competence or character issues, then this obligation is not modified by a confidential resolution of employment relationship matters. If you are an employee, you should remain prepared to answer a professional complaint, if you are an employer, you should be reminded of your obligation to make it, and if you are advising either party, you should make sure that both sides are aware of the wider professional implications of their private process.

...stays in Vegas, or so says just about every person who has ever been to Vegas.

So, I was interested to hear this week that a Christchurch employer has decided to shout his team to an all-expenses-paid, week-long trip to Las Vegas. It’s the sort of decision that makes an employment lawyer smile.

Why? Well because the adage that things “stay in Vegas” rarely applies when employment relationships are concerned. In fact, the law reports are riddled with cases dealing with the consequences of employees behaving badly away from work.

It can be tricky to navigate the divide between what the employer has an interest in controlling, and what is properly considered the employee’s personal life (and none of the employer’s business), but the law is clear that when the employee’s behaviour affects the employer’s business, because it reflects on the employer, or concerns an employment relationship, it can be addressed in the employment domain.

Some time ago, I wrote a blog about Ms Wikaira, who was employed by the Department of Corrections. She was dismissed for bringing the organisation into disrepute after she was charged with an offence and appeared in Court. The Department took the view that her private behaviour reflected badly on it and affected its reputation. The Court accepted that the Department had an interest in the employee’s behaviour (although in this case it could not be established that the employer suffered disrepute and the employer’s action was unjustified).

There is more than one case concerning the behaviour of airline staff while on ‘layover’ in a city away from home. In those cases – where there have been allegations of harassment, intoxication or other poor behaviour, the Courts have had no hesitation in concluding that the employer is entitled to take an interest in the employee’s behaviour away from work but on the employer’s dime.

So, who knows what could go wrong in Vegas (I’ve never been there myself!). However, it seems to me that it is a place where employees’ behaviour might be less ‘restrained’. The risk is that the behaviour might need to be addressed once the party ends, and this could have employment consequences.

So, some tips for work trips:

Most of the time on a work trip an employee is bound by the same standards of conduct as would apply at work;Behaviour towards another employee outside of the work environment can still be addressed as a disciplinary matter;Behaviour towards the employer’s clients, suppliers, contacts or other parties outside the work environment can be addressed as a disciplinary matter;Behaviour which otherwise reflects on the employer – for example behaviour that is reported in the media could be addressed as a disciplinary matter;Remember you have to return to work eventually;An employer might have to be responsible for issues giving rise or potentially giving rise to harm to employees (host responsibility, problem gambling);Otherwise - relax and have fun!

I enjoyed receiving a good amount of feedback on my previous post, about managing sexual harassment complaints in the workplace. One offline commenter challenged me on my comments around suspension of an employee when he or she faces an allegation of sexual harassment. I was asked “would you really keep the victim and abuser working in the same place”. Good question!

In defense of my view, I responded that the Employment Court takes a relatively dim view of suspension, describing it as a “drastic step” and examining very carefully the circumstances giving rise to it when challenged. Certainly, before suspending a person facing an allegation, careful consideration would need to be given to the alternatives.

Suspension is a temporary measure designed to keep an employee away from work. It is not provided for generally in the law – there is a right to suspend striking employees (only in that specific context) and there is a right to suspend under the Heath and Safety at Work Act where an employee represents a real risk to the health and safety of either themselves or others. Apart from that, suspension is only available if the parties have agreed in advance to that possibility – ie there is a clause to that effect in the employment agreement.

Because in general terms suspension is a contractual remedy, it is hard to provide general advice on what must occur before a person can be suspended – this can turn on the terms of the contract. However, it is generally agreed that suspension can only be considered where an employee is facing an allegation of conduct that is capable of amounting to serious misconduct which would justify dismissal.

Even then, it is usually only justified if the suspension is necessary to protect someone from harm – this may be a person from further harassment, any person from poor health and safety practices, or ongoing theft of resources or information. The important point here is that suspension is not designed to be punitive – it can not be used to punish an employee for perceived wrongdoing.

The area of greatest controversy is whether an employee has a right to be heard before a decision is made to suspend. The Employment Relations Act expressly provides that an employer proposing to make a decision that will have an effect on an employee’s employment must give information to that employee and offer a reasonable opportunity to respond. In the case of suspension, it is usually accepted that this process can be abridged, by allowing a shortened period to respond (say a number of hours), before making a decision.

My preferred approach is to provide an employee with information relating to the allegations and the proposal to suspend (with reasons – usually that suspension is necessary to protect a person or prevent interference with an investigation), then invite them to go home for the rest of the day (taking “paid special leave”) to consider their response to the proposal and seek advice. I would then reconvene at the end of the day to hear the employee’s response to the proposal and make a decision.

In making that decision, the employer should consider all alternatives to suspension, and this may differ depending on the workplace. For example, in a large, multi-site workplace, it may be possible to re-deploy an employee to another physical location, or to make changes to the employee’s role to prevent further harm – eg by removing financial authorities, or moving to ‘back room’ duties.

Bearing in mind the Court’s distaste for suspension, in my view it is best to keep a period of suspension short, or if that is not possible, build in review occasions for the suspension. If a disciplinary meeting can be convened to address the substantive allegation within a short period than this may not be necessary. However, if an investigation extends in to weeks or even months, the suspension should be revisited and alternatives explored again.

So, to go back to the question of whether I would suspend an employee facing an allegation of sexual harassment, my answer remains that suspension can be difficult to justify. However, it could be justified in circumstances where there is apparently strong evidence of sexual harassment (I would be looking for a serious event), and there is a risk either to the alleged victim, or evidence that the employee accused would interfere with an investigation into the matter. Before deciding to suspend, I would rule out alternative safety measures – in a small workplace I think suspension would be more likely than in a large one where the parties could be effectively separated. I would give the employee an opportunity to address me on these points before making the decision and I would review it on an ongoing basis.

It is the topic of the year, and some say deservedly so. Appropriate treatment of one person by another is a cornerstone of a fair working environment, and as well as dealing properly with incidents as they arise, a workplace must strive to create a culture of respect amongst staff. This can be challenging where there are systemic power imbalances (like all hierarchical organisations).

Dealing with sexual harassment issues in the workplace is exceptionally challenging. While accepting that perpetrators of abuse must be stopped, our cultural distaste for prying into what is often considered someone’s “private life”, and both the aggressor and the victim’s right to a fair process make it hard to find an outcome that meets the “justification” test for both parties.

Starting Point

The starting point is that every person is entitled to work in a safe environment. The Health and Safety at Work Act requires employers (and others) to take all reasonably practicable steps to identify hazards and then manage them to prevent harm to people. The behaviour of one person to another is specifically recognised as a hazard. So, employers should have policies dealing with how staff treat each other.

It is a reality of adult life that many people form relationships at work, including consensual sexual relationships. Flirting and other types of intimate behaviour are an ordinary precursor to such relationships. The challenge for an employer is where to draw the line.

At one extreme, the employer may have a black line “no consorting” rule. That is, the employer may say that employees are forbidden from any type of non-professional relationship with colleagues. In my view, this would likely create a very sad and disconnected workplace.

The middle ground may be to forbid intimate relationship across certain groups where there is a real risk of power imbalance (ie managers vs crew), or to require employees to declare close relationships with other staff (this is common in industries that handle sensitive information – eg law or banking). The problem with these policies is that it can be very hard to figure out where the line sits – eg must employees declare that they intend to have dinner together, or is it only when they commit to a relationship that the declaration is required.

At the other extreme, and most common, is for employers to have a “no harassment” rule. This approach recognises that employees might want to develop personal relationships, but requires employees to meet appropriate standards of decency.

Enforcing Employer Policies

As many have learned, there are considerable difficulties with this approach too. The greatest difficulty is that each person has a different threshold – so behaviour that is acceptable to one person is completely unacceptable to another. A person can not be expected to know each person’s limits, so attempting to initiate a relationship with a person always risks harming them, and therefore “harassing”.

I pause here to observe that there are some behaviours which clearly cross the line. However, before that point there are dozens of actions which may or may not be sexual harassment, depending on the target’s disposition, culture and personality.

When addressing sexual harassment issues, the Courts tend to accept this difficulty, and therefore look for a point where the victim has complained or asked the harasser to stop. This is an imperfect approach, because it does not account for the effect of a power imbalance or other matters that might make a victim afraid to speak up. However, for fairness reasons, I think it is the only workable response.

Justification

Without minimising the victims experience, or their rights in the workplace, an alleged harasser who is an employee is also entitled to be treated by the employer in a fair and reasonable manner. The Employment Relations Act obligation of good faith requires an employer who is proposing to make any decision that may have an impact on an employee (including an abuser), to provide that person with information relevant to the decision and an opportunity to respond. The employer must take that response into account before making any decision. It is very rare for the Courts to endorse a decision to suspend a person from work while an investigation ensues, so it is likely that both parties will have to work together while this process ensues.

Even if it can be said, at the end of the fair investigation process, that person A subjected person B to sexual harassment, which is defined by workplace policy as serious misconduct, this does not necessarily mean that termination is justified. In determining whether a person’s employment should be terminated (the most serious sanction there is), an employer must take into account the “seriousness” of the offence (on some hypothetical scale), the harm caused, the employee’s intentions (which may have been different to how the victim interpreted it), any similar cases and their outcomes, and whether there are any alternatives to dismissal. The employer’s decision can be challenged by way of a personal grievance.

Thoughts for Employers

As already noted, sexual harassment is one of the most difficult workplace issues to manage. Preventative steps are easier than cures, so the best advice is to treat appropriate interpersonal behaviour as key expectations, and be proactive in addressing observable incidents that may lead to concerns. Try to ensure that employees are connected to good people within the workplace, and make reporting of minor incidents (even anonymously) straightforward and recrimination-free. Try to avoid creating working situations where employees are required to work closely with a senior in unusual circumstances (eg after hours, in remote locations), and

monitor social occasions. When faced with a complaint, consider seeking independent advice to assess and respond.

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Last week I blogged about Mrs Archibald’s case against the Waikato District Health Board. You will remember that Mrs Archibald was held to be redundant when the Health Board changed her job to include a significant travel component. Another interesting feature of Mrs Archibald’s case was her personal grievance claim.

Personal grievance is the phrase the Employment Relations Act uses to describe a complaint or action against an employer for breach of duties by the employer. The Act requires any action the employer takes to be “justifiable”. This means that the employer must act as a (hypothetical, objective) fair and reasonable could have acted in all the circumstances at the time.

This test allows that there are number of decisions that a fair and reasonable employer “could” make – so there is not one right answer – but it requires consideration of both the decision (eg to change someone’s job), and the process by which the decision is made.

The Employment Relations Act creates a number of remedies for a personal grievance. An employee can seek reinstatement (their job back, or changed back to what it was), or compensation for lost wages and benefits. The Act also allows for an award compensating an employee for “humiliation, loss of dignity and injury to feelings”.

In theory at least, you need to prove that you have been humiliated, injured or lost dignity in order to receive an award of this type. In practice, the Court will often infer that such hurt flows as a natural consequence of an unjustifiable decision. Because emotional harm is very difficult to measure in dollar terms, the level of award has always been a bit of a guessing game. This can be contrasted to the approach to setting remedies in other courts (eg when awarding damages to victims in health and safety cases)

Some years ago now, the figure of $15,000 came to be something of a de-facto maximum for emotional harm compensatory awards. Although historically there were some awards up to $50,000, most awards in the Employment Relations Authority clustered around the $5,000 mark. As time has passed, many people have suggested that this it out of step with awards in other jurisdictions (notably the awards given by the Human Rights Review Tribunal, and the recent level of awards for stress in Earthquake cases against insurers in the High Court).

To bring this back to Mrs Archibald’s case – an interesting feature of the Employment Court’s decision was its comments about the approach to compensatory awards. The Court, for the first time, suggested a “banding” approach to damages, dividing cases into low/medium/high bands of loss/damage. The Court assessed Mrs Archibald’s harm as falling in the mid band, and concluded that “having regard to the circumstances of this case, I consider than an award of $20,000 … is appropriate”.

This gives two important take-home points. Firstly, we might expect to see the Court take a more principled approach to compensatory awards, which might mean that employees will need to articulate the type of harm they have suffered, and perhaps compare it to harm in other cases. Secondly, $15,000 can no longer be said to be a de-facto maximum. If the Court is willing to award $20,000 for a mid-band case, we could expect awards under this head to push up to at least $40,000 in the most serious cases.

This is an area likely to develop over the next few years.

In November last year, the Employment Court delivered an interesting decision which serves as a good reminder about the manner in which an employer must engage with an employee when undertaking a restructure process.

The case concerns Mrs Archibald, who worked for the Waikato District Health Board. Mrs Archibald was 67 years old at the time of the decision and worked as a Health Promoter. That job sometimes required her to travel around the Waikato region, but was largely based in Thames.

In 2016, the Health Board re-examined the manner in which services were delivered, and looked to rearrange the Health Promoter role, although largely retain the services that Mrs Archibald and her colleagues provided. A consultation process began.

Mrs Archibald was very concerned that the proposed new role would require significant travel – up to 2 hours and 45 minutes a day. She told the employer that would “destroy” her.

The Health Board concluded that Mrs Archibald could be deployed into one of the new Health Promoter roles. Mrs Archibald said that she couldn’t accept a job with that much travel, and her employment was terminated. She was not entitled to receive redundancy compensation (which was provided in her employment agreement) because she had not accepted the similar role.

The Employment Court held that was unfair. The additional travel was significant for Mrs Archibald, even if it wasn’t for the other affected Health Promoters. Mrs Archibald’s concern that she would not cope with the travel was not adequately considered, and the Health Board’s decision was therefore unjustified.

The take home lessons from this case are:

Changes to a job description that may have an impact on an employee’s subjective experience of work are significant. Changed reporting lines, additional travel, or venue rearrangement may trigger redundancy. Even when employees do the same job, their feedback on a proposal must be considered on an individual basis. It is not necessarily acceptable to have a one size fits all policy.There need not be any change to an employee’s actual work duties for their employment to trigger a redundancy. Compensatory awards are probably on the rise – I’ll develop this point next time.

Until then - if you have any issues with changes in your business, please give me a call.

It is often said that employees reflect on their future over Christmas, and that leads to a rise in resignations in the new year.

Equally, the Christmas break (for those who still enjoy a Christmas close down) is an opportunity for an employer to re-invent how the business will operate with a view to a fresh start. It is therefore timely to provide a refresher on how to implement changes that will have an impact on a person’s employment.

In this regard, it seems that what should be fairly simple has been made complex by different and sometimes conflicting opinions about procedure. However, what the Employment Relations Act requires is fairly straightforward: if you are proposing to make a decision that will have an impact on an employee’s employment (by putting it at risk, adding conditions to it, or ending it), the employee has the right to have their say before that decision is made.

What this means is that an employee should be offered the information that will be relied on in making the decision (and this is an ongoing obligation so if more information comes to light, it should also be given to the employee), and a reasonable chance to add their perspective to the issue at hand.

So, if you are looking to rearrange the workforce, and that might mean redundancies or job changes, you should tell affected staff that you have this idea, and what information you have that supports your thinking about the proposal. Then, staff get the chance to respond with their ideas/criticisms/suggestions, following which you can decide on the new structure.

Both employer and employee have an obligation of good faith, which requires you to be “open, honest constructive and communicative” – so rather than an us/them approach, a project/planning approach should be taken. Very often, employers actually learn things from a good consultation process.

Once the decision about structure is made, it may be necessary to talk to employees again, this time on a more concrete basis, about the changes that will happen to their job.

Throughout this process, employees are entitled to support – they may choose to get this from a lawyer, advocate, union or friend, and you should tell them of this right.

The most important part, is to involve employees meaningfully. That means that the best time to start consulting is before the decisions are set in stone. A good advisor can help you manage the process and ensure that everyone is treated fairly.

Happy new year, and good luck with those resolutions.

It may be trite to say that a business’ most valuable asset is its employees, but it is certainly true in a number of senses (although, in fact, it is the bill-paying customers that truly fund the business). The value of a high performing employee, especially with regard to those bill-paying customers, can make employer’s anxious when the employment relationship terminates.

For many employer’s the response is to take steps to prevent the employee from maintaining a relationship with those customers, by seeking the employee’s agreement to restraint their future activities. Usually this is by way of written agreement obtained at the beginning of the employment relationship, hidden in the bowels of an employment agreement. These types of clauses are collectively known as restraints of trade.

The law has an interesting perspective on restraints of trade. As a starting point, they are contrary to public policy because they prevent real competition in the market place. Competition is considered a social good, and legislation exists specifically promoting it. However, in the employment arena, the law recognises that it would be unfair to let an employee take advantage of their employer’s resources for their own benefit, or the benefit of a different employer.

For that reason, an agreement in restraint of trade might be enforceable if certain conditions are met. Those conditions are:

The employee received “consideration” – that is something of real value – for their agreement to the restraint.The restraint is there to protect something in which the employer has a legitimate proprietary interest – that might be a special type of knowledge (eg the employee has been working on the cure for cancer, or the next break-through bit of coding), or details about or a relationship with particular clients or suppliers. The restraint does no more than is necessary to protect that particular interest.

The third condition is an area where there can be real debate. What might be reasonable or necessary depends on the interest the employer seeks to protect, and how that interest operates in the market place. There are many different types of restraint. Some might prevent the employee from working for any competitor. That might be limited by geography (say for instance in the case of the barista who makes your morning coffee) while others might be nationwide (perhaps in relation to the sales manager for a specialised product). They might apply for a short period or a long one (frequently the length of the sale-cycle is a good lime period).

Other restraints might focus on particular clients, and limit a person from doing any work with a client of the employer, or might simply prevent them touting for work amongst the employer’s clients (this is a “non-solicitation” provision).

In every case, the question of whether the restraint can be enforced will be examined with reference to what the employer seeks to protect, and how they propose to do it. If there is nothing special to protect, or the limits are too great, the restraint will be unenforceable, or may be subject to modification by the Court to a point where it is reasonable and therefore enforceable.

Restraints of trade are a complex area of law, and should not be entered into lightly. My advice to employers is to carefully examine what it is you hope to achieve, and tailor an agreement that serves that requirement. Consider making an additional payment to the employee to secure agreement to the restraint, and avoid taking a ‘one size fits all’ approach. My advice to employees is to avoid agreeing to restraint of trade provisions unless you are sure you understand how they will work in practice. If there is a restraint of trade in your employment agreement which may prevent you from taking that next job opportunity, take good advice and consider negotiating an amendment before accepting new work.

There are some powerful enforcement mechanisms in the Employment Relations Authority – including the possibility of an interim injunction, so it is important to be aware of risks on both sides.

If you have a restraint of trade issue, or want to review your current practice, please do not hesitate to call me.

We finally have an election result. The victors are celebrating and the others are licking wounds, and in the real world, ordinary people are trying to work out what that means for them. It is pretty hard to determine how things might unfold at this stage, but here are a couple of thoughts.

Minimum Wage

Both Labour and NZ First campaigned on lifting the minimum wage. Labour announced an intention to raise it to $16.50 by 1 April 2018, and NZ First to $20 in the next three years. Undoubtedly we will see minimum wage increases, and undoubtedly some businesses will feel such increases are too high. However, you should bear in mind that the minimum wage is always increased on 1 April, and historically that increase is $0.50 to $1.00. So, business as usual really.

Trial Periods

Labour has always opposed the 90-day trial period, and a key part of its pre-election policy was to abolish it. My pick is that there will be a re-writing of trial provisions which allow employees to take personal grievances if fired within the first 90 days. Whatever your view on the use of a trial period, mine thought is that the trial periods have been so severely limited by the Court that they do not offer employers the liberating freedom to disregard all employment law, and in fact 90-day dismissals can feel as tricky as ‘ordinary’ ones. Despite that, expect changes here.

Minimum Standards

Both coalition partners did not address in detail other workplace standards (focussing on broad concepts like “fairness”). NZ First had a policy of setting a minimum standard for redundancy compensation (currently there is no legal requirement to redundancy compensation). It will be interesting to see if this policy survives – in principle it seems aligned with Labour’s values. What I do think will occur is that Labour’s policy of increasing the number of Labour Inspectors will be implemented, and this is something employers should look out for. The Labour inspectorate has increased dramatically over the last five years, and with it, so have minimum standards prosecutions. I am aware that Labour Inspectors are visiting numerous small businesses (targets include hospitality and farming), and issuing fines for breaches of record keeping requirements, or holiday pay errors. My earlier blog detailed some of the things to be aware of, and I suspect this will be a growth area.

Dispute Resolution

Labour’s “fairness” policy included a “simple, fair and fast referee service”, at least for disputes over trial period dismissals. It is not clear whether it proposes a changed approach to employment disputes as a whole, or just in this area. In employment matters, the first stop is mediation with the assistance of a (government-paid) mediator. As systems go, I think it is a fairly good one, although wait times are currently a little long, so the service could do with greater funding. I am sceptical of dispute systems that exclude lawyers (because employment law can be complex and people should be entitled to advice when work is such a fundamental thing in life), but lawyers do tend to slow processes down a bit.

Fair Pay Agreements

Labour intended to introduce “Fair Pay Agreements” setting basic conditions across industries. These sound awfully like the old awards system - or at least a move to promote more multi-employer collective bargaining. Again, I’m sceptical that competing employers could work together to agree minimum standards, and I would be concerned to see government impose specific industry minimums.

Maternity Leave

Both parties have indicated an intention to promote or support an increase in paid maternity leave to 26 weeks. Under the current model, this cost is not paid by the employer, but employers might see an increase in the periods of leave taken by parenting employees.

Health and Safety

This might be an area where sparks will fly. NZ First pledged to remove the “bureaucratic excesses” of the current health and safety law. Labour’s policies do not specifically address health and safety at work, and my pick is that their approach would be to support the role of regulation in this area. I’m not expecting big changes.

Immigration

It is clear that there will be significant changes to immigration policy, with fewer immigrants. One of NZ First’s intentions is to amend the factors the Reserve Bank assesses to place greater weight on full employment, and I expect that immigration changes will make it even more difficult for employers to offer work to a person on a work visa. Expect delays if recruiting in this market, or a sinking lid if you have a large immigrant work force.

Good luck for the next three years – some think it will be a rollercoaster! I will blog on significant changes as they occur.

When, in 2009, the Employment Relations Act was amended to allow employers a “free sample” of a new employee, dire predictions were made. On the one hand, employee advocates predicted the end of employment security as we know it, and lower mobility, while on the other, employer representatives claimed this would provide the necessary confidence to dramatically boost employment. Probably, neither have occurred to any measurable degree, despite some statistics suggesting that up to 70% of new employment agreements contain a trial period. However, the last eight years have produced considerable work for employment lawyers.

The purpose of s67A and 67B of the Employment Relations Act is to allow an agreement to limit an employee’s right to take a personal grievance claim for an unjustified dismissal if it occurs within the first weeks of their employment.

Given that it takes away rights, the sections have some rules which must be met for the trial period to be effective. In particular:

- The trial period agreement must be in writing

- The trial period may not be longer than 90 days

- The employee may not have previously been employed by the employer

- The employee may not be treated differently to an employee without a trial period

All of that seems fairly straight forward, but alas, things are seldom as they seem! It is a well-established principle of law that rules which limit someone’s access to justice (eg the right to challenge a dismissal) must be interpreted strictly. Because of that, since trial periods have been available the Court has minutely examined the circumstances of any trial period agreement that comes before it. As a result, there are now a bunch of extra rules to bear in mind. These include:

- If the agreement is signed sometime after the employee has started work, they are no longer a “new employee” and there can not be a trial period – so an employment agreement must be signed by both parties before the employee’s first day on the job

- If an oral offer of employment is made and accepted, a trial period will not be valid

in the written agreement unless the employee also accepted that at the time of the oral offer – because they were an employee at the time of the oral contract and not a new employee at the time of the written agreement

- If the employment agreement provides for notice in writing, then a dismissal in accordance with the trial period must be made in writing. If no written notice is given (where required), then the trial period is not an effective defense to a dismissal claim

- Although you are not required to give written reasons, failure to explain why you are dismissing in reliance on the trial period may be a breach of good faith and give rise to other (allowed) personal grievances. You may be required to provide feedback, or to manage performance concerns throughout the trial period.

The upshot? Trial periods are complex, require deliberate thought and careful management. If you employ people or are employed subject to a trial period it pays to take advice.

Someone asked me recently to explain the pros and cons of involving the constabulary in employment disputes where the employee is accused of doing something that not only offends the employer’s rules, but is a criminal offence. It is a question which turns as much as anything on issues of strategy rather than of law, but it is an interesting issue to consider.

The important thing to bear in mind is that employment processes are different to criminal processes, and the employer can not control any Police involvement. By this I mean that the Police may investigate an alleged crime whether or not the employer complains about it (eg if a complaint is made from somewhere else), and may elect not to investigate an alleged crime despite a complaint.

However, if the Police do investigate a complaint, then the person under investigation gains a handful of rights attached to the criminal process. The most important of these is the right to refrain from making any comment. The purpose of this right is to protect people against self-incrimination. So, an employee under investigation by the Police could quite reasonably refuse to explain themselves to their employer in a disciplinary context because to do so might be self-incriminating.

Let’s consider an example. Office Limited employs an Office Manager who has wide authority to make payments on behalf of the business. When the Office Manager takes annual leave, her temporary replacement notices some odd-looking transactions. It looks like the Office Manager has been creating false invoices and using them to authorise payments to her. She appears to have been paid more than $50,000 in this way.

Assuming the initial impression is correct, the Office Manager has likely committed criminal offences. Office Limited does not have the resources to investigate any further, and is scared that if they confront the Office Manager, important documents will be destroyed. So a Police complaint is made. The Police gather evidence and then charge the Office Manager with a dozen offences. She is released on bail while the justice system churns through its process. It’s likely to take up to a year before it is complete.

And what of Office Limited? Well, the Office Manager is still an employee and is still entitled to the rights that attach to an employee. The company needs to go through a fair process to determine whether she should be suspended, or whether her employment should be terminated. At the disciplinary meeting, the Office Manager refuses to make any comment. Can a decision be made without hearing her response?

This is a tricky area of law. Many businesses deal with it by providing in their employment agreements that a person can be suspended without pay where they are not able to respond to a serious misconduct allegation within a reasonable time frame. Some would argue that an employer would be justified in making a decision in the absence of an employee’s response where there is unlikely to be a response within a reasonable period. Sometimes it’s made easy if the employee is imprisoned awaiting trial (termination for frustration is a straightforward option here).

The key point is that the Police process might slow the employer’s process. It can be advantageous to involve the Police if your evidence is thin because you might later rely on the Police evidence to take action (and note that criminal offences require proof “beyond reasonable doubt” while employment matters only require proof on the “balance of probabilities” so even if the Police are unsuccessful, that will not stop the employer from acting on the same information).

Another advantage of involving the Police is that if a prosecution is successful, the Court can order, as part of the offender’s sentence, a reparation payment – so you might get your money back – eventually!

On the other hand, there may be reasons to deal with the employment matters before handing your information over to the Police. That way your relationship with the employee is at an end long before any Police involvement can interfere with how you want to address the issue. It may also be the case that the Police would respond more favourably (ie be more likely to prosecute) to a file with all the detail gathered by the employer than some half-hearted allegations.

One important point to note is that it is blackmail, a crime in itself, to threaten a Police complaint to obtain an advantage in negotiations. So, whatever you elect to do, you should never be in a position where you agree to not go to the Police in order to obtain repayment of what was taken.

Some other considerations to bear in mind when considering a Police complaint about your employee:

No matter what, the employer is still required to consider the matter itself and reach a ‘justifiable’ decision – the fact that there are Police charges is not, by itself, enough to justify dismissing an employee;A Police complaint might have consequences for your business. The Police may want to take equipment as evidence and this might have a disruptive effect;There may be media interest, and you will not be able to control this. What impact would publicity about this issue have on the business reputation?;The Police and Court process can take a long time and tie up a lot of resource

In the meantime, lets hope you never find yourself in this position! If you need help dealing with a tricky employment situation - please don't hesitate to call.

Often, technological change happens at a much greater rate than rules and regulation can keep up with. There is no better example of this than the use of cell phones in business where, in 2017, it is unusual for an employee with any level of responsibility to be contacted only at their desk. But the use of a cell phone for work raises a number of questions which might be critically important. Consider these issues:

Who pays the bill?

Sometimes, employees obligingly provide their cell phone number to clients for ease of communication. Other times, the client learns the employee’s number via a caller-ID system. Over time, they come to communicate by cell phone. Who pays that phone account? Arguably, that is an expense incurred in furthering the employer’s business, and there is a good argument that it should be met by the employer. But does the employer want the employee doing that? Who pays for the employee’s calls to their mum? Or their costly downloads? Who pays for roaming if the employee checks their work emails while overseas?

Who owns the number?

When the employee arrives at a new job their existing phone number gets added to their business cards. The business booms and the employee’s cell phone number features in bill board ads, on the back of buses and in a radio jingle. Then the employee leaves to work for a competitor. Who will be allowed to pick up the phone when all those new customers call?

How much is the employer’s business?

Let’s say that there is agreement between the employee and the employer that the employee uses their own device or devices for work. The employer pays the bill or at least a reasonable portion of it. What happens if it later turns out that there is pornographic material on that device? Or evidence of the employee wasting the employer’s time? Can the employer use that to discipline the employee? What happens to emails and contact information when the employee leaves?

Alternatively, let’s say it is clear that the employer owns the device and everything on it. Can the employee use the device for any personal purpose? What happens to personal messages, photographs and downloads stored on the device? Can the employer access them, use them against the employee or delete them?

Who is responsible for the device?

The device gets dropped in the toilet. Who is responsible for replacing it? Does it matter whether the incident occurred at work or at home? What happens when the device gets old and slow? What if it gets infected with some virus (and that virus affects contacts as well)?

Is the employee properly paid for their work?

The good thing about the ‘traditional’ work week is that it was easy to calculate how many hours an employee worked and whether they were being paid properly. If an employee is using their smartphone at home, does it meant they are working? How can an employer control and monitor the work being done, and the hours of work (to ensure that the employee has sufficient breaks and is paid at least the minimum wage)?

Do any of these stupid questions even have an answer?!

There is no clear answer to any of these questions. Maybe over time, and as these issues are tested in the Courts, some principles will emerge. But each case will likely turn on the particular circumstances of the arrangement between the parties.

There may be policies which assist in determining the issue, but policies may conflict (for example a privacy policy might not match the scope of a work tools policy), or may not fully address the issue (eg the policy might address out of hours calls but not international roaming). There may be practices in your workplace relevant to how these questions might be answered.

The simplest approach would be for an employer to issue devices and phone numbers that are for work, and only work, and are entirely paid for by the employer. But it is unlikely that this is going to be workable in all situations. The very best advice is that if you or your employees are using a mobile device for work in any way, you should discuss this in advance and agree on the answers to these questions. A BYOD agreement, communication tools policy, or work device rule document is a good way to do this.

If you need help navigating the use of work devices, or need a smartphone policy, please do not hesitate to call me.

It seems a simple question, but looks can be deceptive. Whether someone’s obligation constitutes work can become very complicated.

Many of our statutes refer to work, but often in different contexts, and without there being one universal definition. Focus turned to the question of what constitutes work in Idea Services v Dickison. That was a case about workers who slept over in supported accommodation facilities. They would have a bedroom to sleep in, but were required to deal with client needs through the night, if circumstances required. For this they were paid a small overnight allowance.

Ultimately, the Court of Appeal determined that although they might be sleeping, staff were working for the purpose of the Minimum Wage Act. The Court reached this conclusion with reference to three considerations; the duties performed by the employee, the restrictions on the employee’s activity and the benefit to the employer. In doing so, it found that it was not possible to contract out of the Minimum Wage Act – it creates a minimum standard, so even if the parties agree otherwise, all hours of work must be paid at the minimum wage.

A number of other cases followed; a boarding home matron, an on-call funeral director and a person sleeping over to respond to issues at a salmon hatchery are among those who took separate cases to claim unpaid wages on the basis that their sleeping was work. The Court takes a case-by-case approach to these claims, carefully analysing the three considerations – duties, restrictions and benefits.

An interesting development has been the activity of the Labour Inspectors in this area. Last year, a Labour Inspector issued an improvement notice to Smiths City Group Limited, claiming that it failed to pay minimum wage in respect of work it required its employees to perform. The retail chain challenged the improvement notice.

The issue arose because Smiths City had a practice of holding morning meetings about 15 minutes before the shop opened. Staff attended the meetings before their shift started at 9am – they were not paid for meeting time. Smiths City argued that the meeting was not work, because attendance was not compulsory, and meetings were relaxed (staff could wear slippers, lie on couches and drink coffee for example).

The Employment Relations Authority found that in some shops where attendance was enforced and employees were entitled to actively participate, this was probably work. In other shops, where the meeting was a more laid-back affair and attended was not so rigidly observed, the meeting was probably not work.

Although confined to a specific point (because the case was about whether a challenge to an improvement notice could be upheld), the decision is interesting, because it demonstrates how nuanced the question of what constitutes work might be, and how, even without the complication of sleeping, there may be an argument about whether an employee’s time at work is work.

Take home lesson: if you are sleeping on the job because your employer wants you there, you are probably working and if you are controlling your employee’s activity for the benefit of the business, you should probably be prepared to pay for it.

Since becoming a barrister, the thing people most want to know is, what’s the difference?! It’s a good question, and one that can lead to real confusion if you are in the market for some advice.

The answer starts with a bit of history. New Zealand inherited its legal system from England. There, the legal profession was, (and is still to a large extent), in two parts; solicitors, who gave legal advice and dealt with commercial affairs or transactions, and barristers who appeared in Court. Although each ‘branch’ were lawyers, their role reflected specialised training and skills.

When New Zealand was colonised, there was too small a population (and too few lawyers) to maintain this distinction. So, the profession was fused – meaning solicitors could work as barristers and vice versa. That practice has endured to this day. New Zealand lawyers all receive the same mandatory training and are usually admitted to the bar as a “barrister and solicitor”. Their authority to practice (which is granted by the New Zealand Law Society) does not limit them to either Court work or advisory/transaction work.

Despite this, some lawyers choose to practice as a barrister sole (shorthanded to barrister). These people focus on litigation and court work, although this does not preclude them from doing some advisory work. A barrister might work in “Chambers” with other barristers, (the office equivalent of a flatting situation), but will not work in partnership. This means that a barrister will not have conflicts of interest arising out of the work other lawyers he or she works with are doing.

Historically, barristers were only allowed to take instructions from other lawyers, not directly from clients. That rule was based on the historical divide – ie your solicitor managed the issue up to the point there was a real dispute then brought in the litigation expert if necessary. That rule has now relaxed significantly, although for some legal problems a barrister will still need an “instructing solicitor”.

So – whether a person is described as a barrister, solicitor or barrister and solicitor, they are a lawyer. They have completed a law degree, and been through the approval process set by the New Zealand Law Society. This process requires the potential lawyer to prove that they are a “fit and proper person” – of good integrity and trustworthiness. The High Court decides whether a person meets these criteria, and if they do, they can be “admitted to the bar”. Those admitted to the bar are the only people allowed to act on behalf of another person in our courts.

It is a privilege to be admitted to the bar, and it carries responsibilities. A lawyer is subject to the Rules of Professional Conduct, which sets high ethical standards which must be adhered to. A lawyer’s conduct, quality of work and fees remain subject to examination by the Law Society. Some of those privileges extend to clients too – for example you can tell your lawyer anything and with only minor exceptions it can never be disclosed to hurt your interests. This is called “legal professional privilege”.

And what of advocates? Confusingly, in America, lawyers are often referred to as ‘advocate’ (especially on television dramas!). However, although lawyers frequently advocate, they will almost always refer to themselves as one or more of the ‘reserved’ names – barrister, solicitor, lawyer, or sometimes in Court proceedings “counsel”. If someone describes themselves as an advocate, consultant (except perhaps a consultant to a law firm), representative, advisor or legal expert, they may be all of those things but they are probably not a lawyer.

There are many good advocates who do good work in their chosen fields. However, some caution may be required – there is no minimum standard to meet or admission criteria to use one of these descriptions. So, you may be dealing with a highly qualified expert or you may not – it pays to ask. Additionally, they may or may not have membership of a professional organisation which monitors their ethical standards, work and fees. Without an overriding accountability, there may be poor quality control, and no limits on fees. Finally, there is a risk in legal proceedings that information you disclose to your advocate can be used against you. Again, it pays to know what you are dealing with.

If you are interested in a lawyer’s professional obligations and responsibilities to you, they should be detailed in their Terms of Engagement (one of our obligations is to provide these to a client at the first opportunity), or you can look at the New Zealand Law Society’s resources online. You can also use that website to search for a lawyer.

In case you're interested in all my dirty laundry: