The Ultimate Guide To Employment Law

1- Types of Engagement

  • Permanent Employment
  • Fixed Term Employment
  • Casual Employment
  • Contractor

2- Employment Agreements

  • Individual
  • Collective

3- Terms of Employment Agreements

  • ROT
  • Confidentiality
  • IP

4- Duties and Obligations (Good Faith)

5- Probationary period and trial periods

6- Hours of work (Wages and Salary)

  • Availability clause
  • Wage and time records
  • KiwiSaver

7- Holidays and Leave

  • Annual holidays
  • Public holidays Sick leave and bereavement leave
  • Parental leave and domestic violence leave

8- Ending the employment relationship

  • Resignation
  • Abandonment
  • Disciplinary process

9- Issues arising during employment

  • Redundancy and restructuring
  • Performance management
  • Disciplinary process
  • Medical Incapacity

10- Personal grievances and remedies

11- Health and Safety At Work Act 2015

12- Human Rights

  • Unlawful discrimination in employment
  • Sexual and racial harassment

13- Privacy Act 1993

  • References
  • Whistleblowing
  • Harmful Digital Communications

Types of Engagement

There are four main types of employment agreements. A specialist Employment Lawyer can help you select the correct contract for each employee and can conduct an employment agreement review.

Edwards Law has employment agreement templates that they can adapt for your business. It is important to seek expert advice before making changes to employment agreements, to ensure you comply with the Employment Relations Act 2000. Edwards Law has extensive experience in all employment law issues and provides reliable, practical advice for peace of mind.

  1. Permanent Employment
  2. Fixed Term Employment
  3. Casual Employment
  4. Contractor

Fixed Term Employment

A fixed-term (temporary) employee’s employment does not continue indefinitely, rather the employment must end on a specified date or when a particular event occurs.

Where an employee is subject to a fixed-term employment agreement, the agreement must state:

a) the way in which the employment will end (i.e. at the close of a specified date or period, on the occurrence of a specified event, or at the conclusion of a specified project); and
b) the reasons for ending the employment in that way (i.e. why the employment relationship cannot be permanent).

Accordingly, in order to utilise a fixed-term employment agreement, an employer is required to specify a “genuine reason” based on reasonable grounds for employing someone on a fixed term. Roles that continue to exist once the fixed term is complete, are of a permanent nature as opposed to a fixed term.

Common examples of genuine fixed term employment agreements include an employee covering another employee’s parental leave or covering a busy period (e.g. a retail worker employed over the busy Christmas period). An employer cannot utilize a fixed term role to assess an employee’s suitability for employment.

Employees employed on a fixed-term basis can move to permanent employment for various reasons. However, the period the employee has worked under the fixed-term employment will count toward their assessment of 12 months’ continuous employment (for the purposes of annual leave).

That said, the amount of any holiday pay the employee is entitled to upon 12 months’ employment will be reduced by the amount of holiday pay that was paid with the employee’s regular pay (pay-as-you-go holiday pay) while employed on a fixed-term basis (should this have occurred). Edwards Law is employment lawyers with fixed term employment agreement templates ready to adapt for your business.

Casual Employment

The term ‘casual employee’ is not actually defined in employment legislation, but most of us know it as a situation where an employee works on an “as and when required” basis. Casual employees do not have fixed hours of work, and receive a “pay as you go” holiday pay equating to 8% of wages as an additional component of their pay. As opposed to providing four weeks of annual leave, this is a casual employment holiday pay entitlement in New Zealand.

What is the difference between casual agreements and part-time employment?

When is a casual employee no longer considered to be casual, but permanent part-time instead? The answer may surprise you. There are many criteria that are often applied to the test of casual employment. If an employer cannot demonstrate that an employee meets, then the casual employee is more likely to be permanent in the eyes of the law. Do your casual employees fit the criteria? Let’s take a look.

The following list of factors are often assessed by employment institutions, including the Employment Relations Authority and Employment Court, and are considered to be consistent with casual employment agreements:

  1. there is engagement for short periods of time for specific purposes i.e. Christmas holiday casuals;
  2. the employment relationship lacks any regular work pattern;
  3. the employee’s employment is dependent on the availability of work demands;
  4. there is no guarantee of work from one week to the next;
  5. there is no obligation on the employee to accept another engagement – so the employee can turn down work on offer. This is something employers often forget, particularly around busy holiday periods, when certain shifts may be more popular than others; and
  6. employees are only engaged for the specific term of each period of employment.

It is recognised that, despite initially being employed on a casual basis, the nature of employment can become more permanent over time, where hours of work are no longer intermittent and irregular.

Accordingly, it is where the pattern of work becomes sufficiently regular and continuous (i.e. the employee is working the same days and/or hours every week) and where the employee has a reasonable expectation of ongoing work and is required to show up each week, that a casual employment relationship could become permanent.

If a casual employee’s employment has ended suddenly, should the employee successfully argue that they were actually performing the role of a permanent employee, this could give rise to an unjustified dismissal grievance. Furthermore, if a regular pattern of work has developed but the employer continues to pay 8% holiday pay for 12 months or more, the employee will become entitled to paid annual holidays, and any amount already paid on a pay-as-you-go basis cannot be deducted.

Ensuring that employment agreements for casual workers clearly set expectations of both parties to a casual employment relationship could help to minimise the risk of casual employees unintentionally becoming permanent employees. Seeking legal advice regarding how to properly set out these expectations in employment agreements for casual workers is very important to mitigate any potential future problems.

Edwards Law is employment lawyers who can provide you with this legal advice and have casual employment agreement templates that are ready to be adapted for your business.

Employers should continually monitor their casual employees’ work patterns, identifying whether they continue to be offered and accept work (with the right to decline work) or whether they are working regular days or hours or being regularly incorporated into a roster.

Independent Contractors

Do you hire independent contractors? Are you aware that they could claim to be employees instead, and ask for payment of minimum employee entitlements? Here are four things that all employers should keep in mind when looking to engage a contractor/s.

Self-employed people are sometimes referred to as contractors or independent contractors; these terms mean the same thing. A contractor is engaged by a principal to perform services under a contract for services (commonly called an independent contractor agreement).

Contractors are self-employed and earn income by invoicing the principal for their services. Contractors are not covered by most employment-related legislation. Contractors do not receive minimum employment benefits, such as annual leave or sick leave, and cannot bring personal grievances to the Employment Relations Authority or Employment Court. Contractors have to pay their own taxes, and general civil law determines most of their rights and responsibilities.

However, there can be instances where the working relationship is not clearly defined at the start of the working arrangement, or the working arrangement changes over the course of the individual’s time working for an organisation. It is not uncommon for the parties to have a working relationship to continue operating harmoniously until the relationship breaks down and the worker claims that they were an employee (and should have been receiving paid holidays etc.).

If a worker were to make such a claim, the Employment Relations Authority or Employment Court will consider a range of factors/tests to determine the “real nature” of the relationship and whether it is truly an independent contractor relationship or if it is in fact, an employment relationship. We have summarised each test briefly below.

1. Intention test

The first test focuses on what the parties intended the relationship to be.

Whilst pursuant to section 64(1) of the Employment Relations Act 2000 (“the ERA”), an employee must be provided with a written employment agreement, the relationship between a contractor and principal will be governed by the agreement between the parties (a ‘Contract for Services’) although there is no legal requirement that this is in writing.

2. Control Test

The second test is the control test. The greater the degree of control exercised over the worker’s work content, hours and methods, the more likely it is that a person is an employee. For example:

  • employees will primarily work for a single employer. Contractors will often be able to, and will, work for more than one principal.
  • an employer will usually exercise a high degree of control over an employee’s work i.e. an employee is often told what to do and how to do it. A contractor will perform services in accordance with the agreement between the parties – the way in which they perform the services will largely be independent of instruction from the company.
  • an employer will usually set the standards and quality/performance targets for an employee, whereas a contractor decides on their own standard and quality of work. an employee will generally have a fixed number of hours per week or rostered hours and is entitled to set breaks;
  • an employee will have limited (if any) control over their availability (unless this is an agreed term) and is likely to have set days to work (e.g. Monday – Friday), where they must be available. However, a contractor generally determines their own breaks and their own working hours. They will also usually have more discretion over their availability (e.g. they may make themselves unavailable on certain days of the week).
3. Integration Test

The third test considers whether the worker is an integral part of the business. Generally, the work performed by an employee will be fundamental to the employer’s business (part and parcel of the organisation). However, work performed by a contractor is usually supplementary to the business.

Work performed by an employee will ordinarily be continuous (unless it relates to a fixed term project). Conversely, work performed by a contractor is often (but not always) project based.

An employer should provide all tools and equipment required by an employee whereas contractors generally provide their own tools/equipment (may provide specialist tools). Similarly, employees are usually reimbursed for work-related approved expenses, whereas expenses are part of the cost of running business for contractors.

Employees are often integrated into a team/meetings/outing however contractors are less integrated into the team environment and not as likely to be included in team meetings/events.

If the employer has a uniform, the employee will generally wear the uniform or company logo. Employees will also generally have company business cards and a company email/sign off. Since a contractor is in business on their own account and does not associate with the company’s brand, they may have their own branding/logo and/or email sign off.

4. Fundamental/Economic Reality Test

The final test looks at whether the worker is in business on their own account. For instance, employees are paid a salary or wage subject to PAYE, by the employer automatically, in the set pay run. Employers will pay PAYE and ACC on an employee’s behalf. However, contractors will invoice for their charges or fees and are not subject to PAYE. They are also responsible for paying their own tax to the IRD and their own ACC levies. Contractors must be GST registered if they are earning over $60,000 per annum, but employees do not need to be GST registered.

An employee’s pay rate is set and increased by the employer and must be at least the minimum wage whereas a contractor often sets their own rate for services and decides on any increases in rates. The minimum wage is not applicable to contractors.

Employees will not be able to increase profits to themselves by cutting on costs etc. but contractors generally have the scope to increase their profits (e.g. by increasing efficiency or reducing costs).

Employees are required to perform the work personally. If the employee is unable to work, they cannot elect a replacement. Alternatively, contractors can often have someone else perform the work (for example engage subcontractors or get their own employee perform the work). Contractors are able to provide a replacement if they are unable to do the work.

Employees are employed personally whereas contractors may operate through a company structure. An employee works within the employer’s business, however a contractor operates a distinct business from the employer’s, providing the services to the company.

Employees do not carry financial risk in performing their work. On the other hand, contractors do carry financial risk (e.g. under-quoting or where costs exceed budget) and are responsible for their own losses as a result of bad management. This flows through to contractors being responsible for remedying any unsatisfactory work at their own expense in their own time. Conversely, if an employee is required to correct work, it will be done during work time.

Employment Agreements

Employment agreements are an essential building block for a good employment relationship. A well written agreement should contain the fundamental terms and conditions of the employment to ensure both an employer and employee are clear about the expectations of the role and the working conditions.

Any problems which may arise throughout the course of employment can be clarified by looking at the provisions set out in the agreement. Therefore, it is crucial for every employee to have a written employment agreement, a copy of which must be provided to them by their employer.

Collective vs Individual Employment Agreements:

There are two types of employment agreements: individual and collective.  There are significant differences between collective and individual employment agreements. An individual employment agreement binds only the employer and employee and allows both parties to negotiate the agreement’s terms and conditions. 

If an employee is a union member, they can be covered by a collective employment agreement which binds them, their employer, and their registered union. A collective agreement covers two or more employees collectively. Edwards Law has employment agreement templates in the form of both individual and collective employment agreements that are ready to be customised for your business. To avoid future problems, you should seek out legal advice when drafting employment agreements.

Individual Employment Agreements

Pursuant to section 64 of the ERA, employers must retain a copy of the Individual Employment Agreement (“IEA”) or the current terms and conditions of employment that make up the terms and conditions of the employee’s employment.  The employer must keep a copy of the intended agreement even if the employee has not signed the intended agreement or has not agreed to any of the terms and conditions of the intended agreement. 

An intended agreement will not be treated as the employee’s employment agreement.   If requested by the employee, the employer must as soon as reasonably practicable, provide the employee with a copy of the employee’s IEA or intended IEA.  Failure to do so will make the employer liable for a penalty imposed by the Authority where an action is brought by the employee or the Labour Inspector.  

Pursuant to section 63A of the ERA, an employee has the right to bargain and negotiate the terms and conditions of their employment.  In doing so, the employer must:

a) Provide the employee with a copy of the intended individual employment agreement;
b) Advise the employee that he or she is entitled to seek independent advice about the intended individual employment agreement;
c) Give the employee a reasonable opportunity to seek independent advice; and
d) Consider any issues that the employee raises and respond to them.

Failure to allow the employee to bargain/negotiate the terms of their employment could make an employer liable for a penalty imposed by the Authority.  However, failure to comply with bargaining obligations does not affect the validity of the IEA. If your business is in need of legal advice regarding the terms of an individual employment agreement, our team of employment lawyers are able to provide this advice for you. Edwards Law has individual employment agreement templates ready to be customised for your business.

Mandatory Provisions of an Individual Employment Agreement

Each individual employment agreement between an employer and an employee must include:

  • the names of the employee and employer;
  • a job description of the work to be performed by the employee;
  • an indication of the place of work;
  • the agreed hours of work or an indication of the hours the employee will work, such as:
    • the number of hours;
    • start and finish times;
    • the days of the week the employee will work;
  • the employee’s wages or salary payable to them for their work; entitlements in the event an employee works on a public holiday, including whether they are entitled to be paid time and a half for work on a public holiday;
  • an employee protection provision, applicable in situations where the employment is affected by the transfer or sale of the employer’s business, the employee’s work is contracted out or the employer’s business is restructured; and
  • an explanation of how to resolve employment relationship problems, the services available to do so, and a reference to the 90-day period within which a personal grievance must be raised by the employee.

Collective Employment Agreements

The duty of good faith requires a union and an employer bargaining for a collective employment agreement to do, at least, the following:

  • the union and the employer must use their best endeavours to enter into an arrangement, as soon as possible, after the initiation of bargaining, that sets out the process for conducting the bargaining in an effective and efficient manner;
  • the union and the employer must meet each other, for the purposes of bargaining;
  • the union and the employer must consider and respond to proposals made by each other;
  • even if the union and the employer have come to a standstill or reached a deadlock, they must continue to bargain about other matters on which they have not reached an agreement;
  • the union and the employer must not undermine or do anything likely to undermine the bargaining or the authority of the other in the bargaining;
  • the union and the employer must provide to each other, on request, information that is reasonably necessary to support or substantiate claims or responses to claims made for the purposes of bargaining.

The duty of good faith also requires the parties to conclude bargaining for a collective agreement unless there are genuine reasons based on reasonable grounds not to.

A collective agreement comes into force on the date specified in the agreement or, if no such date is specified, the date on which the last party to the agreement (or its representative) signed the agreement.

A collective agreement expires on the close of the earliest of the following dates:

  • the date specified in the agreement;
  • the date on which an event occurs, as specified in the agreement; or
  • the third anniversary of the agreement coming into force.

A collective agreement that has otherwise expired continues in force:

    • if the union or the employer initiated collective bargaining before the collective agreement expired and for the purposes of replacing the collective agreement; and
    • for a period not exceeding 12 months during which bargaining continues for a collective agreement to replace the collective agreement that has expired.

A collective agreement that is in force binds and is enforced by:

    • the union and the employer that are parties to the agreement; and
    • the employees:
      • who are employed by an employer that is party to the agreement; and
      • who are or become members of a union that is party to the agreement; and
      • whose work comes within the coverage clause in the agreement.

Mandatory Provisions of a Collective Employment Agreement

According to section 54(1) of the ERA, a collective agreement will have no effect unless it is in writing, and it is signed by each union and employer that is party to the agreement.

A collective agreement must also include:

  • a coverage clause. This means a provision in the collective agreement that specifies the work that the agreement covers and the work or type of work done by named employees, to whom the collective agreement applies (unless the employees are named);
  • the rates of wages or salary payable to employees bound by the collective agreement;
  • an explanation of how to resolve employment relationship problems, the services available to do so, and a reference to the 90-day period within which a personal grievance must be raised by the employee;
  • how the collective agreement can be varied;
  • an employee protection provision – applicable in situations where the employment is affected by the transfer or sale of the employer’s business, the employee’s work is contracted out or the employer’s business is restructured; and
  • the date on which the collective agreement expires or an event on the occurrence of which the agreement is to expire.

Additional provisions for Individual and/or Collective Employment Agreements

Alongside these mandatory provisions, it is a good idea to include some other additional provisions within the agreement outlining the other entitlements available to an employee. These can include, but are not limited to:

  • a commencement date;
  • hours of work;
  • location of work;
  • remuneration;
  • KiwiSaver entitlements, including whether KiwiSaver is included in the employee’s remuneration or is paid in addition. The employment agreement should also state the rate of the KiwiSaver employer contributions (the minimum being 3% if an employee opts to join KiwiSaver);
  • sick leave entitlements, including when proof of sickness is required, whether sick leave can be taken to care for a spouse/partner, child or another dependent; bereavement leave entitlements, including whether their entitlement arises for the death of a spouse/partner, parent, child, brother or sister, grandparent or grandchild, and upon miscarriage or stillbirth;
  • parental leave entitlements;
  • family violence entitlements, including leave and flexible working requests;
  • a recognition of the employee’s entitlement to 4 weeks annual leave;
  • a provision for the option to “Cash up” the fourth week of an employee’s annual holidays;
  • a provision for an annual closedown;
  • any probationary or trial periods applicable to the employment;
  • an availability provision outlining the agreed specified hours of availability, and the payment of reasonable compensation to the employee for making themselves available;
  • jury service, i.e. whether the employee is entitled to be paid their usual wages/salary during jury service or must take leave and keep their juror fee;
  • on what basis the employee’s employment can be terminated, i.e.:
    • by the employee’s written notice of their resignation;
    • termination on notice for misconduct, medical incapacity, redundancy etc; or
    • immediate termination/summary dismissal for serious misconduct;
  • how the employee’s notice period is to be treated, i.e. worked out, paid in lieu of working the notice period or on garden leave;
  • restraint of trade and non-solicitation requirements;
  • whether the employee can be suspended and on what grounds;
  • abandonment;
  • force majeure;
  • medical assessments. In some circumstances an employer can require an employee to undergo a medical or psychiatric examination or assessment;
  • deductions from an employee’s wages;
  • confidentiality, which will set out what is deemed confidential information and that the employee (during and after the termination of their employment) must not use, disclose or copy any confidential information;
  • intellectual property provisions, which provide the employer is the sole owner of all intellectual property, the employee has no claim and has no intellectual property rights in respect of the employer’s intellectual property, the employee assigns all intellectual property rights to the employer;
  • health and safety employment obligations, including taking reasonable care to ensure health and safety, reporting and/or recording all incidents, injuries, incidents and events;
  • conflict of interest, where the employee is prohibited from being interested in, engaged in, employed by or benefitting from any business or activity that competes or intends to compete with the business of the employer-provided the employer has genuine reasons based on reasonable grounds for prohibiting this.
  • rest and meal break times available to the employee, both paid and unpaid; or
  • the nature of employment, i.e. whether it is full-time permanent, part-time permanent, casual or fixed term. If it is fixed-term, the reasons for a fixed-term agreement.

Provisions which directly deal with the breakdown and/or termination of an employment relationship are equally as important to include in individual employment agreements to avoid doubt and uncertainty. A common provision for this purpose is a notice period, which specifies the notice which must be given to the other party upon termination or resignation from employment. Other important provisions consist of redundancy clauses, restraint of trade and confidentiality (explained in more depth further below).

If an individual employment agreement does not contain provisions that an employer wishes to enforce, then such terms shall not apply to the employment relationship unless it meets the common law test for implied terms. However, it is not practicable to include a provision for each eventuality that could potentially arise in the employment relationship.

To ensure employers can achieve a reasonable degree of flexibility with their employees in the workplace, a revisable staff handbook or company policy can help cover all the bases which are unnecessary to include in an IEA. Unlike IEAs, a handbook or policy can be changed by an employer without seeking consent from the employee prior to making the change.

When entering into an individual employment agreement, a prospective employer must provide an employee with a copy of their IEA and advise them on their entitlement to seek independent advice. Furthermore, the employer should give the employee a reasonable opportunity to seek such advice, and should the employee have any issues with the IEA or its terms, an employer should consider any of these issues and respond to them.

Terms of Employment Agreements

Restraints of Trade

Unlawful in the first instance, but incredibly valuable if you get it right, restraint of trade contract law is a contentious area under NZ employment law. A restraint of trade clause is a provision that may be included in an employment agreement or independent contractor agreement. In the context of NZ employment law, it can restrict what the employee can do after their employment ends. There are generally three types of restraint of trade, for example:

  • Non-competition – which prevents the employee from being connected, employed, engaged or interested in a competitor of their former employer;
  • Non-solicitation – which prevents the employee from soliciting clients or other employees from its previous employer; and
  • Non-dealings – which prevents the employee from dealing with any customers or suppliers of their previous employer.

Generally, a restraint of trade provision in an employment agreement must be necessary to protect some proprietary or other legitimate interest (such as confidential business information). It must also be shown that the restraint is not excessive in terms of its duration and the area and scope of activities it covers. On occasion, wider public interest considerations are also relevant.

When assessing the reasonableness of the restraint, the Employment Relations Authority or Employment Court will balance an employer’s need to protect its proprietary interests and business know-how, and an employee’s right to employment in their given field of expertise.

If an employer is relying on a restraint of trade provision, it must show that the employee gave consideration for agreeing to the restraint. Consideration is someone getting something in exchange for something else. In the context of restraints, an employee’s remuneration would amount to consideration for the restraint. However, if an employer is seeking to amend the employee’s terms of employment and includes a restraint of trade clause, the employee should be offered additional remuneration as consideration for agreeing to the restraint. The employment agreement should explicitly acknowledge that the employee has received consideration for the restraint.

If an employer is seeking to enforce a restraint of trade in New Zealand, the first step could be to write to the employee putting them on notice of their obligations and require that they stop doing what they are doing otherwise the employer may seek to enforce it against them in the Employment Relations Authority. If this is not successful or as a first step, the Employer can initiate proceedings in the Employment Relations Authority against the employee for breach of the restraint provision. An employer can do this on an urgent interim basis.

If a restraint of trade is found to be unreasonable, the Authority can either decline to enforce the restraint or modify the restraint and give effect to it as modified. This could include modifying the duration or extent of the restraint.

Employee Confidentiality

Although an employee is bound by the implied duty of confidentiality, it is beneficial to specifically set out what constitutes confidential information, in an employee’s employment agreement. Information that would be prudent to explicitly set out as confidential information in this provision could include the company’s financial information, business methods and strategies. This information is what differentiates one competitor from another. If such information gets out, your business or client’s business might lose its competitive advantage. However, please bear in mind this contractual restraint must be no more than is reasonably necessary to protect the employer’s interests.

A good confidentiality provision and/or confidentiality agreement will have:

  • a definition of what “confidential information” means; and
  • examples of what is considered confidential information. This list should not be exhaustive (i.e., “including but not limited to”) and should include information relating to:
    • the employer’s financial or business affairs;
    • a customer’s affairs;
    • business financial affairs;
    • trade secrets;
    • management systems; and
    • detailed customer or supplier lists.
  • specify that maintaining confidentiality/not misusing confidential information is an enduring obligation, following termination of the employment relationship (for so long as the information continues to be confidential information).

If you suspect that there may have been a breach of confidentiality, it’s important to seek employment law advice immediately.

Intellectual Property Law

What Is Intellectual Property?

It is generally accepted that intellectual property in New Zealand (“IP”) is a business asset and is protected by intellectual property laws. However, when IP is developed by employees or third-party contractors, issues over IP rights can arise. Businesses often take it for granted that they own employee-created IP, whether it is copyright works, patents, trademarks or less common forms of IP. However, in New Zealand, an employer will only be entitled to the rights in any IP created by an employee if it was created ‘in the course of employment’. Generally, where an employee creates IP in their own time, they will retain ownership rights to it.

A well-drafted intellectual property provision will set out:

  • a definition for what constitutes an employer’s IP. This should be an expansive provision to include all types of property the employee may work on/create whilst employed;
  • the employer is the sole owner of all intellectual property rights; the employee does not have or claim any intellectual property rights in or relating to the employer’s IP, and will not exploit any intellectual property rights in or relating to the employer’s IP for his or her personal gain or for anyone else;
  • the employee confers all rights of action in relation to an infringement of the employer’s IP by third parties; and
  • the employee will do all things necessary to secure the employer’s full right, title and interest in the employer’s IP (including by executing any assignments) and confer on the employer all rights or action in relation to any infringement of the employer’s IP by third parties.

Duties and Obligations

The Duty of Good Faith

At the heart of employment relations is a requirement for good faith. Initially, an implied duty under common law, the Employment Relations Act 2000 (“ERA 2000”) introduced a statutory duty of good faith under section 4 that requires parties to an employment relationship:

  • to have an active and constructive relationship where they are, among other things, responsive and communicative;
  • not to do anything that misleads or deceives (or is likely to mislead or deceive) each other;
  • and with some exceptions, it requires an employer to propose to make decisions that will or are likely to have an adverse effect on the continuation of employment of any employees to provide them with access to information relevant to the continuation of their employment about the decision and an opportunity to comment on that information before the decision is made.

The duty of good faith underpins the framework of the ERA 2000. Section 4(4) of the ERA 2000 sets out eight non-exhaustive circumstances in which the duties of good faith must be carried out. These include:

  • collective bargaining (including variations and initiation of bargaining);
  • in any matter arising under or in relation to a collective employment agreement or an individual employment agreement while the agreement is in force;
  • bargaining for individual employment agreements or variations;
  • consultations between employers and their employees and unions about collective employment interests including the effect on employees of changes to businesses;
  • employer proposals that might impact employees including, in particular, to contract out work of employees or sell or transfer all or part of a business; making employees redundant; and
  • access to workplaces by union representatives; communications or contacts between unions and employers relating to secret ballots held for collective bargaining.

It is important to keep the duty of good faith in the back of your mind when undertaking any action as an employer or employee. Both parties must act in a positive and constructive manner during the employment relationship.

Employment Trial Period Provisions

Trial Periods

An employer with 19 or fewer employees (at the beginning of the day on which the employment agreement is entered into) may employ a new employee on an employment trial period for up to the first 90 calendar days of their employment called a 90 day trial period in NZ. However, an employee cannot be on a trial period if they have been employed by that employer before, in any capacity (i.e. casual, fixed term etc).

Including a 90-day trial period provision in an employment agreement means that the employee cannot bring a personal grievance for unjustified dismissal or other legal proceeding about their dismissal (as long as the employer has given the right amount of notice to the employee) when terminating employment during a trial period.

A valid trial period must:

  • be agreed to in the employment agreement before the employee starts work, or the trial period is invalid
  • have a valid notice period in the employment agreement;
  • be agreed by the employer and employee in good faith. An employee should be made aware that their employment will be subject to a trial period. The employee must have a chance to receive advice on the employment agreement/trial period and raise any issues, and sign their employment agreement before they start work.
  • be in the employment agreement and must state that:
    • from the start of their employment, the employee will be on a trial for a set period which is not more than 90 days (but can be less). The exact time period must be stated, e.g. it could be 30 days, or 90 days, or another stated time period less than 90 days; and
    • during the trial, the employer can dismiss the employee; and
    • the employee cannot bring a personal grievance or other legal proceedings about their dismissal.

The employer must abide by the specific notice period under the employment agreement, even if the notice period takes the employment outside of the 90-day trial period.

Probationary Periods

Whilst an employee is statutorily barred from taking a grievance or legal proceedings relating to a dismissal under a trial period, this is not the case for probationary periods in NZ. Essentially, an employment probationary period is akin to a first written warning for poor performance/conduct concerns. It puts the employee on notice that their performance is being assessed.

Therefore, where an employee is subject to a probationary period, the employer can start with a final written warning as the potential outcome (rather than a first written warning). After a final written warning is issued, the process would then follow on from there.

A probationary period must be specified in writing and should include how long the probationary period will last, and what steps will be taken to address any concerns throughout this period.

Probationary periods can be extended by another 90-days if such a clause is included in the IEA.

If your business needs legal advice and assistance surrounding employee probationary period laws in NZ, Edwards Law has a team of experienced NZ employment lawyers who can help your business navigate these laws correctly.

Hours of work (Wages and Salary)

Availability

If an employer wishes to rely on being able to require an employee to be available to work overtime, (as opposed to it being a voluntary exercise), it must comply with the requirements of section 67D of the Employment Relations Act 2000 (“ERA 2000”), which pertains to Availability Provisions.

To comply with section 67D of the ERA 2000, a valid Availability Provision must:

  • only be included where the employer has genuine reasons based on reasonable grounds for including the Availability Provision and the number of hours of work contained in that Availability Provision;
  • specify agreed hours of work (which must include guaranteed hours of work among those agreed hours);
  • relate to a period in which the employee is required to be available in addition to the guaranteed hours of work; and
  • provide for payment of “reasonable compensation” to the employee for being available (over and above the guaranteed hours of work).

The way in which compensation is to be calculated suggests that the greater the span of agreed availability, the larger the compensatory payment should be. However, there is still somewhat of a question mark over what reasonable compensation looks like in any given case, especially where it is not practicable to anticipate in advance what level of overtime/additional hours may be required.

Salaried employees may have a clause in their IEA providing that their salary provides reasonable compensation for them performing reasonable overtime.

However, for waged employees the situation is slightly different, as “reasonable compensation” must be a compensatory payment over and above the employee’s hourly wage. There is no provision in the legislation permitting “reasonable compensation” to be included in the hourly wage.

If the requirements of the ERA 2000 are not met, the result is that the employee can decline to make themselves available (per section 67E of the ERA 2000).

Time and Wage Records

Section 130 of the Employment Relations Act 2000 requires employers to keep wages and time records that show:

a) the name of the employee:
b) the employee’s age, if under 20 years of age:
c) the employee’s postal address:
d) the kind of work on which the employee is usually employed:
e) whether the employee is employed under an individual employment agreement or a collective agreement:
f) in the case of an employee employed under a collective agreement, the title and expiry date of the agreement, and the employee’s classification under it:
g) the number of hours worked each day in a pay period and the pay for those hours:
h) the wages paid to the employee each pay period and the method of calculation:
i) details of any employment relations education leave taken:
j) such other particulars as may be prescribed.

Where an employee’s number of hours worked each day in a pay period and the pay for those hours is agreed and the employee works those hours (“usual hours”), it is sufficient if those usual hours and pay are stated in:

  • the wages and time record;
  • the employment agreement; or
  • a roster or any other document or record used in the normal course of the employee’s employment.

Wage and time records must be kept in written form; or in a form or in a manner that allows the information in the record to be easily accessed and converted into written form. Wage and time records must be kept for seven years (even if the employee has left).

Holiday and Leave Records

The Holidays Act 2003 requires employers to keep a holiday and leave a record, with specific information for each employee. These records must also be kept for six years and must show:

a) the name of the employee;
b)the date on which the employee’s employment commenced;
c) the number of hours worked each day in a pay period and the pay for those hours;
d) the employee’s current entitlement to annual holidays;
e) the date on which the employee last became entitled to annual holidays;
f) the employee’s current entitlement to sick leave;
g) the dates on which any annual holiday, sick leave, bereavement leave, or family violence leave has been taken;
h) the amount of payment for any annual holiday, sick leave, bereavement leave, or family violence leave that has been taken; the portion of any annual holidays that have been paid out in each entitlement year (if applicable);
i) the date and amount of payment, in each entitlement year, for any annual holidays that are cashed up;
j) the dates of, and payments for, any public holiday on which the employee worked;
k) the number of hours that the employee worked on any public holiday;
l) the day or part of any public holiday that is agreed to be transferred and the calendar day or period of 24 hours to which it has been transferred (if applicable);
m) the date on which the employee became entitled to any alternative holiday;
n) the details of the dates of, and payments for, any public holiday or alternative holiday on which the employee did not work, but for which
o) the employee had an entitlement to holiday pay;
p) the cash value of any board or lodgings, as agreed or determined under section 10 of the Holidays Act 2003;
q) the details of any payment in exchange for an alternative holiday; r) the date of the termination of the employee’s employment (if applicable);
s) the amount paid to the employee as holiday pay upon the termination of the employee’s employment (if applicable); and
t) any other particulars that may be prescribed.

Holidays and leave records must be kept in written form; or in a form or in a manner that allows the information in the record to be easily accessed and converted into written form.

KiwiSaver

KiwiSaver is a voluntary saving scheme to help set employees up for your retirement. KiwiSaver is for all New Zealand citizens and permanent residents living or normally living in New Zealand. Individuals can make regular contributions from their pay or directly to their scheme provider.

Employees are automatically enrolled on KiwiSaver if they are:

  • eligible to be enrolled;
  • starting work with a new employer; and
  • aged between 18 and 65.

An individual can opt-out of being enrolled in KiwiSaver when they commence new employment, between the end of week 2 and week 8 of starting work (that is on or after day 14 and on or before day 56). If an employee does not opt-out within this timeframe, they will stay in KiwiSaver and the employer will continue to deduct contributions from the employee’s pay (subject to some specific exceptions e.g. your employer did not give you a KiwiSaver information pack or events occurred outside your control which meant you could not deliver your opt-out notice on time)

If an employee stays enrolled, they will need to make a KiwiSaver employee contribution of either 3%, 4%, 6%, 8% or 10% of their before-tax pay to their KiwiSaver provider. If an employee does not choose a contribution rate, an employer will deduct the default rate of 3%. These contributions will be made through wage deductions.

An employer will also contribute to the employee’s KiwiSaver, in the form of KiwiSaver employer contributions, unless there is an agreement between the parties that the employer contribution is included in the employee’s salary or wages. The current default rate for employer contributions is 3%.

Holidays and Leave

Annual Leave Entitlements

Permanent employees (or employees on a fixed term over one year) are entitled to four weeks’ annual holidays each year when they have worked for their employer for 12 months.

However, an employee’s annual holiday pay be regularly paid with an employee’s pay where:

  1. an employee is employed on a fixed-term agreement to work for less than 12 months; or
  2. an employee works for the employer on a basis that is so intermittent or irregular that it is impracticable for the employer to provide the employee with 4 weeks’ annual holidays (i.e. a casual employee) and:
    • the employee agrees to be paid their holiday pay with the employee’s pay in his or her employment agreement; and
    • the annual holiday pay is paid as an identifiable component of the employee’s pay; and
    • the annual holiday pay is paid at a rate not less than 8% of the employee’s gross earnings.
Calculating Annual Holiday Payments

Annual holidays are paid out at the rate of a higher for employees:

  • ordinary weekly pay (“OWP”) at the beginning of the annual holiday, or
  • the employee’s average weekly earnings (“AWE”) for the 12 months immediately before the end of the last pay period before the annual holiday. This means 1/52 of an employee’s gross earnings.

OWP is the amount an employee receives under his or her employment agreement for an ordinary working week. This includes allowances that are a regular part of an employee’s pay, or regular productivity payments (e.g. regular commission payments).

When it is not possible to work out OWP in terms of the amount the employee normally receives for an ordinary working week then OWP must be calculated in accordance with the OWP formula as follows:
a − b − c

a) is the employee’s gross earnings for—

    • the 4 calendar weeks before the end of the pay period immediately before the calculation is made; or
    • if the employee’s normal pay period is longer than 4 weeks, that pay period immediately before the calculation is made

b) is the total amount of payments that the employee is paid that do not form part of their ordinary weekly earnings (i.e. productivity or incentive-based payments that are not a regular part of the employee’s pay; payments for overtime that are not a regular part of the employee’s pay; any one-off or exceptional payments; any discretionary payments that the employer is not bound, under the terms of the employee’s employment agreement, to pay the employee; and any payment of any employer contribution to a superannuation scheme for the benefit of the employee).
c): is 4.

Cashing up Annual Leave

When it comes to cashing up annual leave, an employee is able to request that up to one week of his or her annual holiday’s entitlement be paid out, per each entitlement year. If the employer agrees to the employee’s annual leave payout request, the employer must pay the employee the amount agreed between the employer and the employee in exchange for the alternative holiday.

Directing an Employee to take Annual Leave

An employer can require an employee to take annual holidays, after consulting in good faith and giving 14 days’ notice.

Public Holiday Pay NZ

The recognised NZ public holidays are Christmas Day, Boxing Day, New Year’s Day, 2 January, Waitangi Day, Good Friday, Easter Monday, Anzac Day, the birthday of the reigning Sovereign, Matariki, Labour Day and Anniversary Day.

Paying Employees on a Public Holiday

If an employee is requested to work on any part of a public holiday, the employee will be entitled to public holiday pay at the greater of the:

  1. hours the employee actually worked at the rate of 1.5 times the employee’s relevant or average daily pay rate (on an hourly basis); or
  2. portion of the employee’s relevant daily pay that relates to the time actually worked on the day.

An employee will also be entitled to an alternative holiday (day in lieu), instead of a public holiday, if:

  1. the public holiday falls on a day that would otherwise be a working day for the employee; and
  2. the employee is required to work and actually works (in accordance with this Agreement) on any part of that day.
Alternative Holidays

An employee is not entitled to an alternative holiday if they only work for the employer on public holidays.

If the employee becomes entitled to an alternative holiday an employer may require an employee to take the alternative holiday on a date determined by the employer, if the parties have been unable to agree on a day on which the Employee will take that day. In those circumstances, the Employer will give the Employee 14 days’ notice of that requirement.

An employee may request that an employer exchange the employee’s entitlement to an alternative holiday for payment if 12 months have passed since the entitlement arose. It is at the employer’s discretion as to whether to agree to that request.

Sick Leave Entitlement

All employees (including part-time and casual employees) are entitled to 10 days’ sick leave if:

a) they have six months’ current continuous employment with the same employer; or
b) they have worked for the employer for six months for:

    • an average of 10 hours per week, and
    • at least one hour in every week or 40 hours in every month.

Sick leave may be taken when:

a) an employee is sick or injured; or
b) an employee’s spouse (including de facto partner) is sick or injured; or
c) a person who depends on the employee for care is sick or injured.

Sick leave is paid out at the rate of an employee’s relevant daily pay. Relevant daily pay means:

a) the amount of pay that the employee would have received had the employee worked on the day concerned; and
b) includes—

(i) productivity or incentive-based payments (including commission) if those payments would have otherwise been received had the employee worked on the day concerned:
(ii) payments for overtime if those payments would have otherwise been received had the employee worked on the day concerned:
(iii) the cash value of any board or lodgings provided by the employer to the employee; but

c) excludes any payment of any employer contribution to a superannuation scheme for the benefit of the employee.

Bereavement Leave Entitlement:

All employees (permanent, fixed-term, part-time and casual) can use bereavement leave in NZ if:

a) they have worked for the employer continuously for six months; or
b) they have worked for the employer for six months for:

a) average of 10 hours per week; and
b) at least one hour in every week or 40 hours in every month.

Each employee gets bereavement leave for a minimum of:

a) three days per death if a spouse or partner, parent, child, sibling, grandparent, grandchild, or spouse or partner’s parent dies, or if the employee (or other person) suffers a miscarriage or still-birth.
b) one day per death if another person dies and their employer accepts they have had a bereavement. This is based on:

    1. how close they were with the deceased person;
    2. whether they have to take a lot of the responsibility for all or any of the arrangements for the ceremonies relating to the death; and
    3. if they have any cultural responsibilities in relation to the death.

As with sick leave, bereavement leave is paid out at an employee’s relevant daily pay.

Parental leave

If an employee is pregnant, has given birth to a child, or is assuming the primary care of a child, they may be entitled to take a period of maternity leave (parental leave) from their employment and to paid maternity leave (parental leave payments) from the Government. An employee’s right to take maternity leave and the associated processes are set out in the Parental Leave and Employment Protection Act 1987 (“PLEPA 1987”).

The PLEPA 1987 includes:

  • minimum entitlements with respect to parental leave for male and female employees; and
  • protections given to employees during pregnancy and parental leave.
Applying for parental leave

An employee who wishes to take parental leave must apply for parental leave by giving written notice to their employer of the employee’s wish to take such leave.

An employee’s written notice to apply for parental leave must:

  • be given at least 3 months before the expected date of delivery;
  • set out the proposed date on which the employee wishes to commence leave, and the duration of the leave;
  • if given by a pregnant employee, shall be accompanied by a certificate from a medical practitioner or a midwife—
    • certifying that the female employee is pregnant; and
    • stating the expected date of delivery; or if given by the pregnant woman’s spouse or partner, shall be accompanied by—
      • a certificate or a copy of a certificate from a medical practitioner or a midwife certifying that the woman named in the certificate is pregnant and stating the expected date of delivery; and
      • a written assurance from the woman named in the medical certificate that the employee is her spouse or partner and that the employee intends to assume care of the child to be born to her.

Once an employer receives the above notice, the employer must within 21 days after the receipt of the notice write to the employee:

  • stating whether the employee is entitled to take parental leave; and
  • where an employer states that the employee is not entitled to take parental leave, stating the reasons why the employee is not so entitled; and
  • stating that, until the end of the employee’s parental leave, the employee’s position in the employment of the employer—
    • can be kept open; or
    • cannot be kept open; and
  • where the employer states that the employee’s position cannot be kept open, informing the employee—
    • that the employee may dispute the employer’s statement that the employee’s position cannot be kept open; and
    • that the employer will, for the period of 26 weeks beginning with the day after the date on which the parental leave ends, give the employee preference over other applicants for any position which is vacant and which is substantially similar to the position held by the employee at the beginning of the parental leave; and
  • inform the employee of the substance of:
    • Primary Carer Leave;
    • Partners Leave;
    • Extended Leave;
    • when there may be an early ending of parental leave, and, in particular, of the employee’s rights and obligations to:
      • determine the date of commencement of primary carer leave;
      • determine the date of commencement of partner’s leave; and
      • advise that extended leave may be taken consecutively or concurrently with leave taken by partner
Length of Parental Leave

Twelve Month Test

Where an employee has worked for one employer for at least an average of 10 hours a week for 12 months or more just before the expected birth of the child, or the date they will take over the care of the child (“twelve month test”), an employee will be entitled to:

  • 52 weeks of parental leave; and a
  • maximum of 26 weeks of government-funded parental leave payments if they will be the ‘primary carer’ of a child that is born or has come into their care.

Six Month Test

Where an employee has worked for one employer on average 10 hours a week for six months or more (but under 12 months) just before the expected birth of the child, or date they will take over the care of the child (“six-month test”), the employee will be entitled to:

  • 26 weeks of parental leave; and
  • a maximum of 26 weeks of government-funded parental leave payments if they will be the ‘primary carer’ of a child that is born or has come into their care.
Partners Leave

A spouse or partner is defined in the Parental Leave and Employment Protection Act 1987 as either:

  • a husband or wife; or
  • civil union partner or a de facto partner

A spouse or partner is entitled to:

  • if they meet the above six-month test, they may take one week’s unpaid partner’s leave; and
  • if they meet the above twelve-month test, they may take two weeks’ unpaid partner’s leave.

An employee can take partners leave in NZ within following timeframes:

  • starting 21 days before the due date of the baby, or the date the employee’s partner or spouse becomes the primary carer for a child under six years; and
  • ending 21 days after the baby is born (unless the baby is discharged from a hospital more than 21 days after the birth, in which case the partner’s leave time frame ends on the day the child is discharged) or the date the employee’s partner or spouse becomes the primary carer for the child.
Keeping in Touch Days

While on parental leave an employee can request to perform work from time to time during their parental leave payment period (for example, to attend a team day or attend to some minor tasks) as long as:

  • the employee only completes a total of 64 hours or less of paid work for their employer during your parental leave payment period; and
  • this work is not within the first 28 days after your child was born.
Returning to Work

Every employee who is on parental leave and whose position is being kept open by their employer, shall, no later than 21 days before the date on which the employee’s parental leave ends, give to the employer written notice stating whether the employee will be returning to work at the end of the employee’s parental leave.

Domestic Violence Protections

The Domestic Violence – Victims’ Protection Act 2018 provides that:

  • it is prohibited for a person/entity to discriminate on the grounds of being a person affected by domestic violence;
  • employees have an entitlement to up to 10 days’ paid family violence leave each year; and
  • employees may request a short-term variation of their ordinary work arrangements if they suffer from family violence.
Family violence leave

Employees become eligible to take family violence leave where:

  • they have worked for the employer continuously for six months; or
  • they have worked for the employer for six months for:
    • an average of 10 hours per week; and
    • at least one hour in every week or 40 hours in every month.

Once an employee is eligible, they are entitled to up to 10 days’ paid family violence leave each 12 months. Employees cannot carry forward unused leave and this leave is not payable at termination.

Taking family violence leave

Employees must disclose to their employer that they intend to take family violence leave either:

  • as early as possible before the employee is due to start work on the day that is intended to be taken as family violence leave; or
  • if that is not practicable, as early as possible after that time.

An employer may request proof that an employee is a person affected by family violence to be produced for family violence leave.

Short-term flexible working requests for people affected by family violence

Where an employee is affected by family violence they may make a request for short-term flexible working arrangements involving a variation of an employee’s usual working arrangements, such as their ordinary days of work, hours of work and duties for a period of up to two months.

This request must be in writing and state:

  • the employee’s name;
  • the date on which the request is made;
  • that the request is made pursuant to Part 6AB of the Employment Relations Act 2000;
  • specify the variation of the working arrangements requested and the period of time (which must be no longer than 2 months) for which the variation is requested; and
  • specify the date on which the employee proposes that the variation take effect and the date on which it is proposed that the variation end;
  • specify how, in the employee’s view, the variation will assist the employee to deal with the effects of being a person affected by domestic violence; and
  • explain, in the employee’s view, what changes, if any, the employer may need to make to the employer’s arrangements if the employee’s request is approved.

Employers may refuse such a request only on limited grounds (for example, if there is an inability to reorganise work among existing staff, inability to recruit additional staff, or the request would have a detrimental impact on the quality of work). Further, employers must respond to that request within 10 days of receiving the request.

Issues Arising During Employment (Processes to address employee issues)

Performance Management

The performance management process in NZ is aimed at developing an employee to perform their job to the best of their ability. An underperforming employee can have a significant impact on a business. Where you have performance concerns about an employee, it is critical that these concerns are addressed in a prompt and constructive manner, through a performance improvement plan or “PIP”.

In terms of starting this performance management process, we recommend that you address any performance concerns with the employee concerned in an informal manner in the first instance, as a preliminary measure. Raising concerns informally could achieve the desired outcome and save your business both time and resources. Should an employee fail to improve despite your informal assistance, you could then commence a formal performance process.

A performance management process involves putting your concerns to an employee in a formal context, and hearing and considering their responses on both the performance concerns and the objectives of the proposed plan, before implementing a performance improvement plan (PIP). The PIP should clearly outline what is expected of the employee in their role, set out the objectives/targets you require them to meet, how those objectives will be assessed, and when the objectives would be formally reviewed (“review periods”), whereby you would assess whether the employee has met the required level of performance.

If at the review period, the employee is still not performing to the standard required, you may initiate a disciplinary process. A disciplinary process could result in a warning, and a further performance improvement period, which ultimately (should the employee not improve), after a number of performance improvement periods, could lead to dismissal. For disciplinary guidance and advice in one of these situations, speaking to a NZ employment lawyer can be extremely helpful. Edwards Law has extensive experience on a wide range of performance and disciplinary issues.

Disciplinary Process

Where an employer is concerned that an employee may have wilfully or deliberately breached their employment agreement, the obligations owed to the company, company policy, or procedures, an employer may commence an employment disciplinary process against an employee.

It is critical to get disciplinary action processes right. If not, even if you have good grounds for disciplinary action, you could risk a personal grievance claim for unjustified dismissal or unjustified disadvantage in NZ. We have summarised the key steps of the NZ disciplinary process below:

Step 1: An act of misconduct arises. Before taking steps to discipline the employee (even if the act is overt), it is important to make sure that you comply with a fair procedure.
Step 2: Decide who will be responsible for the disciplinary process and decision maker. First consider whether this person has any conflict of interest. If the issue is very serious, or sensitive, it may be advisable to use an independent party for the investigation.
Step 3: Check the relevant clauses in the employment agreement and any relevant policies (you may need to suspend, in which case please see the vlog by Rachel Nightingale). Here you will be looking for any disciplinary procedures or terms in the employment agreement, or code of conduct relating to the alleged conduct.
Step 4: The employee must be advised of the allegations against him/her in writing and asked to attend a formal disciplinary meeting. The employee should be provided with all of the evidence being relied on, be notified that they can bring a support person to the meeting and be advised of the possible disciplinary outcome, if proven. If the evidence relied on is what another employee has said, a statement from that employee will need to be provided.
Step 5: At the disciplinary meeting, confirm that no decisions have yet been made and listen to the employee’s responses, with an open mind.
Step 6: The meeting should then be adjourned to consider the responses and to make any follow-up investigations that may be required. It may be appropriate to deliver the outcome after a short break, for example, where there is nothing to investigate, where you are only considering a warning, or where the employee has accepted the allegations.
Step 7: If a further meeting is required, in that meeting, confirm that you have considered the employee’s responses and advise the employee of your preliminary decision regarding the disciplinary action, then give the employee an opportunity to comment on the proposed disciplinary action before confirming your decision verbally. You should then let the employee know that a letter confirming your decision will follow.
Step 8: The written warning / letter of dismissal should be drafted and issued after the final meeting.

Each disciplinary process will be different and having templates you can go to is helpful. It is always best to seek advice from a specialist employment lawyer at the outset so that you can commence and continue a procedurally fair and substantially justified process with confidence. Our employment law services extend to all aspects of employment law, and we can assist you with a range of employment issues. It is vital to follow fair process and uphold employment rights. Edwards Law’s approach to employment law is to provide practical advice with professional service at all times.

Suspension

When undertaking a disciplinary process, it may be necessary to suspend an employee for the duration of the process (particularly where having the employee at work may compromise the investigation, or where the employee poses a risk to employment health and safety). Although suspending an employee can seem like a minor fragment in the disciplinary process, getting this wrong could have serious consequences.

Ability to suspend

The first thing to think about when you are considering whether to suspend an employee, is whether you actually have the right to suspend. The right to suspend an employee is generally a contractual term in the employee’s employment agreement. You may also have the right to suspend pursuant to a company policy. Always check to see if you have the right to suspend, and whether these provisions impose any restrictions or requirements on you when undertaking this process.

If you do not have a contractual right to suspend, it is really only in very limited circumstances that you would be able to lawfully suspend an employee. In these circumstances, as an alternative to suspension, you could propose that the employee takes paid special leave.

Substantive justification

Once you have determined that you have a contractual right to suspend, you then need to ensure you have a good reason to suspend this employee. Simply suspecting an employee may have done something that could constitute serious misconduct does not necessarily mean suspension is warranted. There must be a link between the allegations against the employee and the need to remove them from the workplace. For example, where there is a threat to employment health and safety, a threat to your business, or a threat to the business’ investigation process.

Employee suspension process

If you have a good reason to remove the employee from the workplace, you must then undertake the suspension process in a procedurally fair manner. In particular, you will need to:

  • advise the employee of the reasons for the proposed suspension (i.e. setting out what the employee has alleged to have done and why suspension may be necessary). Ensure that you frame the allegations as something that may have happened, as you do not want any hint of predetermination, as this could undermine the entire disciplinary process on the basis that a decision regarding the allegations has already been made.
  • the suspension must be presented as a “proposal”, in which the employee has an opportunity to comment on the proposal to suspend and seek advice; and
  • the employee should be given some time to give their response to the proposal to suspend before a final decision is made. We usually recommend that the employee is given a couple of hours to call a support person and provide their response. If the employee requests more time, in good faith you should consider this.

Once the employee has had an opportunity to respond to the proposal, you will then need to take time to consider the employee’s response. Following this, you can then confirm that you have considered the employees responses and that it is your view that suspension is warranted.

We would recommend at least an hour is given to consider the employee’s response before a decision is made. This will obviously depend on the nature of the response given by the employee. If they have no substantive responses then you could confirm the suspension in a more timely manner.

It is important to get this process right, because if an employer breaches their legal obligations when suspending an employee, by either suspending without cause or failing to follow a proper process, they are susceptible to a potential unjustified personal grievance. This could be costly for your business, and further, should you predetermine the allegations against the employee, this could undermine the entire disciplinary process.

Medical incapacity

Where an employee is incapable of the proper ongoing performance of his or her duties due to medical incapacity issues, this can be an incredibly difficult time for employers and employees alike. An employer must be able to run a business and cannot hold a job open indefinitely. However, an employee should also expect some measure of compassion from the employer if they cannot work because they are sick or injured.

Accordingly, terminating employment for medical reasons can be a very sensitive issue for an employer to deal with, especially where it is unclear as to when an employee will return to work.

Medical incapacity is where a long-term illness or injury (relating to both physical and mental health) renders an employee incapable of the proper ongoing performance of the job they were employed to do. An employee’s ongoing absence can place significant strain on a business’ operations.

It is well established law that an employer is not bound to hold a job open for an indefinite period, where the employee is sick or prevented from carrying out their duties. There will always be a stage at which an employer can “fairly cry halt”. The emphasis is on “fairly”, and what is fair will depend on the particular facts of each case.

Accordingly, as with any dismissal, the focus is on whether the decision to dismiss is one that a fair and reasonable employer could have made at that time, in all the circumstances. A dismissal will be justified where it can be shown that the decision to terminate was both substantially justified and was carried out in a procedurally fair manner.

In 2017, the Employment Court set out seven principles that should be considered before terminating an employee for medical incapacity. This framework is a good starting point and reflects the need to balance the interests of both parties to help the NZ medical incapacity process go as smoothly as it can. The seven principles are set out as follows:

  1. The employer must give the employee a reasonable time to recover. However, what is reasonable will depend on the nature of the injury, particularly in the case of mental health where obtaining a firm medical prognosis can be difficult.
  2. The employer must carry out a fair and reasonable enquiry. This involves engaging with the employee, as well as seeking and considering all relevant medical information. The employer should also look at an appropriate return to work plan for the employee. The aim is for the employer to have all relevant information before it, that is necessary to decide whether ongoing employment is viable. The decision should balance fairness to the employee against the practical requirements of the business. Dismissing before obtaining medical advice, or without opportunity to do so, is likely to be deemed premature and unjustifiable.
  3. The parties’ obligations of good faith, which requires both parties to actively engage in a consultation process. This means an employee should be notified of the possibility of dismissal and given an opportunity to provide input or comment at all key stages of the process.
  4. Consideration should also be given to certain factors that are likely to inform the employer’s assessment of what is reasonable in the particular circumstances. The following relevant factors should all be assessed before going down the path of medical termination, including:
      • the terms of the employee’s employment agreement and any relevant company policy;
      • the nature of the employee’s position (such as if they hold a key role); and
      • the length of time they have been with the company.
  5. Whether the actions of the employer have caused an employee’s condition, then the employer may have an ongoing responsibility or enhanced obligations in dealing with the employee. For example, they should take reasonable steps to rehabilitate the employee, before turning to the option of dismissal.
  6. For completeness, even in a large organisation, an employer is not obliged to keep a role open indefinitely. Although they may be more equipped to absorb the impact of one less worker, a large employer may still dismiss after a reasonable period before commencing a process. This is usually after a few months.
  7. The employment relationship is a “two-way street”. If there is a lack of positive engagement from an absent employee, this could diminish any later complaint they may bring. Remember, both parties are going through this process together and contemplating termination for medical incapacity is the last position an employer wants to be in.
  8. We also suggest that an employer considers whether it is able to provide the employee with suitable alternative duties. Employers should look at what else is available for the employee, such as lighter duties or administrative tasks.

Termination of Employment

Employee resignation

An employee can resign at any time. The resignation process starts with the employee providing their notice. Most employment agreements will require that an employee give notice of their resignation in writing. Following this, the employer will acknowledge the resignation and confirm when the employee’s last day will be.

If the employment agreement allows, the employer could require the employee:

  • to serve their notice on garden leave;
  • be paid notice in lieu of working; or
  • perform alternative duties during the notice period.

Where an employee is moving to a competitor, the above provisions may be particularly helpful to ensure protection of confidential information.

Where an employee:

  • resigns in the heat of the moment (for example, an employee resigns following an argument at work); or
  • says something that could be interpreted as a resignation (for example, where an employee advises that they are leaving the workplace, and it is not clear whether they intend to leave for the day or resign)

The employer should ask the employee to clarify their position, and if they actually intend to resign they should put their resignation in writing so that the employer can be really sure that the employee truly intends to resign.

Even if the employee has used clear words when resigning, be slow to treat them as having resigned if they have spoken in the heat of a tense moment. Let the employee sleep on it overnight, and ask whether they wish to reconsider their position, now that they have had an opportunity to cool down.

Employee abandonment

An employee is considered to have abandoned their employment if he or she stops showing up to work without explanation or does not return to work after a period of authorised leave for a period of three days or more. Abandonment of employment is grounds for termination of employment in NZ. It is easy to assume an employee who has taken unauthorised leave has ‘left for good,’ however, when in actual fact, this is not always the case and it is crucial employers investigate the matter before jumping to conclusions.

When an employee has been absent without explanation for more than one working day, employers should take all reasonable steps to contact the employee. The employer should:

  • attempt to contact the employee via phone or email and reach out to their emergency contact. It is also worth asking other workers if the absent employee has tried to contact the organisation. If these steps are unsuccessful, it may be necessary to start a formal process in an attempt to establish where the employee is, and whether they intend to return to work.
  • If the employer has not been able to make contact or the employee fails to respond, the employer can notify the employee via phone or email, and send a written letter to the last known address, advising the employee that if they do not make contact with the employer by a certain date (usually three days’ absence), their employment will end by reason of abandonment; and
  • if there is still no response from the employee by the required date, the employer can then follow-up via phone or email and state in writing the employment has ended by way of abandonment, sometimes known as an abandonment of employment letter.

We recommend that employers keep records of all attempts to communicate with the employee. This evidence will help defend against any claims by the employee. These records can also assist with managing unauthorised leave as a form of misconduct, should the employee return before confirmation of abandonment has been sent.

If an employee gets in contact within the required timeframe, the employer cannot end the employee’s employment by reason of abandonment. However, the employer could commence a disciplinary process for unauthorised absence/failure to notify the workplace of their absence.

Business restructuring

It is important for businesses to regularly check that they are structured for optimal success. Having the right roles structured the right way will allow a business to ensure they can meet the needs of their customers, increase efficiencies, and take their business to the next level.

However, employers cannot unilaterally make changes to an employee’s employment. The overarching duty of good faith requires employers to consult in good faith with employees about any proposed changes that may affect their employment and seek their feedback before reaching a decision. Seeking business restructuring advice from experienced lawyers is very important in these situations.

It is important to note that changes can include disestablishing roles, changing an employee’s duties, hours of work or remuneration, but can also include things like moving office locations and removing benefits such as a company car. An employee should be consulted in respect of any changes to their terms of employment.

Accordingly, when proposing to restructure a company, the proposal must be put to affected employees and feedback must be sought prior to making a decision. The restructuring process generally includes the following steps:

Step 1: Write to the affected employee(s) setting out:

    • what the proposal is;
    • the reasons for it;
    • the right for employees to seek legal advice on the proposal and to bring a support person and/or representative to any meetings;
    • the potential impact if the proposal is implemented; and a request for their feedback.

Step 2: receive feedback. Feedback can be provided in writing and/or in a meeting. No decision should be made until all feedback is received.

Step 3: the employer must consider all feedback. This should be done over at least 24 hours;

Step 4: After considering the feedback:

    • if there are any material changes to the proposal, restart the process from Step 1; or
    • if you wish to implement the proposal unchanged, confirm the decision in writing.

This process may be superseded by any specific process and/or timeframes in any policies or employment agreements that may apply to the affected employee.

Restructuring is often a difficult time for both employees and employers. Our advice to employers is to consult a legal expert, to ensure you follow a fair process and avoid claims of unfair dismissal or constructive dismissal.

Personal Grievances

What is a personal grievance?

Employees, including those in a triangular employment situation, can bring a personal grievance in NZ for the following complaints:

  • Unjustifiable and unfair dismissal (including constructive dismissal), unless it was a valid 90 day trial period dismissal
  • Unjustifiable disadvantage
  • Discrimination
  • Sexual harassment
  • Racial harassment
  • Duress over membership of a union or other employee organisation
  • An employer’s failure to comply with obligations relating to continuity of employment for employees affected by restructuring
  • Disadvantage to an employee due to the employment agreement not meeting legal requirements for:
    • agreed hours of work
    • availability provisions
    • reasonable notice periods to be given before cancellation of a shift
    • reasonable compensation to be paid if a shift is cancelled
    • secondary employment provisions.
  • Unfair treatment of an employee who has lawfully refused work in certain circumstances
  • Where an employer engages in adverse conduct for a prohibited health and safety reason in relation to an employee or tries to force or persuade an employee not to perform a function, exercise a power or undertake a role under the Health and Safety at Work Act 2015.
Raising a personal grievance

A personal grievance must be raised with the employer within 90 days of when the personal grievance arose or first came to the employee’s attention.

The employee must communicate with the employer to tell them about the personal grievance and request to resolve the issue. The employee must clearly state what their complaint is and the reasons they believe that they have a grievance. The employee must give enough detail about the problem for the employer to respond to the issues.

An employee may only raise a personal grievance claim after a 90 day timeframe if the employer agrees. If the employer does not agree, the employee can ask the Employment Relations Authority if they can raise a personal grievance. An employee can only do this if they prove the delay was due to exceptional circumstances.

Exceptional circumstance examples can include:

  • the employee’s representative failed to raise the grievance in time
  • the employee being unable to raise a grievance due to health issues caused by the problem.

If you need legal advice surrounding the personal grievance process our employment lawyers can provide advice and support.

Controlling Third Parties

New legislation has recently come into force giving employees the ability to raise a personal grievance claim against a third party, in situations where the employee is employed by one employer (“the agency”), but works under another business or organisation that directs or controls the employee’s day-to-day work (“controlling the third-party”)

An employee or employer can join a controlling third party to the employee’s personal grievance claim by applying to the Employment Relations Authority or Employment Court. When an employee applies to join the controlling third party, the employee must notify the controlling third party of the employee’s intention to join them to the personal grievance claim within 90 days of the personal grievance. If an employer applies to join the controlling third party, then the employer must notify the controlling third party within 90 days of the employer receiving the personal grievance claim from the employee.

The Authority or Court also has powers to, at any stage of the proceedings, order at its own motion a controlling third party to be joined to the proceedings. The Authority or the Court must award any remedies against the employer under section 123 and against the controlling third party under subsection (2) in a way that reflects the extent to which the actions of each contributed to the situation that gave rise to the personal grievance.

There is no longer the requirement to be bound by the collective of the controlling third party. This change recognises the fact that employees often work for a number of different “controlling third parties”, especially in true labour hire situations, and it would be impractical for such employees to be bound by various different collectives.

Remedies

This section outlines remedies available to employees in the Employment Relations Authority (“the Authority”) or Employment Court (“the Court”).

Reinstatement

An employee can seek reinstatement to their former position or a position no less advantageous to the employee. Reinstatement is the primary remedy available if an employee can show it is practicable and reasonable to be reinstated.

Employees can seek interim and permanent reinstatement. If interim reinstatement is sought, it will involve an urgent application to the Authority and can be determined within weeks of the application being made. The employee must show:

a) an arguable case that he or she was unjustifiably dismissed;
b) the balance of convenience favours them; and
c) the overall justice of the case means the employee should be immediately reinstated.

Compensation for hurt and humiliation

An employee may be awarded tax free compensation if he or she can show a loss of dignity, injury to feelings and hurt and humiliation because of their unjustified dismissal. The average level of compensation awarded by the Authority between July and December 2021 was approximately $14,500.

Lost Wages

An employee can claim reimbursement of the lesser of lost remuneration or three months’ ordinary time remuneration. The Authority has discretion to award a higher amount. For an employee to claim lost wages, they must prove that they have mitigated their losses by providing evidence such as job applications, emails and so on.

Loss of Benefits

Employees can also claim compensation for loss of any benefit they would have reasonably expected had the personal grievance not arisen. For example, commission payments, accommodation costs, insurance costs and so on.

Penalties

Employees can also seek penalties of up to $20,000 in the case of a company and $10,000 in the case of an individual for a breach of good faith, breaches of employment agreements and breaches of various employment-related legislation. The amount of the penalty will depend upon:

a) the nature and extent of breach;
b) whether it was intentional, inadvertent or negligent;
c) the nature and extent of loss or damage; and
d) the circumstances of breach.

Penalties are ordinarily paid to Crown, however, an employee can apply to have part or all of any penalty paid to them.

Costs

The successful party to an Authority determination can seek costs. Costs in the Authority are based on the daily tariff. This means despite how much either party spends on legal representation, the costs awarded by the Authority will be the same (unless there are factors requiring an uplift or decrease in costs). The daily tariff is $4,500 for the first day of the Investigation Meeting and $3,500 for any subsequent day. The length of the Investigation Meeting will depend on the number of witnesses and length of any evidence.

Reduction for Contribution

Notwithstanding that an employee may prove that they were unjustifiably dismissed and therefore entitled to remedies, the Authority can reduce the remedies if the employee has contributed to the situation that gave rise to the personal grievance.

Controlling Third Party

The Employment Relations Authority or Employment Court may order a controlling third party to pay to the employee lost wages, compensation for hurt and humiliation and/or loss of benefits if it determines that the actions of the controlling third party caused or contributed to the situation giving rise to the personal grievance.

A third party is a controlling third party if they direct or control the employee in a similar or substantially similar way to that of an employer. This is commonplace for labour-for-hire arrangements.

Health and Safety at Work Act 2015

The Health and Safety at Work Act 2015 (“HASWA 2015”) replaced the Health and Safety in Employment Act 1992, with the purpose of providing a balanced framework to secure the health and safety of workers and workplaces. Under the HASWA 2015, “health” includes both mental and physical health.

Unlike previous legislation, the HASWA 2015 is not centred around the employer-employee relationship. Instead, it focuses on persons conducting a business or undertaking (“PCBU”) and people who work for the business or undertaking in any capacity (“workers”).

It is not lawful to “contract out” of the HASWA 2015, to agree to modify any of the duties or requirements under the HASWA 2015, or to transfer any of the duties imposed by the HASWA 2015 to anyone else. This includes offering, accepting or agreeing to indemnify another person, or have someone else indemnify the duty holder for any liability for a fine or payment that arises under the HASWA 2015. Any such indemnification would be unlawful, unenforceable, and the parties involved may be committing an offence in attempting to do so.

Duties under the Health and Safety at Work Act 2015

The core duty under the HASWA 2015 is the requirement for all duty holders, so far as is reasonably practicable, to eliminate risks to employees’ health and safety, and to minimise any risks that cannot be eliminated.

A PCBU has the following duties under the HASWA 2015:

    • to ensure, so far as reasonably practicable, the health and safety of:
      • workers who work for the PCBU, while workers are at work in the business or undertaking; and
      • workers whose activities in carrying out work are influenced or directed by the PCBU, while the workers are carrying out the work.
    • to ensure that there is a safe workplace for workers, including safe machinery and plant, systems of work, safe storage of machinery and substances, provision of necessary information, training, instruction and supervision to protect all persons from health and safety risks. PCBU’s must also monitor the health of their workers and the safety of the workplace so as to prevent illness or injury.
    • to ensure that every worker has adequate knowledge and experience to carry out the work, use the machinery/plant, or deal with any substance so as not to adversely affect the health and safety or cause harm to the worker or any other person; or to ensure that every worker is adequately supervised by a person who has that knowledge or experience.
    • to ensure that every worker is trained in the safe use of all machinery/plant, objects, substances, or equipment that they may be required to use/handle, and trained in the appropriate use of all personal protective equipment (“PPE”) that the worker will be required to use/wear.
    • to consult, cooperate and coordinate with their workers on health and safety matters and with other PCBUs who have the same duty.
    • to report any “notifiable event” to WorkSafe as soon as possible. A notifiable event includes:
      • a work-related death;
      • a “notifiable injury or illness”, which includes a serious head injury, amputation of any part of the body, serious burns, serious eye injuries, spinal injuries, an injury that would usually require immediate hospitalisation, and a serious infection to which the carrying out of work was a significant contributing factor.
      • a “notifiable incident”, being “an unplanned or uncontrolled incident in relation to a workplace that exposes a worker or any other person to a serious risk to that person’s health or safety.
    • to retain records of each notifiable event for at least five years.

The Health and Safety at Work Act 2015 also has obligations that specifically apply to “officers”, being people who hold governance and top management roles, such as chief executives and directors, and who can “exercise significant influence over the management of the business or undertaking”.

Officers must exercise “due diligence” to ensure the PCBU complies with its duties or obligations under the HASWA 2015, and they must exercise the care, diligence, and skill that a reasonable officer would exercise in the circumstances, considering the nature of the business or undertaking and the officer’s position and responsibilities.

Likewise, “workers” have several obligations under the HASWA 2015. While at work, workers must:

      • take reasonable care for their own health and safety;
      • take reasonable care to ensure that their acts or omissions do not adversely affect the health and safety of others;
      • comply, as far as they are reasonably able, with any reasonable instruction given by the PCBU to allow the PCBU to comply with the HASWA 2015 and any associated regulations; and
      • cooperate with any reasonable health and safety policy or procedure of the PCBU that has been notified to workers.

For employees, these obligations should be considered in conjunction with the statutory duty of good faith. Additionally, employees have an obligation to raise with their employer any concerns about health and safety in the workplace.

Breaches of Duties

The Health and Safety at Work Act 2015 provides for a three-tiered regime of offences for breaches of health and safety duties:

  1. It is an offence for a duty holder to engage in reckless conduct, being conduct that exposes another person to a risk of death, serious injury, or serious illness.
    a) For an individual who is not a PCBU or an officer of a PCBU, the maximum penalty is up to five years’ imprisonment, a fine of up to $300,000, or both.
    b) For an individual who is a PCBU or an officer of a PCBU, the maximum penalty is up to five years’ imprisonment, a fine of up to $600,000, or both;
    c) For any other person, the maximum penalty is a fine of up to $3 million.
  2. It is an offence to fail to comply with a health and safety duty if that exposes a person to a risk of death or serious illness or injury.
    a) For an individual who is not a PCBU or an officer of a PCBU, the maximum penalty is a fine of up to $150,000.
    b) For an individual who is a PCBU or an officer of a PCBU, the maximum penalty is a fine of up to $300,000;
    c) For any other person, the maximum penalty is a fine of up to $1.5 million.
  3. It is an offence to fail to comply with a health and safety duty. a) For an individual who is not a PCBU or an officer of a PCBU, the maximum penalty is a fine of up to $50,000.
    b) For an individual who is a PCBU or an officer of a PCBU, the maximum penalty is a fine of up to $100,000;
    c) For any other person, the maximum penalty is a fine of up to $500,000.

Right to Refuse Unsafe Work

The Health and Safety at Work Act 2015 provides workers with the right to cease or refuse to carry out work which they believe would expose them, or other persons, to a serious health or safety risk through immediate or imminent exposure to a hazard. However, a worker may not refuse to do work that “because of its very nature, inherently or usually carries an understood risk to the worker’s health and safety, unless that risk has materially increased beyond the understood risk”.

Where an employee refuses to undertake work on the grounds that it would expose them or others to a serious health or safety risk through immediate or imminent exposure to a hazard, and they are disadvantaged or suffer repercussions because of this lawful refusal, the employee may raise a personal grievance under the Employment Relations Act 2000.

Edwards Law employment lawyers can help with health and safety claims and compliance advice.

Prohibition on Adverse Conduct

The HASWA 2015 prohibits any adverse conduct being taken against a worker or prospective worker for any prohibited health and safety reason, where:

  • “Adverse conduct” includes:
    • dismissing a worker who is an employee;
    • terminating a contract for services with the worker;
    • refusing or omitting to employ or engage a worker;
    • refusing or omitting to afford the worker the same terms and conditions of work as provided to other works who are employed or engaged in substantially similar circumstances;
    • subjecting the worker to any detriment;
    • retiring the worker or causing the worker to resign or retire;
    • terminating a commercial engagement with another person; or
    • refusing or failing to enter into a commercial arrangement with another person.
  • “Prohibited health and safety reason” includes where the affected worker or prospective worker:
    • is, has been, or proposes to be a health and safety representative or a member of the health and safety committee;
    • raises has raised, or proposes to raise an issue or concern regarding health and safety with the PCBU, WorkSafe, another worker, or a health and safety representative;
    • is taking action to seek compliance with a duty or obligation under the HASWA 2015;
    • has ceased work or directed it to cease on the basis that the work would expose them or others to a serious health or safety risk through immediate or imminent exposure to a hazard.

In establishing whether adverse conduct was taken against a worker or prospective worker for prohibited health and safety reasons, the onus is on the defendant to show that the action against the worker/prospective worker was not taken for any of these reasons.

Specific health and safety risks

Workplace stress

As per workplace legislation under the Health and Safety at Work Act 2015, work-related stress is accepted as one of the health and safety risks which must be eliminated or controlled. PCBUs that fail to identify and/or manage workplace stress as a health and safety risk could face prosecution under the HASWA 2015. An employee could also bring a claim in the Employment Relations Authority for:

  • a breach of the employment agreement;
  • a personal grievance for unjustified disadvantage; or
  • a personal grievance for unjustified (constructive) dismissal, where the employee resigns as a result of the employer PCBU’s failure to address the workplace stress after being put on notice of it.

The Court of Appeal in Attorney-General v Gilbert identified that employers have a duty under the HASWA 2015 to provide a working environment and management processes that do not cause undue stress. However, it was also observed that whether the workplace stress is unreasonable will depend on the facts.

Drugs and Alcohol

Under the Health and Safety at Work Act 2015, alcohol and drugs are accepted as potential sources of health and safety risks. As such, PCBUs have an obligation to manage this risk as necessary/appropriate.

Employer PCBUs may implement Drug and Alcohol testing policies as a means of managing this potential risk. However, the Employment Court has recognised that employee drug testing regimes significantly impinge on an employee’s individual rights, and as such, any drug testing policies and processes must meet the legal tests of being a lawful and reasonable direction (Parker v Silver Fern Farms Ltd (No 1)).

While in most cases an employer PCBUs can implement ‘with cause’ drug testing regimes, which will apply where the employer has reasonable cause to suspect drug and/or alcohol use in the workplace, random drug and/or alcohol testing can only be implemented for employees in “safety sensitive” roles, and to implement such a policy for employees in non-safety sensitive roles would be unreasonable (New Zealand Amalgamated Engineering etc Union v Air New Zealand Ltd).

ACC

The Accident Compensation Act 2001 set out New Zealand’s “no fault, no liability” cover for personal injury.

Personal injury includes:

  • death;
  • physical injuries such as cuts, scrapes, burns, abrasions, sprains etc. There must be actual physical damage, general symptoms and pain are not sufficient on their own;
  • metal injury which is suffered as a result of physical injuries, being “a clinically significant behavioural, cognitive, or psychological dysfunction”;
  • work-related mental injury that is suffered on or after 1 October 2008 and I caused by a single traumatic event;
  • mental injury suffered by a person who is a victim of certain sexual-related criminal offending; and
  • damage to dentures and prostheses (other than wear and tear), excluding hearing aids, spectacles and contact lenses.

A personal injury does not include any injury that is wholly or substantially caused by the aging process.

A work-related personal injury is a personal injury that is suffered by an employee when they:

  • are at any place for the purposes of employment;
  • are having a rest or meal break at the place of employment;
  • are travelling to or from the place of employment at the start or finish of the day’s work, in transport provided for employees by the employer;
  • are travelling, by the most direct practicable route between the employee’s workplace and another place to get treatment for a work-related personal injury;
  • suffer from a cardiovascular or cerebrovascular episode while at work, which is caused by physical effort or strain which is “abnormal in application or excessive in intensity” for the employee and occurs while the employee is performing work-related tasks;
  • suffer a personal injury that is caused by a work-related gradual process, disease, or infection; or
  • suffers a personal injury as a result of treatment for a work-related personal injury.

A personal injury will still constitute a workplace injury even where the employee was:

  • disobeying a work instruction or acting without instruction;
  • a victim or perpetrator of misconduct or negligence;
  • the victim of an act of god or a natural event;
  • acting in breach of any Act or regulations relating to employment;
  • working under an illegal or unenforceable contract.

For the purposes of ACC cover, a person is “incapacitated for employment” where a personal injury prevents them from undertaking their pre-injury employment.

An individual who suffers a personal injury and is covered by ACC will be entitled to:

  • rehabilitation;
  • weekly compensation of 80% of ordinary earnings if unable to work;
  • lump sum compensation for permanent disability;
  • funeral/survivor grants.

See Termination for Medical Incapacity for the potential impact of long-term injury or disability on ongoing employment. A NZ employment lawyer can provide accident compensation advice and work related injury claim assistance.

Human Rights

The Human Rights Act 1993 aims to ensure that all people receive equal opportunities and are not unfairly treated based on personal characteristics that are not relevant. This applies to opportunities in employment, education, housing, and the provision of goods and services.

The Human Rights Act 1993 prohibits discrimination on the following grounds:

  • sex;
  • marital status;
  • religious belief;
  • ethical belief;
  • colour;
  • race;
  • ethnic or national origins;
  • disability;
  • age
  • political opinion;
  • employment status;
  • family status; or
  • sexual orientation.

People who think they have been discriminated against in the course of their employment can file a personal grievance with their employer or a complaint with the Human Rights Commission in NZ.

Unlawful Discrimination in Employment

Both the Human Rights Act 1993 and the Employment Relations Act 2000 prohibit unlawful discrimination in employment. Under the Human Rights Act 1993, where a job applicant or an existing employee is qualified for any work, it is unlawful for an employer or a representative of the employer to decide, on any of the above-prohibited grounds of discrimination:

  • to refuse or omit to employ the applicant on work of that description which is available; or
  • to offer or afford the applicant or the employee less favourable terms of employment, conditions of work, fringe benefits, and opportunities for training, promotion or transfer than are made available to applicants or employees of the same or substantially similar capabilities employed in the same or substantially similar circumstances on work of that description; or
  • to retire the employee, or to require or cause the employee to retire or resign.

It should be noted that “employer” for the purposes of discrimination under the Human Rights Act 1993 has a very broad definition, including:

  • the employer of an independent contractor (i.e. the principal);
  • the person for whom work is done by contract workers supplied by an agency which is the actual employer of those workers (i.e. the “controlling third party” in a triangular employment relationship); and
  • the person for whom work is done by an unpaid worker.

Likewise, under the Employment Relations Act 2000, an employee is discriminated against in their employment if the employer or a representative of the employer, by reason directly or indirectly of any of the above prohibited grounds of discrimination, or the employee’s union membership status or involvement in union activities commits any of the actions listed above for the equivalent claim under the Human Rights Act 1993.

While the Human Rights Act 1993 addresses applicants and prospective recruits, the Employment Relations Act 2000 more relates to existing employees being discriminated against.

Sexual Harassment

An employee is sexually harassed if their employer, or a representative of their employer (e.g. a senior manager):

  • asks the employee for sex, sexual contact or other sexual activity with a:
    • promise of better treatment in their employment; or
    • a threat of worse treatment or about their current or future job security.
  • subjects the employee (directly or indirectly) to behaviour that the employee does not want or is offensive to them (even if they do not let their employer/ the employer’s representative know this) and which is either so significant or repeated that it has a negative effect on their employment, job performance or job satisfaction:
    • by using (in writing or verbally) sexual language; or
    • by using sexual visual imagery (e.g. photos, diagrams, videos etc.); or
    • through sexual physical behaviour.

Racial Harassment

An employee is racially harassed if their employer, or a representative of their employer (e.g. a senior manager), uses language (either written or verbal), visual material, or physical behaviour that directly or indirectly:

  • expresses hostility against, or brings the employee into contempt or ridicule, because of their race, colour, ethnic or national origins of the employee; and
  • this is hurtful or offensive to the employee (even if they do not let their employer or the employer’s representative know this); and
  • it is so significant or repeated that it has a negative effect on the employee’s employment, job performance or job satisfaction.
Sexual or Racial Harassment by Customers or Clients

If a customer or client of the employer subjects an employee to sexual or racial harassment, the employee can complain to their employer, who must then investigate and determine whether harassment occurred, and if so, take whatever steps are practicable to stop this harassment from happening again. If the harassment does happen again, and the employer has failed to take practicable steps, the employee can file a personal grievance with the employer or file a complaint with the Human Rights Commission.

Harassment Claims

Both the Human Rights Act 1993 and the Employment Relations Act 2000 prohibit sexual or racial harassment. Where racial or sexual harassment has occurred, the employee has the option of raising this human rights harassment claim in the employment jurisdiction through a personal grievance, or a human rights claim in the Human Rights jurisdiction through a complaint to the Human Rights Commission. Edwards Law has employment lawyers for workplace harassment cases who can give you the best possible advice and assistance.

Privacy Act 2020

The Privacy Act 2020 came into force on 1 December 2020 and brought about a significant overhaul of New Zealand’s privacy law.

The purpose of the Privacy Act 2020 remains to protect individuals’ rights to privacy of their personal information, including the right to access their personal information, while recognising that other rights and interests may also need to be considered.

Under the Privacy Act 2020, individuals have the right to:

  • access any personal information held about them by an agency; and
  • request that the agency holding their personal information correct any personal information.

Where a business receives a request from an individual under the Privacy Act 2020 for access to their personal information, this request must be met as soon as practicable, and within 20 working days.

The Privacy Act 2020 also restricts what personal information an agency can collect, where the information can be collected from, what the information can be used for, when the information may be disclosed to another person or agency, and how long the agency can retain the information.

Any complaints under the Privacy Act 2020 can be made to the Privacy Commissioner and the Human Rights Review Tribunal.

Disclosure

A breach of privacy/disclosure of personal information can occur intentionally or unintentionally, and can be explicit or by implication. As such, even where an employer does not explicitly disclose an employee’s personal information, a breach may still occur if the employer impliedly disclosed personal information, either by inference or by its actions.

Monitoring or Surveillance

Setting up cameras or software to monitor employees at work should only be considered where it’s reasonable, such as where it is necessary to protect staff from injury, or if theft is a problem. Employees should be consulted prior to any monitoring or surveillance measures being implemented.

Recording

Employees can record discussions that they are a party to, and these recordings may be admissible in the event that the matter progresses to the Employment Relations Authority. However, recording may be in breach of an employer’s policy, in which case the recordings may amount to a breach of good faith. This will need to be determined on a case-by-case basis, depending on the evidentiary value of the recordings.

References

During the recruitment process, an employer should only contact references that the applicant has nominated. If the applicant has not agreed to the employer approaching someone else, the employer should not approach that person for information.

An employer can use publicly available information as part of their assessment, such as the results of a Google search. However, they must obtain the applicant’s consent to conduct any further enquiries, such as checking qualifications with education institutions, criminal conviction checks, or police vetting.

Whistleblowing/Protected Disclosures

For a disclosure to be protected under the Protected Disclosures Act 2000 (“PDA 2000”), it must have related to “serious wrongdoing”, which is loosely defined in section 3 of the PDA 2000 and includes any act or omission that constitutes an offence.

Additionally, the requirements under section 6 must be met, including:

  • the information is about serious wrongdoing in or by that organisation; and
  • the employee believes on reasonable grounds that the information is
  • true or likely to be true; and
  • the employee wishes to disclose the information so that the serious wrongdoing can be investigated; and
  • the employee wishes the disclosure to be protected.

If all of the requirements above can be met, then a disclosure may be a protected disclosure under the PDA 2000.

If an employee believes on reasonable grounds that the information they disclose is about serious wrongdoing in or by their employer but that belief is mistaken, then information must be treated as being about serious wrongdoing in or by the employer for the purposes of the protections conferred under the PDA 2000 and by section 66(1)(a) of the Human Rights Act 1993.

The disclosure must also have been made in accordance with the employer’s internal process for reporting serious wrongdoing.

Where a protected disclosure has been made, the employee will receive the following protections:

  • the employee will be entitled to raise a personal grievance for unjustified dismissal or unjustified disadvantage if they suffer any retaliatory action from their employer as a result of making the protected disclosure;
  • the employee will have immunity from liability under any civil or criminal proceedings or under any disciplinary proceeding by reason of have made or referred that protected disclosure;
  • any person to whom a protected disclosure is made must use their best endeavours not to disclose information that would identify the employee who made the disclosure unless:
  • the employee has provided written consent for their identity to be disclosed; or
  • disclosure of these identifying details is essential for the investigation into the allegations made under the protected disclosure, to prevent serious risk to public health or safety or the environment, or essential in regard to the principles of natural justice.

Additionally, s 66 of the Human Rights Act 1993 makes it unlawful for any person to treat or threaten to treat any other person less favourably on the ground that they, or any relative or associate of that person, intends to make a protected disclosure, does make a protected disclosure, or has encouraged someone else to make a protected disclosure.

However, the protections under the PDA 2000 and s 66 of the Human Rights Act 1993 do not apply where the person who made the protected disclosure makes an allegation that they know to be false, or otherwise acts in bad faith.

Harmful Digital Communications

The Harmful Digital Communications Act 2015 (“HDCA 2015”) was passed in 2015 to help people dealing with serious or repeated harmful digital communications. It covers any harmful digital communications (like text, emails or social media content), and is regulated by NetSafe.

The HDCA 2015 sets out 10 Communication Principles, being that a digital communication should not:

  1. disclose sensitive personal facts about an individual;
  2. be threatening, intimidating, or menacing;
  3. be grossly offensive to a reasonable person in the position of the affected individual;
  4. be indecent or obscene
  5. be used to harass an individual;
  6. make a false allegation;
  7. contain a matter that is published in breach of confidence;
  8. incite or encourage anyone to send a message to an individual for the purpose of causing harm to the individual;
  9. incite or encourage an individual to commit suicide; or
  10. denigrate an individual by reason of their colour, race, ethnic or national origin, religion, gender, sexual orientation, or disability.

Complaints can be made to NetSafe, who will then investigate and attempt to facilitate a resolution between the parties. If NetSafe cannot resolve the matter, the complainant may file their complaint in the District Court to seek orders that:

  • someone, either the perpetrator or the online platform host (e.g. Facebook) take down the digital communication;
  • the perpetrator cease and desist from further digital communications;
  • the perpetrator publish an apology or a correction, or give the complainant a right of reply;
  • the identity of the perpetrator be released (for anonymous communications); or
  • that the complainant obtained name suppression.

There are also criminal penalties under the HDCA 2015, including a fine of up to $50,000 or imprisonment for up to two years for a natural person, or a fine of up to $200,000 for a body corporate where:

  • a person posts a digital communication with the intention that is cause harm to a victim;
  • posting the communication would cause harm to an ordinary person in the position of the victim; and
  • posting the communication causes harm to the victim.
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