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I’m an employer – what laws do I need to know about?

on Monday, 04 March 2013. Posted in Latest Articles, Business

As an employer, you are subject to a range of laws which govern all employment relationships within New Zealand. This article briefly outlines the most important of these laws for you.

EMPLOYMENT RELATIONS ACT 2000

The Employment Relations Act 2000 (the ERA) governs employment relationships in New Zealand. The ERA establishes the legal rules covering the negotiation and enforcement of employment agreements as well as the processes required to resolve employment disputes.

The ERA recognises that employment relationships must be built on mutual obligations of trust and confidence. The overriding principle established by the ERA is that employers and employees must act in good faith when dealing with each other. This good faith principle has a broad application. It applies, for example, where parties, including unions, are bargaining for a collective employment agreement or where an employer is considering a restructure of its business.

The ERA recognises that employment agreements can be governed by collective agreements or individual agreements. Employees have the freedom to choose whether they want to be party to a collective agreement or negotiate their own independent agreement. The ERA sets out the different rules which apply to the negotiation of such agreements.

Under the ERA, union membership is voluntary, but employers have a legal obligation to provide new employees with information regarding any relevant union the employee can join. Where a new collective agreement is being negotiated, the relevant union usually commences this process, with the ERA governing aspects of the negotiation process as well as setting out the powers a union has (such as access rights to the workplace). In respect of individual agreements, these cannot be based too closely upon a collective agreements (if such an agreement exists), but the parties to an independent agreement may agree to such terms as they see fit.

The ERA requires employers to:

  • Have a written employment agreement with every employee;

  • Observe the terms of its employment agreements;

  • Pay correct wages, including new payment methods as set out in the Holidays Act 2003;

  • Keep accurate wage records;

  • Provide employees with written information regarding services available from the Department of Labour to resolve employment relationship problems; and

  • Ensure that discrimination within the workplace is not occurring; and

  • Act in good faith, including being active in communicating with employees to maintain a productive relationship, and where a proposal is contemplated that may negatively impact on the continuation of employment, to consult with potentially affected employees.

Penalties can be awarded against an employer who fails to comply with any of these legal obligations.

Resolving disputes with employees

The Department of Labour has a specialist service called the Employment Relations Service (the ERS), which provides free mediation services to assist with resolving employment disputes. Mediation is the primary focus for resolving employment disputes, with approximately 76% of disputes being resolved at the mediation level. However, if mediation is not successful employers and/or employees can apply to the Employment Relations Authority (the Authority) for the dispute to be resolved. The Authority has wide-ranging powers to conduct an investigation into the matter and has the power to make binding decisions.

The Authority has a lot of remedies available to resolve employment disputes. For example, if an employee has been unjustifiably dismissed, the Authority can order that the employee be reinstated to their previous position. Where reinstatement is not appropriate the Authority can order an employer to pay reimbursement of lost wage and other benefits, compensation for humiliation, monetary penalties and costs.

If an employee or an employer is dissatisfied with any decision from the Authority, they can appeal the decision to the Employment Court.

Your obligations as an employer under the ERA

The ERA governs all employment relationships within New Zealand. It is important that you have a sound understanding of how to conduct employment negotiations, deal with your employees, and resolve disputes correctly. It is particularly important that you advise your employees of their rights under the grievance procedures in the ERA.

If you are an employer, you need to follow the correct procedures when dealing with your employees. In particular, in matters of discipline and redundancy, you must be able to prove that your actions are justifiable and procedurally fair.

To manage your obligations under the ERA, you should formulate your own compliance programme. We can assist you with this process. The benefits of a comprehensive compliance programme include:

  • Helping you to develop and evaluate your human resource management system;

  • Helping you to identify your labour requirements for running your business efficiently and profitably;

  • Helping you to ensure your employees are engaged on appropriate and certain terms;

  • Lowering the risk of employees bringing personal grievance actions;

  • Helping to ensure employees are treated fairly, and the relationship between the parties is good, which leads to confidence between the parties;

  • Increasing the level of confidence unions hold in an employer, which will assist in ensuring that valuable labour hours are not lost on protracted disputes with unions;

  • Helping to ensure that the right person is employed in the right job;

  • Helping with staff performance review procedures and disciplinary procedures; and

  • Helping you to end employment relationships with minimal risk.

Summary

The ERA is one of the most significant business laws affecting the day-to-day operation of New Zealand businesses. It is therefore important that you understand your obligations under the ERA and establish a compliance programme to ensure that you meet those obligations. We employ lawyers who specialise in providing advice in this complex and significant area of the law. If you are an employer or are planning on employing staff, you should contact us to discuss how the ERA will affect you and your business.

HEALTH AND SAFETY IN EMPLOYMENT ACT 1992

The Health and Safety in Employment Act 1992 (the HSA) also has a significant impact on employers. It is designed to “promote the prevention of harm to all persons at work”.

Your obligations under the HSA

If you are an employer you must:

  • Have procedures for identifying and assessing hazards;

  • Eliminate, isolate, or minimise significant hazards;

  • Keep employees informed of existing hazards, emergency procedures and where to find and use protective gear and safety devices;

  • Provide adequate training and supervision;

  • Investigate the cause of any work accidents;

  • Take all practicable steps to ensure employees’ actions or inactions do not harm any other person in the workplace;

  • Provide reasonable opportunities for employees to participate in processes for the improvement of health and safety; and

  • Record and give notification of work accidents to occupational health and safety inspectors.

You can face significant penalties if you fail to meet any of these obligations. Penalties can include fines of up to $500,000 or two years’ imprisonment or both.

Health and safety compliance programme as an employer you should implement a health and safety programme. A well designed compliance programme should help you to meet your obligations under the HSA and assist with:

  • Reducing workplace injuries;

  • Avoiding criminal liability;

  • Reducing ACC levies;

  • Improving staff relations (employees who are involved in a health and safety programme that reduces workplace injuries have higher morale and productivity);
  • Reducing the likelihood that you will breach your obligations under the HSA; and

  • Avoiding adverse publicity.

Your health and safety compliance programme should include:

  • A workplace health and safety manual; and

  • Regular health and safety audits.

Your health and safety manual should clearly state that you give health and safety in the workplace a high priority. It should also outline the procedures for identifying hazards and eliminating, reducing or minimising them, and should emphasise that this is the responsibility of every employee. Your manual should also identify any particular hazards and give warnings about those hazards, as well as setting out emergency procedures, including how to deal with an accident.

However, it is not enough simply to have a good health and safety manual. You should continually assess health and safety in your workplace. The second element in every compliance programme should therefore be regular health and safety audits. Audits will assist in reducing the number of hazards in your workplace as well as minimising your liability.

Summary

Employers who fail to meet their obligations under the HSA can face significant fines and even imprisonment. If you are an employer you should establish a vigorous health and safety compliance programme to protect your employees from injury and to protect yourself from legal liability. This programme should include developing a health and safety manual as well as establishing a regular audit process.

If you have any questions about your obligations under the HSA or establishing a health and safety compliance programme you should contact us.

OTHER LEGISLATION

Other important legislation for employers If you are an employer, you should also be familiar with the following laws:

Minimum Wage Act 1983: Every employee aged 16 and over is entitled to the prescribed minimum wage, regardless of whether a lower wage is negotiated in their employment agreement. This Act requires the Minister of Labour to review the prescribed minimum rate each year.

Parental Leave and Employment Protection Act 1987: Employees have minimum entitlements to parental leave, including paid parental leave, and certain preferential rights to re-employment. If a negotiated employment agreement gives lesser entitlements, that part of the agreement will have no effect.

Holidays Act 2003: Every employee is entitled to a minimum of four weeks’ paid leave each year, plus 11 specified statutory holidays. An employer and an employee cannot agree to restrict or reduce these entitlements.

Immigration Act 1987: If you are an employer you must ensure that all of your employees are New Zealand citizens or have residence permits or work permits or limited purpose permits granted for the purposes of employment.

Smoke-free Environments Act 1990: As an employer you must take all reasonably practicable steps to ensure that no person smokes at any time in your workplace.

Wages Protection Act 1983: If you are an employer you may not make any deduction from your employees’ wages or salary without the written request or consent of the affected employee, which that employee may revoke at any time.

SUMMARY

If you employ staff in your business you need to understand your legal obligations as an employer. You have significant obligations to your employees under the Employment Relations Act 2000, the Health and Safety in Employment Act 1992 and a wide range of other related legislation. To ensure that you comply with these obligations you should carry out a complete review of your employment practices and establish a regular review process.

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