The following are articles that I have either had published or have been sent to papers for publication.
A New Support Service Available To Small Employers
Non compliance with legislation is a subject creating difficulties for small business holders in a number of areas, but these people do not have to be experts in everything. It is more cost effective to utilise specialist skills of others when needed. Such a commitment gives a greater return than an individual attempting to stay abreast of every piece of legislation that covers their business.
In the employment area alone a businessman is required to meet the provisions of a significant amount of legislation such as:
· Employment Relations Act 2000
· Holidays Act 2003
· Minimum Wage Act 1983
· Health and Safety In Employment Act 1992
· Wages Protection Act 1983
· Human Rights Act 1993
Breaches of, in particular, the Employment Relations Act and /or the Holidays Act have resulted in small employers either having to pay compensation in the thousands of dollars to ex employees or even if the employee is unsuccessful in their claim significant expenses either in legal fees or lost time from the business.
The soon to be implemented changes to the Employment Relations Act double the maximum penalties available. It is a certainty that the Courts, as they did with changes to the Health and Safety in Employment Act, will increase the penalties that they impose.
Although professional associations provide members with pro-forma employment agreements these need to be negotiated with new employees and re-drafted to a point where both parties are satisfied and understand their obligations in the employment relationship.
In addition to the minimum requirements of the Employment Relations Act, that has eight minimum conditions that must be met, there is a significant amount of other information that should be part of the relationship and can either be included in an employment agreement, i.e. leave provisions, or appended as a policy or staff handbook.
A recent court decisions have created further risk in the compilation of contractual arrangements around fixed term agreements and has indicated that the requirement to state reasons is more onerous as some may think to allow them to meet the requirements of section 66 of the act. As a result greater care in defining the reasons for and the extent of any fixed term agreement is required.
Kachina Limited is a new business in Whangarei that is in a position to assist small businesses in ensuring their documentation meets minimum requirements and give advice and support in the operation of these so that the possibility of ending up in the Employment Tribunal is minimised.
Big Risk of ERA Failures
Recent statements by Federated Farmers in the national press and decisions by the Employment Relations Authority and Employment Court have highlighted the risk that farmers are taking in not complying with the Employment Relations Act and other employment legislation in the operation of their businesses.
Non compliance with legislation is a subject creating difficulties for farmers in a number of areas, but farmers do not have to be experts in everything. It is more cost effective to utilise specialist skills of others when needed. Such a commitment gives a greater return than an individual farmer attempting to stay abreast of every piece of legislation that covers their business.
In the employment area alone a businessman is required to meet the provisions of a significant amount of legislation such as:
· Employment Relations Act 2000
· Holidays Act 2003
· Minimum Wage Act 1983
· Health and Safety In Employment Act 1992
· Wages Protection Act 1983
· Human Rights Act 1993
Breaches of, in particular, the Employment Relations Act and /or the Holidays Act have resulted in farmers either having to pay compensation in the thousands of dollars to ex employees or even if the employee is unsuccessful in their claim significant expenses either in legal fees or lost time from the business.
Although Federated Farmers provides members with pro-forma employment agreements these need to be negotiated with new employees and re-drafted to a point where both parties are satisfied and understand their obligations in the employment relationship.
In addition to the minimum requirements of the Employment Relations Act, that has eight minimum conditions that must be met, there is a significant amount of other information that should be part of the relationship and can either be included in an employment agreement, i.e. leave provisions, or appended as a policy or staff handbook. These would include conditions like:
· Health and Safety Obligations of all parties
· Performance expectations and reviews
· Smoking policies
· Codes of conduct
· Processes defining and for dealing with misconduct and serious misconduct
· Harassment policies
A recent court decision (Shortland v Alexander Construction Co Ltd) has created further risk in the compilation of contractual arrangements around fixed term agreements and has indicated that the requirement to state reasons is more onerous as some may think to allow them to meet the requirements of section 66 of the act. As a result greater care in defining the reasons for and the extent of any fixed term agreement is required.
Kachina Limited is a new business in Whangarei that is in a position to assist farmers in ensuring their documentation meets minimum requirements and give advice and support in the operation of these so that the possibility of ending up in the Employment Tribunal is minimised.
Les Freeman, Kachina’s director, has over 30 years experience in Human Resource and Industrial/Employment Relations management. He is also an accredited Mediator and qualified Adult Teacher and Trainer and is ready to assist employers where employment difficulties may already be occurring.
Should you wish to have your employment documentation independently audited or to discuss a more detailed process of employment support Les can be contacted on 027 2949980 or by e-mail at les@kachina.co.nz.
ARE YOUR SYSTEMS STRINGENT ENOUGH TO LET THE 90 DAY RULE APPLY AND AVOID PERSONAL GRIEVANCE CLAIMS?
The cases of Smith v The Stokes Valley Pharmacy Ltd and Parkes v Squires Manufacturing Ltd confirm the need for an employment agreement to be completed before an employee commences work for the 90 day rule to apply.
In the Stokes valley Pharmacy case Ms Smith was an employee transferring to a new employer on the sale of the pharmacy and commenced work on a Monday but did not sign her employment agreement until the following day. The court decision included as justification the fact that Smith had worked for the new employer prior to the Employment Agreement being entered into. Even though it was only one day, this nullified the company’s ability to include a 90 day provision in the agreement.
In the Parkes case Ms Parkes commenced employment on 28 September and signed the employment agreement after lunch on her first day of work. Relying on the Trial period / Probationary period detailed in that agreement the employer dismissed Ms Parkes two days later on 30 September.
The employer however did not sign the employment agreement until 5 October, i.e. retrospectively and after the employee had actually been dismissed. It is this omission by the employer that nullified the effect of the 90 day trial period clause in the agreement. Had the employer signed the agreement on Ms Parkes first day of employment, the trial period would have applied and she would not have been able to lodge the grievance for unjustified dismissal.
The Authority member also commented on other breaches of good faith required by the employer and awarded Ms Parkes $11,500 in lost wages and compensation for hurt and humiliation. Costs have been reserved but should these need to be awarded then the employer, in addition to their existing legal fees, could be facing further expenses based on the current schedule of up to $3,000 per day.
These cases re-enforce the need for employers to have sound process in place to ensure that both parties have agreed to the 90 trial provisions in an employment agreement and that the agreement is signed by all concerned before employment commences.
In Graham v Northland Waste Ltd a similar situation arose where on the purchasing of a business, Northland Waste Limited did not have appropriate employment agreements in place at the time of transfer. When an agreement was offered to a transferring employee, sometime after he had transferred to the new company, it did not reflect the information originally conveyed to him. (It was a fixed term agreement as opposed to a permanent role).
In terminating his employment on the basis of a fixed term agreement that had not been agreed to Northland Waste had unjustifiably dismissed their employee who was awarded almost $7,800 in costs and compensation for hurt and humiliation.
To ensure that any trial period or changed employment conditions are to apply it would be best practice to ensure that any employment agreement is signed by both parties before an employee commences work. In the case of the sale and purchase of a business this should be completed before date of settlement of the sale.
Further difficulties with 90 Day Trial Period provisions.
Employment Authority member, Yvonne Oldfield, has referred a situation to the Employment Court for consideration and determination.
The Employment Relations Act defines an employee as including “a person intending to work” that is someone who has been offered and accepted a role but has not yet commenced with a new employer.
The case Blackmore v Howick Properties Ltd involves the clarification around the effectiveness of a 90 Day trial period in a written employment agreement.
Mr Blackmore states that in October 2010 he was verbally offered and accepted a role with Howick Properties and in the discussions he was advised that no trial period was to apply. In November when he actually reported for work he was supplied with an Individual Employment Agreement that contained a Trial Period provision. He felt compelled to sign this on his first day at work.
Mr Blackmore was for some reason dismissed and is claiming the right to take a personal grievance on the basis that having accepted the role on a verbal agreement that no trial period would apply and then having to sign an agreement that contains such a provision, that provision should not be effective.
The Authority Member in her consideration of the matter has highlighted an even greater issue and this is stated as follows:
“I have been given to understand that there is no dispute that Mr Blackmore was offered and accepted work in October 2010. If it were to be found that he became an employee at that point, it would give rise to the question whether he can be held to a “trial provision” contained in a written agreement entered into a month later.” (Emphasis mine)
As of 1 July all employers are required to hold signed copies of employment agreements, this issue emphasises the need for employers to ensure that all matters regarding the employment relationship are committed to writing and supplied as an employment agreement at the time a prospective employee is considering the offer of employment. The Act already contains a provision that employees are entitled to seek independent advice regarding an individual agreement therefore it is advisable that this occur before an offer is formally accepted.
If this is not done and there is a period of time where a person is “an employee intending to work” and has not agreed to a trial period, any such period may be declared void by the Employment Authority or Court.
Compliance with the Employment Relations Act is going to build an environment where offers of appointment are needed to be made in writing and include any individual employment agreement that may apply. Where collective agreements are in existence these are already required to be supplied to new employees.
Mediation has been required of employers and employees in disputes for at least twenty years and has been used in a number of other areas of dispute for an even greater time.
In 2009 changes to the District Court Rules placed a stronger influence on the use of mediation in civil matters to reduce the workload of the District Courts, but what are the benefits of utilising mediation as opposed to litigation and a court hearing?
Mediation is a process where the parties can, in a safe environment, discuss the issues under the guidance and facilitation of a trained mediator. These can happen with or without the support of a lawyer.
Mediation also allows the parties to reach an agreement that satisfies both their needs but may be more in the spirit of the law as opposed to the strict interpretation of a law that is required by judges in the court system. Mediation cannot however be used to circumvent or undermine a legal minimum entitlement. It also allows for a hearing to be arranged and decisions agreed within a matter of weeks instead of the months required for a court hearing. In matters of urgency mediations can be arranged within a few days, depending on the availability of the mediator you chose or any alternative they may be able to recommend.
The process is very user friendly in that it becomes as formal or informal as the parties agree and the mediator is able to guide discussions and maintain a focus on the core issues identified as being the hindrance to settlement.
A mediator is not necessarily a lawyer and will not give any legal advice but will work with the parties to allow them to reach a decision or settlement that they are both able to live with. A mediator will not arbitrate or force a decision on the parties.
The process normally involves some pre-discussions between the mediator and both parties to allow the mediator to become familiar with the issues as seen by each party, and to familiarise the parties with the process. The mediation session would then be set up and the parties are given the opportunity to state their side of the situation, usually without interruption, to the mediator and the other party. During this time the mediator works to ensure that all matters for discussion are raised and that all critical points are identified.
From this identification session a formal agenda of discussion points can be developed that will allow parties to focus on the critical issues. Because of the confidentiality that surrounds mediation sessions free and frank discussions are able to be held. This confidentiality is critical to the process to the degree that persons who are at the meeting to support one or other of the parties are often required to sign individual confidentiality agreements. Any agreed settlements are either confidential between the parties or contain descriptions of what information and to whom that information can be released.
The parties’ then work through each of the issues identified, working towards a conclusion that will be acceptable to all. This may involve the mediator working in ‘one on one’ sessions with either or both parties usually where emotions may be hindering progress or in an attempt to break an impasse. Again to allow for full and frank discussion any such session is confidential between the mediator and the party involved. These may also allow for the mediator to discover external influences that are affecting discussions but have not previously been revealed.
Once a decision has been reached the parties can sign formal terms of settlement that become legally binding on the parties, it is therefore necessary for the individuals attending the mediation to have the authority to sign such a binding document. If a party is attending without legal support it may be advisable for them to have access to legal advice but the mediator would ensure these issues would be discussed before the process commenced.
Because of the skills of the mediator in keeping parties focussed on the issues many mediations can be conducted and resolved in what is seen as a half-day (up to 5 hours) session. The total time dedicated to reaching resolution would be up to eight hours depending on the amount of pre-discussion required by both parties with the mediator
To maintain the professional standards required mediators should be members of a professional body, in New Zealand this would most likely be either AMINZ or LEADR both of which have high professional standards and require ongoing professional development of their practicing members to ensure the quality of mediation support being given. In recognising a need to move from an adversarial to a more advocacy style of interaction many lawyers are undergoing training as mediators and obtaining accreditation by one or other of the professional associations.
Research has shown that over 85% of situations that utilise mediation as a means of achieving settlement are successful, allowing the parties to move forward with their lives within a short timeframe and at a cost usually less than had they continued with litigation that would have them facing an all or nothing decision by the courts.
ERA Changes
Much of the publicity around the current Employment Relations Amendment Act 2010 has focussed on the extension of the 90 day rule and union access to employer’s premises. In addition to these two items the Bill calls for a number of amendments that will affect the smaller employer, some of which will ease some compliance burden and risk but these are offset by additional stated obligations and increases in (doubling of) penalties for breaching legislation.In the area of Personal Grievances alone there are nineteen amendments to the act a number of which are issues of procedure for the Employment Authority and Mediation Service.
Of benefit to the employer are:
The amending of “justification for dismissal” by replacing the word WOULD with COULD in section 103 A this reduces the pedantic nature of scrutiny by the Authority in making a decision and the change also ensures that minor or technical defects in an employers’ policy, that do not disadvantage an employee, will not result in an unjustifiable dismissal being decided on a technical point.
The removal of reinstatement as a primary remedy in any dismissal case. This remains an option but practice has shown that even as a primary remedy it has seldom been awarded. Recent court decisions have shown that even where a process has taken a significant amount of time, reinstatement can be ordered even where an employer has had to recruit replacement staff to cover the role of the dismissed employee. The roll on effect of possibly having to dismiss a new employee to allow for the reinstatement had no influence on the court decision. The Chief Employment Court judge in a recent public event reminded employers that one case awarded reinstatement of a police officer after seven years of litigation.
Although the purist definition of mediation relies on the parties being drawn to resolution of their own, mediators will now, on request, be able to make recommendations based on independent knowledge and expertise that may assist the parties in coming to resolution.
Supplying more flexible mediation services including the ability of the mediator to bring parties together without legal representation to resolve issues in a less adversarial context. This also includes the ability to conduct mediations via a teleconference.
Subject to an appeal to the employment court the employment authority will have the ability to dismiss cases that appear to be lodged on a frivolous or vexatious basis and to withdraw cases that have been inactive for three years from the last action.
The Authority also will have the power to award financial penalties for obstructive and delaying behaviour so that the processes can operate efficiently and reduce the costs of ongoing actions.
To counter these however the penalties for breaching the Employment Relations Act and the Holidays Act have been doubled from $10,000 to $20,000 for a company and from $5,000 to $10,000 for an individual.
The Bill also includes a requirement for employers to have copies of Individual Employment Agreements for staff and this includes copies of proposed agreements supplied to employees or prospective employees that may not have been signed. Not doing so will be a breach of the Act subject to penalty.
Labour Inspectors have also been given the authority to issue Improvement Notices on a similar basis to Health and Safety Inspectors it is hoped that the availability of this process will assist in avoiding litigation and create a more co-operative approach to compliance issues.
Many small employers appear to operate their personnel practices on good will and will have inadvertently breached legislation but it only takes one discontented employee to open a full can of worms and place them at risk of penalties.
Employers have only a short period of time to ensure that their records and processes are compliant and it would be advisable for them to review their employment documentation and processes to avoid the possibility of penalties in the future.
STOP PRESS
CAN YOU AFFORD TO BE NON COMPLIANT BY NOT SUPPLYING YOUR EMPLOYEES WITH AN EMPLOYMENT AGREEMENT??
On 14 January Bucky’s Diner in Kerikeri were fined $500 (payable to the Crown) for not supplying an employee with an employment agreement. (Rosenthal v Buckland & Anor t/a Bucky’s Diner)
On 22 March DRK Chartered Accountants, as part of an overall penalty of $10,000 were ordered to pay their employee $6,000 for not providing an employment agreement to her. (Kruthoffer v DRK Chartered Accountants Ltd)
On 1 April the maximum penalties available to be awarded under the Employment Relations Act are to double. The expectation will be that the Employment Court and Employment Authority will therefore double any awards they make.
The latest amendments to the Employment Relations Act require that an employer keep a SIGNED copy of any agreement with effect from 1 July 2011. The current requirements are that a copy of any agreement is kept by an employer.
An employer who has not retained copies of their employment agreements are therefore at risk of significant penalties if any grievance containing a claim against the non provision of an agreement is lodged.
With the amounts currently being awarded it is my expectation that any advocate taking a grievance for an employee will as part of their claim include a claim around this breach.
Remembering that each employee who has not received an agreement is deemed an individual breach of the Act, can you afford to risk up to $12,000 per employee when a few hours of Human Resource assistance will nullify that risk?
If you want assistance ring me on 0272949980 or email les@kachina.co.nz to arrange an appointment.
