Newsletter - Winter 2010
In this issue:
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here to download the printable PDF version.
All You Need To Know
About Employment
The world of employment law is ever evolving and it can be difficult
for employers to keep up with proposed changes and deal with the
multitude of other tasks required to operate their businesses.
At Turner Hopkins we give you information that you need to know – and
in that spirit, we list below some of the areas of employment law
currently being scrutinised by the Government, and some of the proposed
amendments considered.
Definition of Serious Harm
The Government have proposed amending the definition of “serious
harm” under the Health and Safety
in Employment Act 1992. The definition of serious harm is important as
an employer or person in control
of a workplace must, where serious harm has occurred, report this
immediately to the appropriate
authority - the Department of Labour, The Civil Aviation Authority or
Maritime New Zealand.
The proposed definition of serious harm will contain three main
categories of harm:
- Trauma injury – physical harm arising out of a single accident or
event and defined by the degree of physical incapacity,
- Acute illness or injury – requiring treatment by a medical
practitioner and caused by exposure to workplace hazards, and
- Chronic or serious occupational illness or injury - physical or
mental harm requiring hospital
admission, in-patient surgery, or able to be confirmed by a
specialist medical diagnosis.
It is expected that the proposed definition will be clearer and
easier to use and will remove the gaps in coverage of certain types of
harm or hazard which currently exist.
Report on Workplace Deaths
There were 31 workplace deaths in 2009 - all of which were men.
Most of the deaths remain under investigation. The Department of
Labour has been asked to identify whether there are any common
underlying causes and whether employers had failed to meet their
obligations to keep employees safe. Some decisions have already been
released and they underline
the real need for employers to turn their minds to safety features in
the workplace, particularly in
workplaces involving machinery.
Holidays Act/Personal Grievance Review
The much-talked about review of the Holidays Act 2003 was received by
the Minister of Labour in
December 2009 and the Government intends that proposals for change
will be introduced to a select
committee for comment this year.
Some of the proposals may include:
- the opportunity to trade 1 week of annual leave for cash,
- a change in the method of calculating holiday and sick leave
entitlements, and
- the transfer of public holidays to another day.
A review of the way that the personal
grievance system works is also being
conducted. Submissions from those
with experience in this field were
invited, and closed in March 2010. It will be
most interesting to see the conclusions drawn
from those submissions. Watch this space for further updates!
Rest and Meal Breaks
We are still receiving enquiries (mainly from
employees) with regard to rest and meal
breaks. This highlights that many employers
are unaware that since 1 April 2009 employees
have been entitled to compulsory rest and meal
breaks after a certain number of hours of work. Whilst many
workplaces meet or exceed the
compulsory minimums, some workplaces have
had real difficulties and have found that the law,
while well-intentioned, is overly prescriptive.
The Rest Breaks and Meal Breaks Amendment
Bill (which had its first reading in Parliament on
27 April 2010), while maintaining an entitlement
to rest and meal breaks, proposes that:
- employers may not have to provide a complete
break from work duties in situations where
the employee is a sole attendant, and
- where a break cannot reasonably be
provided the parties may agree that time
off is given at an alternative time, for
example an employee may start later or
finish earlier in the day.
If you have any questions relating to employment
law (either as an employee or employer) we are
very pleased to assist. Often queries can be
answered with just a short phone call. Put us
to the test – contact Michael Robinson or
Helen Wendelborn of this office.
Outsourcing Payroll -
Could It Be Right For You?
Payroll is like housework
Payroll administrators may well think payroll
is like housework. People only notice when
something is wrong, and when you have finished
it 's time to do it again!
But the analogy stops there. Miss out Joe's
overtime and Mary's holiday pay and you'll cause
problems for them at home and at work. For
most employees the money they earn is a major
reason for working, and it's a sensitive issue.
Produce too many pays incorrectly too often
and you'll not only have angry employees, but
you'll change the culture of your organization.
It can be a thankless task as well. When someone
contacts the payroll administrator and demands
to speak urgently, is it to say thanks for a job well
done or to complain because they think there is
an error? Unfortunately, it is more likely to be
the latter. And it doesn't end there. The payroll
administrator will need to be able to explain
complex issues in simple language. Issues such
as why the sick leave rate is different from the
annual leave rate; why some of the final holiday
pay has been paid in dollars not time; or why the
annual leave rate is different from when they
took leave last time, or why KiwiSaver has been
deducted from their pay.
A payroll administrator has a tougher job than
most would imagine. Consider, for example, that
they have to cope with changes to employment
Acts that over the years have become more
and more difficult to administer. It is so
difficult that in a recent survey the Employers
and Manufacturers Association concluded,
“the law is so complicated and confusing that
most employers appear to find aspects of it
unworkable and are not complying with all of it.”
Outsourcing Payroll could be an answer
If you are an employer and you're starting to
think that vacuuming never sounded so easy,
outsourcing your payroll may be the answer.
All of your payroll processing requirements can
be taken care of leaving you with peace of mind.
What do payroll outsourcing companies do?
Well, at The Paymasters we take care of the
complete payroll function. That includes data
entry, payroll processing, employee banking,
producing payslips, and reporting and filing IRD
reports and payments. Client companies can
then concentrate on their core business.
Companies may choose to outsource their
payroll for a variety of reasons. One is that many
employers find it difficult and time-consuming,
keeping up with changes and understanding
employment related legislation... and more changes
are due. The Minimum Wage Act changed on
April 1st this year, and more changes to the
Holidays Act are likely in 2011.
Another common reason to outsource payroll is
to lower overheads. Employee time is freed up
for other tasks, and employees no longer need
training in software, time to fix errors, or training
in legislation. There is also no need to provide a
backup person in case the payroll administrator
is absent. Additionally, some companies like the
confidentiality of having their pay processed offsite.
Knowing that the IRD will have reports filed
and payments made on time without the risk of
penalties is another obvious benefit.
If you would like some more information about
outsourcing payroll for your organisation please
contact us and we will be very happy to discuss
your particular requirements.
This article has been submitted by Jenny Sainsbury
of The Paymasters Ltd. For further information
please contact Helen Wendelborn of this office.
Leaky Homes Crisis -
Recent Developments
The Government has, at long last, announced its proposal to address
the leaky homes crisis.
The crisis surrounding defective houses has
escalated over recent years. In a report by
PricewaterhouseCoopers (released in late 2009)
the scope of the problem has been assessed as
affecting between 22,000 and 89,000 houses.
The report has adopted “consensus forecast”
of 42,000 homes however many experts
believe that the scale of the problem may well
exceed the 89,000 estimate. Even on the PricewaterhouseCoopers
conservative estimate the
cost of remedial work is expected to amount to
over $11 billion!
Consistent with this assessment, we have
noticed a significant increase in the number
of leaky home disputes being referred to us.
We have developed a considerable degree of
experience representing not only homeowners
but also builders, developers, architects designers
and other subtrades. Proceedings
of this nature have traditionally been pursued
through either the Weathertight Homes
Tribunal or the High Court.
The latest proposal to address the problem
envisages the Government contributing 25%
of the repair costs with the relevant Local
Authority contributing a further 25% on
accepted claims. The proposal was announced
in mid May and at the time of writing this
article Local Authorities were yet to respond
to the suggestion. The specific details are not
yet available.
It is anticipated that homeowners would remain
at liberty to pursue the potentially responsible
parties (including builders, developers,
designers, subtrades and possibly building
product suppliers/installers)
for amounts over and above
those contributed by the
Government and Local
Authorities. Homeowners
would also be at liberty to
elect not to avail themselves
of the financial assistance
package and simply pursue
the potentially liable parties through the Tribunal
or Courts at their discretion. The approach to
be adopted will need to be considered in each
case and will vary depending on the particular
circumstances not only of the homeowners and
the house but also the potentially liable parties
(and their financial circumstances) and the
specific defects giving rise to the claim.
The recent proposal also envisages bank loans
becoming available for homeowners for the
remaining 50% of the remedial costs. This assistance
will need to be provided by trading banks and as yet
the criteria and details are still to be determined.
Of particular importance for any party involved in
a leaky home (especially owners) is to be aware
of the very strict 10 year time limitations which
preclude claims being commenced after the expiry
of 10 years from the date on which the defective
works or actions are alleged to have occurred. In
light of the fact that most of the houses currently
exhibiting leaks or water
ingress were constructed
in the period between
1992 and 2005 this strict
10 year limitation period
is highly relevant. We
strongly recommend any
homeowner concerned
about their house to take
urgent steps to assess their options. Michael
Robinson or Andrew Hooker at this office
have considerable experience in assisting parties
involved in leaky home disputes and will be happy
to answer any particular questions that clients
may have concerning leaky homes (whether as
a homeowner or party against whom a claim is
being made).
Three Strikes Law
While there is consensus over the fact that
there is too much serious crime in New Zealand,
debate has raged over whether the 'three strikes'
legislation is the correct way forward.
The legislation lists over 36 offences, which
are qualifying offences and count as a strike
against the offender:
- Strike one occurs when the offender
commits the first qualifying offence.
The offender will receive the standard
sentence and a first warning.
- Strike two occurs if the offender commits
another qualifying offence. The offender
must serve the sentence without parole
and will receive a second warning.
- Strike three occurs if the offender commits
a third qualifying offence. The offender
must be sentenced to the maximum
sentence for that offence with no parole.
For murder and manslaughter the maximum
sentence will be life imprisonment and under
the legislation life will mean life (i.e. until
the prisoner dies). For aggravated robbery,
kidnapping, and attempted murder the
maximum sentence will be 14 years, and for
sexual violation 20 years. For the second
and third strikes all of these sentences will
be served without eligibility for parole. Preventative detention will
still be available if a
longer sentence is required.
It is anticipated that the new law will improve
public safety by locking up offenders for a
longer period and improve public confidence
in the justice system. It is also hoped the new
law will relieve victims of the stress of attending
parole hearings, and the anxiety and uncertainty
of not knowing when offenders will be released
on parole.
Critics argue that the 'three strikes' law will
take away judicial discretion and ignore the
factors that should be considered when
assessing sentencing such as premeditation,
an early guilty plea, and an offender who is
remorseful. Dr Richard Ekins, Senior Lecturer
at Auckland University's Faculty of Law, has
highlighted instances where inconsistencies
may occur:
- Two men who commit an unpremeditated
aggravated street robbery would ordinarily
receive a sentence of 18 months to 3 years.
If one of the men has previously had two
strikes then he has to be sentenced to 14
years in prison – the maximum penalty for
aggravated robbery.
- An armed robber, with no prior convictions,
may brutally assault a victim while his
accomplice, with two previous strikes, may
be merely the getaway driver. In sentencing,
the judge will have no discretion with the
getaway driver – he will receive the maximum
sentence with no parole while the armed
robber may comparatively be punished less
severely.
No doubt there will be ongoing debate about
the merits and efficacy of the 'three strikes' law
into the future. Watch this space for updates. If
you have any queries regarding criminal offences
please contact Douglas Mitchell or anyone in
our litigation team.
Award Winning Service
(It's one more way we can say
'thank you' for the business you
entrust to us).
Established back in 1850 and proudly New
Zealand owned, TSB Bank has grown - and it
really has grown - to become the nations' most
loved bank. ('Loved' and 'bank' in the same
sentence? Not something you see often, is it?)
The fact is, for the last 10 years on end TSB Bank
has had the highest customer satisfaction rating
of all banks in New Zealand. Add to this their
amazing 22 successive years of profit growth and
how easy they've made it for folks to deal with
them, and you'll begin to understand why we're
bringing this special client-only offer to you.
For a limited time, if you're looking to buy a new
home, or refinance your existing home loan, TSB
Bank is offering you a really rewarding reason
to experience their award-winning service for
yourself.
As an exclusive offer to Turner Hopkins' clients,
arrange a home loan through TSB Bank before
the end of July and you'll receive:
- A great home loan rate (see www.tsbbank.co.nz for current rates
available)
- Up to $750 towards legal fees (based on 0.25% of the loan amount, up
to a maximum of $750)
- No application fee
A TSB Bank Home Loan is not an off-the-shelf
kind of product. You are free to mix and match
from a range of interest rate, loan and repayment
options to create a home loan package most
suited to your needs.
This special offer is only available to you as a
Turner Hopkins client, and only until 31 July
2010. Terms and conditions apply, see TSB Bank
for details. To find out more, simply call in to
TSB Bank on the corner of Hurstmere and Lake
Road, Takapuna (phone 09 920 4270) or on the
corner of Queen and Wellesley Streets in the
city (phone 09 920 4222) or visit
www.tsbbank.co.nz/tsb.aspx/turner-hopkins to find out more.
The Benefits And
Pitfalls Of Franchising
Are you contemplating buying a franchise?
It is helpful to have an understanding of
how franchising works, and the potential
pitfalls for the franchisee, before signing
any franchise agreement.
Franchising is a business model in which one
business, the franchisor, allows a separately
owned business, the franchisee, to use their
systems, brand name and other intellectual
property rights in return for royalties and other
payments. The advantage
for a franchisee is that they
get the benefit of a proven
and tested business model. The franchisor, on the other
hand, is able to expand
their business without
providing the capital and taking on the risk. The
association between the parties is symbiotic.
The franchisee relies on the franchisor and the
other franchises to maintain the reputation of
the brand.
The franchise agreement sets out the conditions
upon which the franchise is to operate. This
will usually include:
- fees to be paid, both upfront and ongoing,
- duration of the agreement and renewal rights,
- intended territory or market,
- dispute resolution procedure, and
- rules relating to the on-sale of the
franchise.
In order to assist the franchisee and to ensure
consistent quality of service amongst franchises
there is usually a franchise manual that provides
operational details. This manual contains
the business model, with most agreements
requiring strict adherence to it.
Fundamentally, franchise agreements should
be approached like any other contract and
need to clearly reflect the
arrangement between the
parties. The agreement
should be carefully
examined by an independent
lawyer, preferably one
with franchise experience. Many franchise
agreements, particularly with large firms, are
non-negotiable. Prospective franchisees should
be prepared to decline to sign contracts that
contain onerous and one-sided terms.
There are a number of common pitfalls
within franchise agreements. For example, the
franchisee needs an exclusive territory within
which the franchisor may not grant any other
franchise licenses. Clauses that allow reduction
of this territory by the franchisor are common
and should be considered carefully. Also, the
franchisor should specify the steps they will
take to protect the intellectual property rights being paid for. The
exact method of calculating
the royalties needs to be specified as well as
penalties for late payments. Clauses that allow
for early termination are very common and need
to be clearly understood. Agreements that limit
the liability of the franchisor to the franchisee
are cause for concern, particularly when related
to obligations for marketing, training, and
disclosure statements in the negotiation phase.
There is no specific franchise legislation to
protect franchisees, however a large number
of franchisors abide by a self regulating code of
conduct that aims to “promote high standards
of franchise conduct” and does offer some
protection against unreasonable and unfair
conduct on the part of the franchisor.
If you would like us to assist you with any
franchising or other business matters, please
contact Mike Newdick.
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