Posted on: Dec 16, 2013

A penalty of $50,000 payable to the employer has been imposed on an employee who breached his employment agreement with the employer at least 263 times.

The Employment Relations Authority held that the employee was bound by a reasonable restraint of trade and by confidentiality provisions and had breached them by:

The Authority said because the employer had been caused serious harm and the breaches were flagrant, deliberate and ongoing, a severe penalty should be imposed. It said denunciation and deterrence were important. The Authority noted that not all of the damage the employer had sustained would be recoverable. The Authority also awarded $6,778.17 to the employer to reimburse it for the costs it incurred in engaging a private investigator to investigate the employee’s activities.

See Zeald New Zealand Ltd v Bernard [2013] NZERA Auckland 402.

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This article, and any information contained on our website is necessarily brief and general in nature, and should not be substituted for professional advice. You should always seek professional advice before taking any action in relation to the matters addressed.

Posted on: Dec 11, 2013

Employing family members can lead to problems as the case noted below shows. Family members should always be given written employment agreements and be paid at least the minimum wage.


In Meroiti v Lindale Lodge Ltd [2013] NZERA Wellington 104, Graeme was employed by his brother John as manager of the Lindale Motor Lodge. The agreement (which appeared to be unwritten) was that Graeme would live in and be paid $350 per week in the hand after tax had been deducted. Graeme was required to work hours as required. The brothers fell out and John summarily dismissed Graeme. Graeme issued proceedings in the Employment Relations Authority and claimed the difference between what he had been paid and the minimum wage, unpaid holiday pay, three months’ lost wages following the dismissal and compensation.

The Authority said because Graeme was an employee he was entitled to the minimum wage and holiday pay and it found Graeme had been unjustifiably dismissed. John did not appear at the Authority investigation to challenge Graeme’s claims. The Authority awarded Graeme gross unpaid wages of $86,935.25, holiday pay of $7,702.80, $17,745 for lost wages after dismissal and $6,000 as compensation for hurt and humiliation.

Disclaimer

This article, and any information contained on our website is necessarily brief and general in nature, and should not be substituted for professional advice. You should always seek professional advice before taking any action in relation to the matters addressed.

Posted on: Dec 11, 2013

Any agreement regarding time in lieu to be taken for working over agreed hours should be written into the employment agreement. The agreement should also make it clear whether the time owed will (or will not) be paid out on the termination of employment. If that is not done an employer may face an unexpected claim on termination of the employee’s employment.


In Jackson v TSL Nelson Ltd [2013] NZERA Christchurch 179, Mr Jackson brought a claim for $19,975.56 for unpaid time in lieu. The Employment Relations Authority found Mr Jackson was employed on a salary to work 40 hours per week and had an unwritten understanding with the employer that he would be paid for hours worked over and above the 40 hours. The understanding was referred to in emails between the parties before Mr Jackson was employed. The Authority awarded the amount sought. It noted that Mr Jackson’s employment agreement provided the terms in the agreement “represented the entire terms and conditions that operate between the parties with respect to the employee’s employment” and that ordinarily such a clause would be a powerful argument against implying a term into an employment agreement. However, in Mr Jackson’s case the Authority said because the agreement had another employee’s name on it (not Mr Jackson’s name) and had not been signed by Mr Jackson it would be dangerous to assume that Mr Jackson considered himself bound by it.

Disclaimer

This article, and any information contained on our website is necessarily brief and general in nature, and should not be substituted for professional advice. You should always seek professional advice before taking any action in relation to the matters addressed.

Posted on: Dec 09, 2013

An employer’s claim that weekly wages that were less than the minimum wage, paid to a farm worker when cows were being milked, could be offset against wages that were higher than the minimum wage, paid to the worker when the cows were dry, so over the year the employer was complying with the Minimum Wage Act 1983 was unsuccessful.

An employer is not complying with the Minimum Wage Act by averaging out payments made to an employee, who is paid weekly, throughout the year.  A Labour Inspector on behalf of Mr Almao, the worker, gave evidence that except in the dry season Mr Almao worked 60 hours a week for three weeks, with the fourth week at 49 hours per week and in the dry season Mr Almao worked between 38 and 44 hours per week.

The Authority found for the duration of the dry season Mr Almao was paid above the minimum wage but for all other weeks his rate of pay was less than the minimum rate in the applicable Minimum Wage Order. It said he was entitled to be paid the difference between the amount of salary he received and the relevant weekly minimum rate during the milking season.

The Authority noted that Mr Almao’s employment agreement provided that salaried employees would be paid by equal weekly instalments and said that the relevant unit of time for measuring Mr Almao’s minimum entitlement was therefore one week. It said payment by way of salary could not be used as a mechanism to avoid the rates set out in a Minimum Wage Order.

Disclaimer

This article, and any information contained on our website is necessarily brief and general in nature, and should not be substituted for professional advice. You should always seek professional advice before taking any action in relation to the matters addressed.

Posted on: Nov 25, 2013

On 30th October 2013, the Medical Council released its updated standards for doctors writing medical certificates. Employers are welcoming this update, which has come about from a recent period of review – including submissions from interested parties.

The Medical Council chairperson, Dr John Adams says that the writing of medical certificates can be a complicated part of medical practice. It is an area of practice where doctors have responsibilities to a third party, such as an employer, in addition to their primary obligation to care for their patient.

‘Doctors in writing a medical certificate certainly need to be mindful of the implications for the patient, themselves, and the agency receiving the certificate.’

’Medical certificates may have financial implications for the patient and the recipient through benefits, employment and compensation payments and failure to complete a certificate appropriately may have a negative impact on the patient, the patient’s family or the receiving agency (for example, in the case of sick notes, the patient’s employer).’

’In addition, a doctor who certifies a patient to undertake work when he or she is unfit may place the patient or the patient’s colleagues at risk,’ said Dr Adams.

Under the new standards, a certificate must clearly identify the examination date and the time period of treatment (if any). Interestingly, retrospective certificates should now be clearly identified as such – a change welcomed by employers who were previously inundated with poorly written, backdated and irrelevant doctor’s slips.

The Council’s new standards state medical certificates should provide the necessary information required by the receiving agency and consented to by the patient.

The ‘necessary information’ should usually be limited to information about the doctor’s clinical opinion on safe activities / restrictions and time frames. The certificate should not include private or irrelevant information.

For employers, this means the medical certificate should contain much more useful and specific information on what duties/tasks an employee can and can’t do – as well as what capacity he/she has for alternative duties.

Any comments on fitness for work should refer specifically to the doctor’s clinical opinion, outlining those activities that are safe for the patient to undertake and appropriate restrictions, or unsafe activities, that the patient should not undertake. If the patient is fit for some activities, this should be recorded in the certificate. Any duties that should not be attempted should also be clearly stated.

A doctor should not usually record a diagnosis in a medical certificate, unless this has direct implications for the receiving agency. Examples of where a doctor should seek a patient’s consent to include a diagnosis in a certificate includes where the diagnosis relates to a workplace injury or illness and where the employer might need to take action to prevent a recurrence, or where the illness or injury may have an impact on co-workers and the public and the medical certificate is to be received by the patient’s employer (for example, where a chef is diagnosed with a food-borne illness).

Dr Adams said, ‘Often employers or other agencies may seek additional information from a doctor about a patient’s health status and whether they can work, together with the number of hours a patient may be able to work.

‘In these situations, our statement suggests employers or other agencies ask for the doctor’s clinical judgement as to what work the patient is fit for together with the number of hours a patient may be able to work.’

’However, the doctor’s ability to provide this type of information will be limited if the patient has not consented to its release.’

Dr Adams says that if employers and other receiving agencies are concerned about the content of a medical certificate then they should seek the patient’s consent and approach the doctor who issued the certificate with their concerns. If the doctor’s response does not meet their needs, then they might consider asking the patient to see another doctor to obtain a second opinion.

If you are concerned that a doctor has not complied with the requirements of the Council’s statement, you can lodge a complaint with the Medical Council or the Office of the Health and Disability Commissioner.

Common Q and A’s on the new standards

Q. Will these standards make it harder for patients to get a medical certificate?
A. No. There is no intention to make it harder for patients to get a certificate. Where we have made changes to the standards it is usually to make sure that the content of a certificate is clearer and more useful.

Q. Won’t making a certificate clearer and more useful mean breaching of my right to privacy?
A. No. A certificate can only contain information required by the receiving agency and consented to by the patient. The statement tries to draw a distinction between information that is private (such as a diagnosis) and information that your employer or a government agency might need (for example, the timeframe for your recovery). Most of the time we suggest that doctors should seek your permission, and then include only information that the receiving agency needs in a certificate. In very limited circumstances, where a diagnosis relates to a workplace injury or illness, or when an illness may have an impact on co-workers or members of the public then we say that the doctor should seek your consent and also include on the certificate a diagnosis and the workplace factors which may have contributed. An example of when this might occur is where a doctor believes that a chef is suffering from a food-borne illness.

Q. Do the Council’s new guidelines on writing medical certificates for sick or impaired patients mean they will forced back to work when they are still sick or impaired?
A. Absolutely not. The decision to return to work is often like any other medical decision and involves balancing the risks and benefits of the treatment plan, and any alternatives, before agreeing on the best treatment option. Sometimes the best option might be for the patient to have time away from work, but there is a developing body of evidence that work is good for health and wellbeing and in other cases the patient might be capable of some work duties and their recovery may actually be assisted if they are at work and performing some work tasks. Because of this, it can sometimes be useful for the doctor to consider any information from an employer about the patient’s work environment, the workplace support available and possible alternate duties.

Q. The guidelines appear to favour employers and other agencies over patients, is this fair?
A. This perception is unfair. When doctors, patients and employers all have different rights, responsibilities and needs there will always be a potential for conflict and disagreement. Our aim with the new statement is not to change this balance of rights, responsibilities and needs –but to help doctors provide better information and to reduce the potential for conflict. If a patient is concerned that a doctor has acted unfairly, he or she can lodge a complaint with the Medical Council or the Office of the Health and Disability Commissioner.

Q. How can a doctor know the detail of a patient’s workplace activities?
A. The Council acknowledges that it is often be difficult for a doctor to gauge the type of work a patient does, especially if they do not have access to their detailed job description or workplace job task sheet.
The patient and their employer are often in a better position to decide how the doctor’s clinical opinion applies to their particular situation. It is therefore often important for the doctor to focus their attention on those activities the patient can and cannot safely undertake, rather than on whether or not the patient is capable of working.

For example, it may not be accurate to write a sickness certificate saying that a truck-driver with a broken leg is unable to work’ if part of the patient’s job involves office work and he or she remains capable of doing that work. Instead, it is likely to be more useful for the doctor to advise the employer in on certificate that the patient ‘is unable to drive a truck’.

Q. What can patients do if they disagree with the medical certificate their doctor has written for them?
A. Patients like employers and other agencies can always get a second opinion from another doctor, occupational medicine specialist or other specialist.

Q. What feedback did the Council receive when consulting on these guidelines?
A. The Council received 68 submissions from a wide variety of groups and organisations including patient advocacy groups, employers, unions and government agencies. Overall, there was wide support for the changes Council has made.

 

The information contained in this article has been taken from the Medical Council website www.mcnz.org.nz, for more information on this topic please refer directly to this site.

Disclaimer

This article, and any information contained on our website is necessarily brief and general in nature, and should not be substituted for professional advice. You should always seek professional advice before taking any action in relation to the matters addressed.

Posted on: Nov 12, 2013

The world doesn’t stand still, it’s constantly moving and so it the environment in which businesses operate.  Hence, it is very common that the circumstances under which you employed someone may change, and you therefore need to make amendments (or variations) to an employment agreement.

The problem is, you cannot simply issue new employment agreements containing different terms and conditions to existing employees.  It is unlawful to unilaterally make changes to an existing employee’s terms and conditions of employment, and therefore the trick is to ensure to get your employee’s agreement.

Existing employees

An employer is not entitled to unilaterally insert a new clause into an existing employment agreement. As a general rule, contractual terms cannot be varied without the consent of both of the contracting parties. An employer has the right to manage his or her business and the line between the employer’s right to manage, which does not require the consent of an employee (but does require consultation), and a variation of contract, which does require the consent of an employee, can sometimes be hard to draw.  Certain terms and conditions are more protected than others – for example, the wage to be paid and hours of work are clearly important terms of the agreement and the employer cannot unilaterally reduce the employee’s wage rate or hours of work.

Any variation to the contract must be done by agreement and in conformity with any provision in the employee’s employment agreement about how the agreement is to be varied. The Employment Relations Act 2000 provides that when bargaining over a variation to the terms of an individual employment agreement the employer must:

The employer must keep copies of a finalised individual agreement, and of intended agreements supplied during bargaining for a variation.

There is no law setting out an exact consultation process to follow when entering into an agreement to vary an existing agreement, but the following process is suggested. The process must be fair and equitable.

  1. Check the employment agreement for any relevant provisions, including provisions on the process to be followed on how a variation is to be carried out.
  2. Write to the employee and ask him or her to attend a meeting (time and date) to discuss the proposed change.
  3. In the meeting, tell the employee what the proposed changes are and provide a copy of the proposed new agreement.
  4. Tell the employee when you hope to introduce the new arrangement, provided they agree to it.
  5. Emphasise that the employer understands it cannot vary the employee’s contract without the agreement of the employee and ask the employee to consider the matter and to consider any other ideas he or she may have to solve the problem or avoid the change.
  6. If it is a possible outcome that without the changes the employee’s position may become redundant, warn the employee that if an appropriate solution cannot be found, the employee’s position might become redundant.  This is important information for him/her to know before making their decision as to whether or not to agree to the proposed changes.  Don’t use redundancy as a threat however; only say this if it is actually a reality.

At the meeting, go through the proposed agreement with the employee and explain the reasons for the need for change as far as is reasonable. Give the employee plenty of time to discuss the matter and tell the employee he or she is entitled to seek legal advice. Agree to meet a few days later.

If agreement can be reached, the new agreement should be recorded in writing and the employee asked to sign the agreement. If it is a reduction in pay or benefits, or a restraint of trade has been put in place, the employer should give some “consideration” to the employee in return for the employee giving something up to ensure that the new agreement is binding.  The employee should be given a letter with the new employment agreement and stating when it will come into force.

If the employee refuses to accept the variation, the employer could make the employee’s position redundant provided it first follows a fair and proper procedure and can show clear evidence of the commercial necessity for the redundancies.

New employees

Employers are entitled in add conditions into their employment agreements with any new employees provided they are on an individual employment agreement.  It doesn’t matter if new employees have different terms and conditions to existing employees.  The Employment Relations Act 2000, section 65(2) sets out the required contents of an employment agreement but otherwise provides section 65(1)(b) that the agreement may contain such terms and conditions as the employer and employee think fit.

An employment agreement must at least contain the following clauses:

It is wise to include many other clauses to this document, as it forms the fundamentals for the employment relationship.  For help drafting specific clauses to suit your business, or for a simple template document for you to start with, please contact the team at Paul Diver Associates.

Disclaimer

This article, and any information contained on our website is necessarily brief and general in nature, and should not be substituted for professional advice. You should always seek professional advice before taking any action in relation to the matters addressed.

Posted on: Nov 08, 2013

On 25 October, the Ministry of Business, Innovation and Employment’s Labour Inspectorate served freezing orders which were granted by the Employment Court, on three companies operating Auckland convenience and liquor stores owing over $200,000 for breaches of employment law.  It is the first time the Labour Inspectorate has used section 190 of the Employment Relations Act 2000 in attempt to secure outstanding wage and holiday pay and penalties.

In August the Employment Relations Authority issued a determination against the companies operating as Civic Convenience, Symonds Liquor and Sky Liquor after receiving a complaint from 11 migrant workers. The companies share the same sole director Mr Ala’a Bader.

The Authority stated that the breaches were serious and ordered the companies to pay a total of $211,574.33. This includes outstanding minimum wage and holiday payments and penalties for breaches of the Minimum Wage Act 1983, Holidays Act 2003 and the Employment Relations Act 2000.

Labour Inspectorate Northern Regional Manager David Milne says the companies have acknowledged some holiday pay liabilities and made a payment of a little over $2000 to the Authority, with the remaining funds yet to be paid.

“It has come to the Labour Inspectorate’s notice that Symonds Liquor has recently been sold for an amount exceeding what is owed,” Mr Milne says.

“The Labour Inspectorate applied to the Employment Court for the freezing orders, which were granted. The order has now been served and has frozen the companies’ assets. This includes the proceeds from the sale of Symonds Liquor.”

Mr Milne says the order prevents the companies from removing these assets from New Zealand.

“The Labour Inspectorate will not hesitate to prosecute breaches of minimum employment, reclaim money owed to workers and ensure that penalties are paid. If the Inspectorate needs to go as far as freezing employers’ assets to ensure that happens then we will have no hesitation in doing so.”

The freezing orders were due to expire on Monday 4 November 2013, however we have not yet heard if the Employment Court has determined that the orders are to be continued or not.

“The exploitation of workers is not welcome and breaches New Zealand law,” Mr Milne says.

 

Disclaimer

This article, and any information contained on our website is necessarily brief and general in nature, and should not be substituted for professional advice. You should always seek professional advice before taking any action in relation to the matters addressed.

Posted on: Oct 24, 2013

Jessie is employed by Magic Hire Ltd, a company which hires out costumes. Jessie has 40 days of annual leave owing to her. The company has asked Jessie on a number of occasions to reduce the number of days owing to her. However, Jessie has not taken any leave.

Can Magic Hire Ltd tell Jessie that she will lose 20 days of annual leave if she doesn’t take any leave in the next three months?

No. Magic Mirror Ltd cannot tell Jessie that she will lose 20 days of annual leave if she doesn’t take any leave in the next three months.

An employee cannot lose his or her entitlement to annual holidays. The Holidays Act 2003 provides that the entitlement remains in force until the employee has taken all of the entitlement as paid holidays or has been paid out.

Employees are entitled to minimum statutory entitlements. Employers can agree to provide enhanced entitlements, but any attempt to provide less than the minimum is unenforceable.

Magic Hire Ltd can, however, require that Jessie take annual leave. The company should meet with Jessie and discuss the problem and the best way to resolve it. If no resolution can be reached, Magic Hire Ltd will be entitled to require Jessie to take annual leave after giving her 14 days’ notice of the requirement.

Disclaimer

This article, and any information contained on our website is necessarily brief and general in nature, and should not be substituted for professional advice. You should always seek professional advice before taking any action in relation to the matters addressed.

Posted on: Oct 22, 2013

An employee is entitled to four weeks of annual leave. The employee has a large amount of annual leave owing. Both the employer and the employee have agreed that the employee can cash up any portion of the annual leave entitlement.

Can the employee cash up more than one week per annum of annual leave if both employee and employer are in agreement?

No! It is illegal to cash up more than one week of annual leave per annum. Only a maximum of one week can be paid out.

Any employment agreement that excludes, restricts or reduces an employee’s entitlement has no effect to the extent that it does so. This does not mean that the entire employment agreement is rendered void because of this breach. Rather, the agreement is enforceable and operates until it starts to deprive the employee of his or her minimum entitlements.

The annual holiday entitlement has two dimensions: time and money. The employer must not only pay the employee for annual holidays, but must also allow the employee the time off work (these are minimum entitlements). This is why it is not possible to cash up more than one week of the annual holiday entitlement.

The bar on cashing up annual holidays applies only to the statutory entitlement provided by the Holidays Act 2003. An employee who enjoys a greater entitlement under his or her employment agreement can at any time agree to vary the agreement and accept an agreed cash value for annual holidays in excess of the minimum entitlement. That is not the case here.

Disclaimer

This article, and any information contained on our website is necessarily brief and general in nature, and should not be substituted for professional advice. You should always seek professional advice before taking any action in relation to the matters addressed.

Posted on: Oct 16, 2013

This dancing guy message is short and simple, but true. In order to be a successful leader, you need to be able to create followers.

Disclaimer

This article, and any information contained on our website is necessarily brief and general in nature, and should not be substituted for professional advice. You should always seek professional advice before taking any action in relation to the matters addressed.