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Five companies sentenced over Whakaari/White Island eruption

In our Summer 2024 edition published in early February, we wrote on the Whakaari/White Island prosecutions brought by WorkSafe; in this Winter issue we report on the court’s late February sentencing.

Almost five years after the Whakaari/White Island eruption that left 22 people dead and 25 others severely injured, the District Court delivered its sentence for safety failings under the Health and Safety at Work Act 2015.[1]

Five companies were collectively fined $2 million for failing to assess and mitigate risk, and three of the five have been ordered to pay a collective total of $10.21 million in reparations to victims and their families. GNS Science was also fined $54,000 for failing to adequately communicate risk to contractors.[2]

Whakaari Management Limited (WML), one of the five companies sentenced and responsible for managing access to the land, was held liable for a significant portion of the penalties. WML has claimed it is unable to pay the penalties as it has no assets or bank account, even though evidence at trial indicated WML received about $1 million annually from island tours. The judge acknowledged he cannot make orders against WML’s shareholders, but appealed to their ‘inescapable’ moral duty to advance the necessary funds – even if this means reaching into their own pockets.

These penalties are a strong reminder for businesses to take seriously their health and safety obligations or risk hefty penalties.

 

Navigating financial distress

What should you do if your business is in rough financial waters? If you feel financial strain creeping into your business, it is important to take action early to address the situation rather than hoping it improves on its own. Below we suggest some options to help you navigate financial distress.

  • Engage with lenders: Communicate transparently with your lenders early on. This will maximise available options and strengthen your relationship. Most lenders are willing to agree to an approach where borrowers are transparent and can demonstrate a plan

 

  • Reach out to suppliers and customers: Have open conversations, where appropriate. Clarity around payment timeframes, late payment fees and other expectations will provide certainty for all parties involved

 

  • Review business contracts: Understand the terms of your business contracts, what obligations are owed and the implications if you default

 

  • Keep directors’ duties in mind: Ensure you are complying with your director duties, including avoiding trading recklessly or incurring obligations the company is not able to perform. You can be found personally liable if you breach your director duties. Maybe you have to make the difficult decision of winding up your business to avoid breaching your duties, and

 

  • Seek professional advice: Speak to your accountant or financial advisor to assess the financial position and solvency of your business. We can also advise on your options at any stage.

 

Commerce Commission win over Viagogo

In a recent judgment, the High Court provided useful guidance on misleading and deceptive conduct, and unfair contract terms under the Fair Trading Act 1986 (FTA). The decision followed a six-year legal battle between Viagogo and the Commerce Commission.[3]

The Commission commenced proceedings against Viagogo in 2018 after receiving thousands of complaints by consumers who had purchased event tickets from Viagogo, only to be refused entry at the events because their tickets were not authentic.

The High Court found that Viagogo had misled consumers in breach of the FTA by:

  • Failing to adequately disclose its status as a resale platform
  • Guaranteeing customers’ tickets to events, when in practice it often refunded invalid tickets after a customer had already missed the event
  • Creating a false sense of urgency for prospective purchasers seeking tickets
  • Disclosing additional ticket fees at a late stage of the purchase process, and
  • Stating it was an official or authorised source of tickets when it was not.

A clause in Viagogo’s terms and conditions requiring customer disputes to be resolved in Switzerland was also found to be unfair and unenforceable.

Viagogo was ordered to correct the misleading information on its website and update its terms and conditions.

This judgment emphasises the importance of using honest and fair trading practices, and ensuring your terms and conditions comply with the FTA.

Viagogo has appealed the judgment.

 

CCCFA update

The government recently announced changes to the Credit Contracts and Consumer Finance Act 2003 (CCCFA) as part of a larger, two-phase financial reforms package to address concerns about the accessibility of credit and burdensome obligations on lenders.

Phase 1: Already underway, this phase includes the removal of overly prescriptive requirements around loan affordability assessments, and exemptions for local authorities and providers of non-financial goods and services (such as certain car dealers).

Phase 2: As this phase is rolled out, it is expected the CCCFA will be updated to further streamline the lending process and continue to support more accessible lending practices.

The Ministry of Business, Innovation and Employment will publicly consult on revisions to the Responsible Lending Code and possible amendments to the CCCFA as they become available.

[1] WorkSafe New Zealand v Whakaari Management Limited, White Island Tours Limited,
Volcanic Air Safaris Limited, Aerius Limited, Kahu (NZ) Limited [2024] NZDC 4119.

[2] WorkSafe New Zealand v Institution of Geological Nuclear Sciences Limited [2024] NZDC 4149.

[3] Commerce Commission v Viagogo AG [2024] NZHC 713.

 

 

 

DISCLAIMER: All the information published in Commercial eSpeaking is true and accurate to the best of the authors’ knowledge. It should not be a substitute for legal advice. No liability is assumed by the authors or publisher for losses suffered by any person or organisation relying directly or indirectly on this newsletter. Views expressed are those of individual authors, and do not necessarily reflect the view of Edmonds Judd. Articles appearing in Commercial eSpeaking may be reproduced with prior approval from the editor and credit given to the source.
Copyright, NZ LAW Limited, 2022.     Editor: Adrienne Olsen.       E-mail: [email protected].       Ph: 029 286 3650


The Budget 2024

A no-frills outlook

Although it is clear the economic outlook is somewhat gloomy, in delivering the 2024 Budget, the Minister of Finance, Nicola Willis, said that savings across government have resulted in responsibly-funded tax relief. “Spending is targeted, effective and affordable.”

The government has promised targeted investments in public services, including healthcare, education, and law and order. Front-line services will be increased.  Having said that, the minister has admitted the Budget is “tight but realistic” and she intends to stick closely to these allocations.

 

Tax relief

The much-promised tax cuts have been delivered.

As previously signalled, the Budget will help what the government calls ‘the New Zealand squeezed middle income earner’. For the first time since 2010, personal tax brackets have been adjusted for New Zealanders earning up to $180,000 pa. Overall, average income households will have up to an extra $102 in their back pockets each fortnight.

Additional FamilyBoost payments will help around 100,000 families manage the costs of early childhood education with up to $150/fortnight.

These tax changes take effect from 31 July this year (a month later than promised) in order for payrolls to accommodate the re settings. Changes to FamilyBoost will apply from 1 July.

The government has reiterated the restoration of tax deductibility for interest on residential investment properties, as well as the adjustment to the bright-line test from 10 years back to two years from 1 July this year.

 

Health

Frontline health services have received a boost. Emergency departments, primary care, medicines and public health will get $8.15 billion additional operating and capital funding over the next four years:

  • $3.44 billion has been allocated for hospital and specialty services (including $31 million to increase security in emergency departments)
  • An additional $2.12 billion will be available for primary care, community and public health providers including GPs, Māori health services, mental health services and aged care services
  • Free breast screening will be gradually extended for 70–74-year old women (currently only available up to 69 year olds); an extra $31.2 million
  • Pharmac will receive additional funding of $1.77 billion over four years, which is said to just cover ongoing costs for additional medicines, and
  • The mental health initiative, Gumboot Friday, has $24 million to deliver services to young New Zealanders.

 

On the other side of the coin:

  • Free prescriptions have gone for most New Zealanders. However, free prescriptions will remain for those under 14 years old, people aged 65 and over and for Community Services Card holders, and
  • Promised additional funding for cancer drugs has not materialised. Since the Minister delivered the Budget, she has stated that the government aims to make an announcement on cancer drug funding this year.

 

Education

There will be increased spending on schools and early childhood education equating to $2.93 billion in extra operating and capital funding, including $440.8 million of reprioritisation. The government is allocating:

  • $1.48 billion to build new schools and classrooms and to maintain and upgrade existing school properties. This includes funding for kōhanga reo, play centres, kindergartens, kura kaupapa Māori, special schools, and intermediate, secondary and charter schools.
  • $516.4 million to support schools and early childhood education providers, plus $153.3 million to establish charter schools
  • $477.6 million to continue the Healthy School Lunches programme for the next two years
  • $67 million to support schools to use the new structured literacy approach when teaching reading, and
  • Funding is switched to allow a fees-free final year of tertiary study, rather than free fees in the first year.

 

Law and order

The government has reiterated its pledge to crack down on crime and keep communities safe. This includes:

  • Funding of $1.94 billion for more frontline Corrections officers, increased support for offenders to turn away from crime and increased prison capacity, and
  • $651 million allocated to support frontline policing (including increased pay) and for an additional 500 police officers and additional operational support staff.

 

Public services

$140 million is budgeted for an additional 1,500 social housing places, delivered by community housing providers.

$1.1 billion is allocated to ensure disabled people can access the essential services, equipment or support they need.

Hawke’s Bay and Auckland communities will receive $1 billion-plus for the rebuild and recovery from Cyclone Gabrielle and the Anniversary Day floods. $939.3 million of this is allocated for road repairs.

 

Infrastructure

The government, as it has previously signalled, is investing heavily in roading – $4.1 billion to accelerate priority roading projects including Roads of National Significance.

$200 million will be invested to support KiwiRail carry out maintenance and renewals on the national rail network.

 

Climate change

The government wants to support the country’s transition to a low-emissions economy and climate-resilient future. The minister said that around $2.6 billion of climate initiatives funded from the previous government’s Climate Emergency Response Fund will continue.

Later this year the government will consult on plans to deliver emissions reductions over the second emissions budget period. The minister confirmed that the Emissions Trading Scheme will play a vital role in reducing emissions.

 

In summary

While the Budget could not be considered an austerity plan, it is certainly a ‘no frills’ programme indicating the government will be running a tight financial ship over the next few years.

Treasury expects the economy to pick up later this year, including inflation returning to its target band of 1–3% and a fall in interest rates.

All things being equal, the government expects the country’s operating balance (before gains and losses) to head into surplus in the 2027–28 financial year.

In the meantime, however, we will all need to hold on to our hats and buckle our belts a little tighter over the next few years.

To read more detail about the Budget, click here for the Budget documents.

 

 

DISCLAIMER: All the information published in Commercial eSpeaking is true and accurate to the best of the authors’ knowledge. It should not be a substitute for legal advice. No liability is assumed by the authors or publisher for losses suffered by any person or organisation relying directly or indirectly on this newsletter. Views expressed are those of individual authors, and do not necessarily reflect the view of Edmonds Judd. Articles appearing in Commercial eSpeaking may be reproduced with prior approval from the editor and credit given to the source.


Copyright, NZ LAW Limited, 2021.     Editor: Adrienne Olsen.       E-mail: [email protected].       Ph: 029 286 3650


What can agriculture expect?

All three political parties that make up the governing coalition campaigned on the premise that agriculture is the backbone of New Zealand’s economy. Each party stated that the rural sector should be supported, rather than what they saw as being hindered by government, particularly in the areas of regulation, red tape and climate policy.

In this edition, we cover the proposed repeal of the Three Waters and resource management replacement legislation in the next article, but what else are we likely to see from this government?

 

The parties’ agreements

There are two separate agreements between the coalition partners – the National-ACT Coalition Agreement and the National-New Zealand First Coalition Agreement.  Both agreements should be read in conjunction with the other and, in the agriculture area, are quite similar in their aims. Both agreements contain commitments to:

 

  • Reduce red tape and regulatory blocks
  • Reverse the ban on live animal exports while still ensuring high standards of animal welfare
  • Reform the National Animal Welfare Advisory Committee
  • Improve farm environment plans so they are more cost-effective and pragmatic for farmers, and to be administered by regional councils and targeted at a catchment level
  • Replace the National Policy Statement for Freshwater Management to better reflect the interests of all water users, and
  • Liberalise genetic engineering laws.

 

Some differences in approach

There are some areas, however, where the coalition agreements aren’t exactly the same, but look to achieve similar outcomes. For example, in the National-ACT agreement, the parties agree to maintain a split-gas approach to methane and carbon-dioxide through to 2050, and to review the methane science and targets in 2024 for consistency, with no additional warming from agricultural methane emissions.

 

The National-ACT coalition agreement also contains a commitment to amend the Overseas Investment Act 2005 to limit ministerial decisions to national security concerns (to keep politics out of it as much as possible) and to make decision making more timely.  The National-New Zealand First agreement commits to incentivise the uptake of emissions reduction mitigations such as low methane genetics and low methane producing animal feed.

 

In addition, that document also contains an agreement to amend the National Environmental Standards for Commercial Forestry regulations to place a duty upon harvesters to contain and remove post-harvest slash.  Much of the regulation and red tape that has been criticised by the three coalition parties comes from a need to comply with international obligations. A change of government does not mean a change of those obligations and, for example, just in the last week or so the New Zealand government has signed up to the COP28 Declaration on Food Production and Sustainable Agricultural Adaptations. The Declaration seeks to protect the livelihoods of farmers while, at the same time, recognises that agriculture and food production has to ‘urgently adapt to respond to climate change.’

 

The UAE Climate Change and Environment Minister, Mariam Almheiri, said, “Countries must put food systems and agriculture at the heart of their climate ambitions, addressing both global emissions and protecting the lives and livelihoods of farmers living on the front line of climate change.”  Somewhat predictably, Greenpeace New Zealand responded by saying that this country needs to transition to a more organic farming system and that the New Zealand government should introduce policies that bring us into line with global commitments.

 

While the three coalition partners are indicating a new support for agriculture, and with the two associate Ministers of Agriculture both being farmers, a more practical approach to deal with climate and water issues is being signalled. New Zealand has international commitments that it must fulfil, as well as already recognised issues of water quality. These issues will not go away.

 

 

Looking ahead

It will be interesting to see, in practical terms, what is likely to happen in the agriculture sector over the course of this administration.  In terms of the immediate changes or focus on specific issues that are likely to arise, the government’s 49-point 100-day plan includes the repeal of the Water Services Entities Act 2022, the Spatial Planning Act 2023 and Natural and Built Environment Act 2023. The only other items that directly relate to agriculture are the government’s commitment to improve the quality of regulation, to cease implementation of new Significant Natural Areas and to seek advice on the operation of the existing areas.

 

Apart from those issues, there is a commitment to meet with councils and communities to establish reasonable requirements for the recovery from Cyclone Gabrielle and other major recent flooding events that have had a severe impact on some rural communities, particularly on the East Coast, Hawke’s Bay and the greater Auckland area.  As much as anything, we can expect to see a more collaborative approach to issues such as climate change and protecting the natural environment that, in the eyes of many in the agricultural sector, gives the sector (as one of the main drivers of our economy) the respect it deserves.

 

 

 

DISCLAIMER: All the information published in Rural eSpeaking is true and accurate to the best of the authors’ knowledge. It should not be a substitute for legal advice. No liability is assumed by the authors or publisher for losses suffered by any person or organisation relying directly or indirectly on this newsletter. Views expressed are those of individual authors, and do not necessarily reflect the view of Edmonds Judd. Articles appearing in Rural eSpeaking may be reproduced with prior approval from the editor and credit given to the source.
Copyright, NZ LAW Limited, 2022.     Editor: Adrienne Olsen.       E-mail: [email protected].       Ph: 029 286 3650


Postscript

Firearms Registry now up and running

The new Firearms Registry opened on 24 June 2023.

It is now mandatory for firearms licence holders to provide information about their firearms items. The development of the Firearms Registry follows major changes to New Zealand’s firearms laws made after the March 2019 terrorist attacks at two Christchurch mosques.

Firearms owners must register:

  • Non-prohibited firearms, including Specially
  • Dangerous Airguns (PCPs)
  • Prohibited firearms and magazines
  • Pistols
  • Restricted weapons
  • Major parts, and
  • Pistol carbine conversion kits.

You must also register firearms that do not work.

Antique firearms or airguns are not required to be registered. Registration is also not required for ammunition in your possession, nor do you need to record sales or purchase of ammunition to or from other firearms licence holders.

You can register online here: https://www.firearmssafetyauthority.govt.nz/firearms-registry or by phone at 0800 844 431 (04 499 2870) 8.30am-5pm, Monday to Friday.

 

Looking after your mental health

These days everyone is being advised to take care of their mental health, as well as making sure their physical (and emotional) needs are met. In busy working days, it’s easy (and tempting) to think things will sort themselves out if you are under pressure.

To help you manage your mental health and day-to-day activities, Spark Business Lab and The Institute of Organisational Psychology has designed an e-learning series to help you run your business more effectively and to help make your life easier.

The videos have practical advice, you can download useful tips and templates you can use every day. Go here to get started: www.business.govt.nz/wellbeing-support/brave-in-business-e-learning/

 

DISCLAIMER: All the information published in Fineprint is true and accurate to the best of the authors’ knowledge. It should not be a substitute for legal advice. No liability is assumed by the authors or publisher for losses suffered by any person or organisation relying directly or indirectly on this newsletter. Views expressed are those of individual authors, and do not necessarily reflect the view of Edmonds Judd. Articles appearing in Fineprint may be reproduced with prior approval from the editor and credit given to the source.
Copyright, NZ LAW Limited, 2022.     Editor: Adrienne Olsen.       E-mail: [email protected].       Ph: 029 286 3650


School boards of trustees

Significant obligations and responsibilities

Every three years, state and state-integrated schools hold elections for parent and staff representatives to join the governing bodies for their schools – the board of trustees (BoT).

School trustees are, however, sometimes confused or unsure about their role, and their obligations and responsibilities. The BoT is not like the PTA committee that co-ordinates parent helpers, organises school events, fundraises, etc.

A BoT role is like that of a company director. Although a school is not a commercial business, it should have robust governance processes in place that align with those of a well-run commercial business.

Health and safety aspects

The BoT is responsible for the governance and management of the school. It has discretion to manage the school within the parameters of the laws of New Zealand.

Alongside this governance approach, the Education & Training Act 2020 (E&TA) sets out the BoT’s obligations under the health and safety workplace laws. The Ministry of Education advises that:

School boards and early learning organisations are considered a PCBU (Person Conducting a Business or Undertaking) and must, so far as is reasonably practicable, provide and maintain a work environment that is without health and safety risks.

(Ministry of Education website)

A BoT is the legal entity that is the PCBU. If there is a health and safety failure at a school, the BoT could potentially face prosecution by WorkSafe under the Health and Safety at Work Act 2015 (HSWA).

The best possible policies, and rigid adherence to them, may still not prevent accidents or injuries from occurring. The potential always exists that actions may be taken that do not comply with the policies and issues that arise. In this situation, it would be fair to say that responsibility would fall on those responsible for those non-compliant actions if the obligations of the BOT are shown to have been fulfilled.

Even if the BoT delegates responsibility for these policies, it has over-arching responsibility for the school staff who are operating under those policies. The BoT must take an active role to ensure that any people under its control are safe, and that suitable guidelines are in place to identify and mitigate the risks being faced. Ultimately, it remains an obligation of the school and BoT to be responsible for their students’ safety.

EOTC risks

Out of school activities or education outside the classroom (EOTC) should be managed and controlled by reference to the BoT-approved health and safety policies.

To be effective, the policies must have measurable risk assessment components. For example: what are the risks and how serious is each risk? What is the likelihood of students and accompanying adults being hurt? How can these risks be managed by the activity leader? Does the school’s policy have a tool for assessing risk and the seriousness of the risk?

When things go wrong on an EOTC trip and a participant is badly hurt, there will be investigations by the police and WorkSafe and, if someone dies, the coroner. It is equally possible that, as the result of those investigations, charges could be laid if breaches have occurred.

Prosecutions

Two recent cases[1] have shown that even with a successful WorkSafe prosecution, the fines awarded have either been reduced to $0, or set at a notional figure and payment has not been sought.

Regarding personal liability of BoT members, both the E&TA and HSWA contain exclusions of personal liability for board members provided that any act or omission was carried in good faith with the performance, or intended performance, of the BoT.

Trustees must fully understand their role

The BoT role is not one to be considered lightly, although training and guidance is available so trustees fully understand their responsibilities. BoTs are full of amazing and dedicated people who are doing their best for their community. A crucial part of that role is ensuring the everyday safety of the students and employees at their school.

Trustees must be aware that with the role comes responsibility and accountability. BoTs must manage their duties accordingly and fulfil all legal requirements.

[1] WorkSafe v Tauraroa Area School Board of Trustees [2022] NZDC 21558 and WorkSafe v Forest View High School Board of Trustees [2019] NZDC 21558

 

DISCLAIMER: All the information published in Fineprint is true and accurate to the best of the authors’ knowledge. It should not be a substitute for legal advice. No liability is assumed by the authors or publisher for losses suffered by any person or organisation relying directly or indirectly on this newsletter. Views expressed are those of individual authors, and do not necessarily reflect the view of Edmonds Judd. Articles appearing in Fineprint may be reproduced with prior approval from the editor and credit given to the source.
Copyright, NZ LAW Limited, 2022.     Editor: Adrienne Olsen.       E-mail: [email protected].       Ph: 029 286 3650


Budget 2023

Key points

With the country expecting a no-frills Budget to match the Hipkins’ government’s bread-and-butter focus on issues for 2023, this year’s Budget had few surprises.

The government has a tightrope to tread in trying to deal with inflation, supporting the recovery from the Covid pandemic, and managing the significant economic effects of the Auckland Anniversary floods and the devastation from Cyclone Gabrielle. The Minister stood by his earlier statement that there would be no tax cuts in this Budget, but there would be increased cost of living support.

Already announced over the last few weeks have been a $1 billion flood and cyclone recovery package, funding for climate change initiatives, and additional funding for education and the New Zealand Defence Force.

On the afternoon of Thursday 18 May, the Minister of Finance, the Hon Grant Robertson, presented the Wellbeing Budget 2023 – Support for today, building for tomorrow.

The Minister focused on four themes:

  • Supporting New Zealanders with the cost of living
  • Delivering the services New Zealanders rely upon
  • Recovery and resilience, and
  • Fiscal sustainability.

We summarise the key points of this year’s Budget.

 

Cost of living support

There is to be free public transport for children under 13 years old, and permanent half-price fares for those under 25 years old. The Minister said, “This will help passengers meet the cost of public transport and encourage increased use, while also supporting New Zealand to achieve its climate change goals.”

The $5 co-payment for prescriptions will be removed from 1 July.

The government has pledged to lower households’ energy costs. It has expanded its Warmer Kiwi Homes Programme providing around 100,000 new heating and insulation installations; 7,500 hot-water heat pumps; and five million LED light bulbs.

For early childhood education, eligibility criteria for 20 hours’ Childcare Assistance has been extended to cover two-year olds, as well as three-to-five year olds. The subsidy rates will be increased. This comes into effect on 1 March 2024.

 

Delivering more reliable services

The government has acknowledged the need to make significant investments to protect and improve public services for Kiwis.

Housing: There is increased funding to deliver 3,000 new state houses.

Education: As announced a week ago, there is a commitment to boost skills, improve achievement, reduce class sizes and increase teacher pay. There will be 6,600 additional student places, and new classrooms and schools to fit them in.

Health: The government is to focus on the effects of winter on the health system; the urgent need for more medical staff (including 500 nurses), and to reduce the massive waiting lists.

There is a commitment to spend more than $1 billion to increase the pay rates and boost staff numbers, and $20 million to lift Covid immunisation and screening for Māori and Pacific peoples.

The Budget includes a range of investments to support Māori and Pacific peoples. These include:

  • Investment of $223 million to improve housing outcomes for Māori. This includes $23 million for an extension to the Te Ringa Hāpai Whenua Fund and $200 million to increase the supply of Māori housing and to repair homes in Māori communities.
  • Supporting whānau and tamariki by expanding Whānau Ora services and support for wāhine hapū in the first 1,000 days of life for their pēpi, and
  • $143 million has been set aside to foster Māori and Pacific language and culture.

 

Recovery and resilience

The government has already announced its package for the recovery and its investment in regional resilience from the Auckland Anniversary floods in late January and Cyclone Gabrielle in February.  There is a commitment for $71 billion across the next five years for new and existing infrastructure investment (schools, hospitals, public housing, rail and road networks), in addition to funding set aside for projects that are still in the planning stage.

Acknowledging the need to rebuild New Zealand’s crumbling infrastructure, $6 billion over a 10-year period has been allocated for a new National Resilience Plan. Initially focusing on ‘building back better’ from the effects of the floods and cyclone, it will also fund the country’s long-term infrastructure deficit, and develop a credible pipeline to support the plan.

 

Fiscal sustainability

Whilst the Minister held fast on his promise not to raise income tax, the trustee tax rate (currently at 33%) will increase to 39% from 1 April 2024 bringing it into line with the top personal tax bracket. The Minister says this will create fairness and remove a potential loophole.

Whilst the Minister confirmed that the country’s economy has emerged from the three years of Covid in a ‘solid position’ – the economy expanded by 2.4% over the 2022 calendar year and modest growth is anticipated for this year – there are headwinds. The continuing impact of the war in Ukraine, and worldwide inflation will affect New Zealand’s economy.

Although inflation peaked at 7.3% in June 2022 and eased to 6.7% earlier this year, rising immigration to this country and the government’s investment in infrastructure projects will increase demand. This may put more pressure on the Reserve Bank to contain inflation.  Whilst New Zealand is not in a recession, recovery from the knocks of the past few years may take longer than anticipated. The government expects the books to return to surplus in 2025–26, a year later than Treasury’s December 2022 forecast.

The 2023 Budget is very much what the government had said it would do – no huge surprises and keeping a firm hand on the tiller to make New Zealand a better country in which to live. The proof, however, will be in the pudding as the year proceeds.

 

To read more detail about the Budget, click here for the Minister’s speech.

DISCLAIMER: All the information published in Commercial eSpeaking is true and accurate to the best of the authors’ knowledge. It should not be a substitute for legal advice. No liability is assumed by the authors or publisher for losses suffered by any person or organisation relying directly or indirectly on this newsletter. Views expressed are those of individual authors, and do not necessarily reflect the view of Edmonds Judd. Articles appearing in Commercial eSpeaking may be reproduced with prior approval from the editor and credit given to the source.


Copyright, NZ LAW Limited, 2021.     Editor: Adrienne Olsen.       E-mail: [email protected].       Ph: 029 286 3650


Postscript

Minimum wage increased on 1 April 2023

The adult minimum wage increased to $22.70/hour on 1 April 2023.

 

This is a significant increase, up from $21.20, and aligns with the 7.2% rate of CPI inflation in the year to 31 December 2022.

 

Also increased on 1 April were the training and starting-out minimum wage rates that are increased to $18.16/hour; this is 80% of the adult minimum wage.

 

For an employee who works 40 hours/week, the minimum wage rise to $22.70/hour means they earn an additional $60 each week before tax.

 

The government says it will review the minimum wage rate later this year.

 

Renew your employeespay rates

If you haven’t done so already, you should review your employees’ pay rates to ensure you are compliant with the new minimum wages. For employees on a wage this is a straightforward process as you only need to ensure that their wages are at least $22.70/hour. This is not the case for all employees, however, as it includes those on a salary whose current pay rates may be sufficient when they work overtime.

 

During busy times, salaried employees often work hours over and above their regular employment agreement hours. You should check the pay of these employees every pay period to ensure their pay divided by the actual hours they worked meets minimum wage requirements. If not, your employee’s pay must be topped up to at least the minimum wage, regardless of whether any term in their employment agreement says otherwise.

 

Failing to keep accurate time records could lead to a penalty under the Employment Relations Act 2000 or Holidays Act 2003.

 

You should also take the opportunity to ensure your time recording systems are accurate.

 

 

Improving the sustainability of your supply chain

All businesses in New Zealand should be working towards making their supply chain more sustainable – we all have a responsibility to help save the planet.

 

The Ministry of Business, Innovation & Employment states that about 70% of your business’s sustainability impact comes from your supply chain – so this is a good place to start.

 

Launched in February 2023, Docket provides a free (and short) online assessment, and practical tools and guides for you to see how well your business is caring for the environment and your team. Docket was created by the Sustainable Business Network in partnership with the government and the private sector.

 

To find out more, go here: https://sustainable.org.nz/docket/

 

 

DISCLAIMER: All the information published in Fineprint is true and accurate to the best of the authors’ knowledge. It should not be a substitute for legal advice. No liability is assumed by the authors or publisher for losses suffered by any person or organisation relying directly or indirectly on this newsletter. Views expressed are those of individual authors, and do not necessarily reflect the view of Edmonds Judd. Articles appearing in Fineprint may be reproduced with prior approval from the editor and credit given to the source.
Copyright, NZ LAW Limited, 2022.     Editor: Adrienne Olsen.       E-mail: [email protected].       Ph: 029 286 3650


Greenwashing

‘Green’ credentials are good but take care

The Sustainable Business Council ‘Better Futures 2022’ report[1] surveyed New Zealanders and identified that more than 43% of Kiwis are committed to living a sustainable lifestyle; this is a continuation of an upward trend over the last three years. Given the public’s motivation to be more sustainable than ever, businesses are honing their marketing strategies towards environmental sustainability.

 

Making any form of environmental claim in marketing is known as ‘green marketing.’ Making an environmental claim that is misleading, false or unsubstantiated is usually referred to as ‘greenwashing.’ It is not a new concept but, given the increasing number of Kiwis wanting to make environmentally sustainable decisions, the desire to market products and services in a green way continues to increase. However, if any such claims are not substantiated, an advertiser may inadvertently cross the line between green marketing and greenwashing.

 

Responsibility for preventing greenwashing falls to a number of different regulatory bodies in New Zealand. These include:

  • Commerce Commission that, amongst its many roles, takes action to enforce the Fair Trading Act 1986 by taking breaches of the legislation to court
  • Advertising Standards Authority for breaches of the Advertising Standards Code, and
  • Financial Markets Authority through its enforcement of the fair dealing provisions of the Financial Markets Conduct Act 2013 and its support of New Zealand’s transition to an ‘integrated financial system.’ This not only takes into account financial returns but also non-financial factors such natural, social and human capital impacts.

 

Greenwashing with words

Expressly making environmental claims, or using words to imply a certain environmental attribute, that do not exist is a mistake a business could easily make. Regardless of whether this is unintentional, using words such as ‘eco’, ‘organic’, ‘natural’, ‘green’, ‘plant powered’, ‘non-toxic’, ‘plant based’, ‘zero waste’, ‘recycled content’, ‘compostable’ and many more can all be examples of greenwashing unless the words are completely truthful, substantiated and not misleading in any way.

 

For example, if packaging says a product is ‘recyclable’, but can only be recycled at recycling centres in a limited area, or by returning the packaging to the manufacturer, this may be considered greenwashing. Similarly, if packaging says ‘compostable’ and does not specify under what kind of composting environment it will break down; it may amount to greenwashing and a misleading environmental claim.

 

Greenwashing imagery

Even if a business avoids using any ‘green’ terms but uses imagery that implies some environmentally friendly attributes, that could be considered greenwashing. The most common examples of using images for greenwashing are the use of the three green arrow recycling logo, an image of the earth or a green tick. These may be easy enough to justify, but a business could still be found to be greenwashing for using images of flowers and trees if those images lead a consumer to believe the product has environmentally friendly qualities that it does not have.

 

Deliberately misleading statements

Any false environmental related statements are obvious greenwashing, for example, if a product is labelled ‘organic’ or ‘plant based’ if it is not made with organic material or plants. What is trickier though, is making statements that aren’t technically false, but the unique combination of marketing features could lead a consumer to an incorrect conclusion about a product.

 

A recent example is a case[2] of a smallgoods producer that used the phrase ‘100% NZ owned’, along with imagery of farms and a rural address for the business. This company was found liable for greenwashing because its pork products comprised 87% imported meat, but the marketing led consumers to reasonably believe the pork was New Zealand-reared. The company was fined $180,000 for this breach despite each marketing element being truthful; the company was 100% New Zealand owned and the rural farm address was a genuine address for the business. Businesses, however, cannot ‘hide’ behind each statement being truthful if the combined elements together lead a consumer to a misleading conclusion.

 

Tips to avoid greenwashing

Avoiding greenwashing is a case of stepping into the shoes of a consumer to assess whether any of the marketing elements could potentially be interpreted to give the product more environmentally friendly attributes than it truly has. Before finalising packaging or marketing, business owners should ask themselves if the marketing is:

  • Honest
  • Specific
  • Substantiated
  • In plain English
  • Not exaggerated, and
  • Not misleading in its overall impression.

 

It is also important there are frequent branding and marketing checks, particularly if there is a comparative claim. A good example is making a claim that a product is ‘recyclable’; that may be considered greenwashing if the ability to recycle that product is not commonly available through local council recycling services.

 

Keeping business honest

Anyone who identifies greenwashing, or wants a greenwashing claim investigated, can report suspected cases to the Commerce Commission, Advertising Standards Authority, Financial Markets Authority or another relevant regulator or industry body.

 

In the case of a complaint made to the Commerce Commission, depending on the severity of the alleged greenwashing, the Commission can either choose to disregard the report, investigate further, or issue a warning or a ‘compliance advice’ letter. In significant cases it can take the company or individual responsible for the alleged greenwashing to court for a breach of the Fair Trading Act 1986. The penalty for failing to ensure environmental claims are truthful and substantiated can be up to $600,000 for a company and $200,000 for an individual.

 

Sue me!

Even if the Commerce Commission or other regulatory body decides not to pursue a company for greenwashing, a competitor may choose to sue privately for misleading statements that may amount to greenwashing.

 

A private claim has been filed by United States-based carpet making giant Godfrey Hirst against New Zealand-owned carpet company Bremworth. In 2020, Bremworth announced that it was moving to 100% wool fibre production. In its marketing campaign, Bremworth made a number of claims about the benefits of wool over synthetic carpets. One such claim was that the weight of a nylon carpet in an average size home was similar to 20,000 plastic bags. Godfrey Hirst, that manufactures nylon carpets (amongst other types of carpet), claims this is misleading as the consumer is led to believe its nylon carpet has the same environmental impact as 20,000 plastic bags. Bremworth stands behind its statements as being factually correct; the two companies remain in costly ongoing litigation.

 

Care is needed

We can reasonably expect that, given the focus on environmentally conscious decision-making by the New Zealand public, green marketing will continue to rise and, along with it, instances of greenwashing. Business owners keeping a careful and critical eye on marketing will help both the consumer make a considered and informed choice, and ensure the business does not succumb to greenwashing.

 

The Commerce Commission has guidelines on greenwashing: go to www.comcom.govt.nz and search for ‘greenwashing.’

 

If you would like help with reviewing marketing claims for your business or would like more information on greenwashing, please contact us.

[1] https://sbc.org.nz/resources/better-futures-2022-report/

[2] Commerce Commission v Farmland Foods Ltd [2019] NZDC 14839

 

DISCLAIMER: All the information published in Fineprint is true and accurate to the best of the authors’ knowledge. It should not be a substitute for legal advice. No liability is assumed by the authors or publisher for losses suffered by any person or organisation relying directly or indirectly on this newsletter. Views expressed are those of individual authors, and do not necessarily reflect the view of Edmonds Judd. Articles appearing in Fineprint may be reproduced with prior approval from the editor and credit given to the source.
Copyright, NZ LAW Limited, 2022.     Editor: Adrienne Olsen.       E-mail: [email protected].       Ph: 029 286 3650


Postscript

Fair Pay Agreements legislation passed

The new Fair Pay Agreements Act 2022 worked its way quickly through the House and comes into effect on 1 December 2022.

 

The government’s objective is to provide a framework for collective bargaining of pay agreements. It stated that the legislation will improve employment conditions by enabling employers and employees to bargain collectively (by occupation, for example), rather than on an individual basis.

 

The Minister for Workplace Relations and Safety, the Hon Michael Wood said, “By increasing bargaining coordination to agree minimum employment terms within a sector, outcomes for vulnerable employees will be improved and we will see growth in the incomes of New Zealand employees. This is especially the case for Māori, Pacific peoples, young people and people with disabilities who are over-represented in occupations which will benefit from a Fair Pay Agreement.”

 

As we noted in the Winter 2022 edition of Fineprint, the provisions in this legislation have been welcomed positively by unions although not so warmly by many employers.

 

If you would like help in any pay negotiations, please don’t hesitate to be in touch.

 

Some plastic products now banned

Since 1 October 2022 it became illegal to provide, sell or manufacture the following plastic products in New Zealand:

  • Single use plastic drink stirrers
  • Single use plastic cotton buds
  • Degradable plastics such as oxo and photo degradable (such as some dog poo bags)
  • Certain PVC food trays and containers
  • Polystyrene takeaway food and beverage packaging, and
  • Expanded polystyrene food and beverage packaging.

These new regulations may affect the way you do business. To find out more, go to www.environment.govt.nz and search for ‘plastic phase outs’ and scroll to the end page.

 

 

DISCLAIMER: All the information published in Fineprint is true and accurate to the best of the authors’ knowledge. It should not be a substitute for legal advice. No liability is assumed by the authors or publisher for losses suffered by any person or organisation relying directly or indirectly on this newsletter. Views expressed are those of individual authors, and do not necessarily reflect the view of Edmonds Judd. Articles appearing in Fineprint may be reproduced with prior approval from the editor and credit given to the source.
Copyright, NZ LAW Limited, 2022.     Editor: Adrienne Olsen.       E-mail: [email protected].       Ph: 029 286 3650


Would be compulsory for most Kiwis

Every year, more than 100,000 workers in New Zealand are laid off or lose their jobs through no fault of their own.[1]

In February, the government proposed a new compulsory insurance scheme for all employees. This would provide most Kiwis with 80% of their regular salary for a minimum of seven months if they lose work through no fault of their own (including a health condition or redundancy).

We look at what the proposed scheme would involve and whether you as an employer should prepare.

Why introduce such a scheme?

Mass and dramatic redundancy of workforces has been experienced in New Zealand during the 2007–09 global financial crisis, the Christchurch earthquakes in 2010–11 and the current Covid pandemic. These events cause significant economic stress on employees and their families while also impacting the broader community as there is decreased consumer spending. The government claims the scheme will also help close the income gap and make income support available to people who cannot work due to non-accident-related health conditions.

What would it entail?

The proposed scheme would provide coverage for total loss of work due to redundancy or health conditions (including disability). It will not cover an employee’s reduced hours, reduction from full-time to part-time hours, or unemployment due to a dismissal or resignation.

How much coverage?

To comply with this scheme, employers would have to give a statutory four weeks’ paid notice of termination to their employee. In circumstances where an employer is unable to make that payment, the scheme would pay it and seek reimbursement from the employer’s liquidator.

Employees would then receive 80% of their usual salary for up to a further six months paid by the government. Payments would be capped at an annualised salary of $130,911. In some circumstances, the support could be increased to 12 months if the recipient is using the time to retrain or undertake medically required rehabilitation.

To continue to receive the coverage, each recipient would need to prove they are continuing to look for new work, are taking part in training/further education, are medically unfit for work or undertaking medical rehabilitation.

Who will be eligible?

To be eligible for the proposed insurance coverage, an employee would need to have contributed to the scheme for at least six months in the immediately preceding 18 months. An exemption is proposed for someone who does not meet the contribution timeframe if they have been on statutory parental leave.

Fixed-term and seasonal workers on short-term contracts would only be eligible to receive coverage until the end of their contracted period, ie: if someone lost their job two months before the contracted end date, the scheme will only cover the two-month period of lost work. However, any fixed-term or casual worker who could show a regular pattern of work with an employer and have a reasonable expectation of ongoing employment will be eligible for full support.

The government is yet to issue a position on how the scheme would treat the self-employed or contractors. It is possible this will be dealt with on a case-by-case basis to determine eligibility and ensure work is not being rejected just to gain access to the scheme.

Paying for it

Nothing comes for free. It is proposed that the Income Insurance Scheme will be administered by ACC and, as such, will be funded in a very similar way by levies. The government estimates that it will require a 1.39% per annum levy from both employers and employees to successfully fund the scheme (resulting in a total levy of 2.78% per annum of the employee’s gross annual salary). The levy would be reviewed after two years and, if insufficient to cover the number of people it is supporting, could be raised.

Do I need to make changes to my business?

If the scheme goes ahead, it could become operational in 2024. Until there is a known date and more detail, however, businesses need not take any specific steps to prepare. In the meantime, you should review your own personal insurance or any insurance you offer to your staff.

[1] Employment New Zealand/MBIE.

DISCLAIMER: All the information published in Commercial eSpeaking is true and accurate to the best of the authors’ knowledge. It should not be a substitute for legal advice. No liability is assumed by the authors or publisher for losses suffered by any person or organisation relying directly or indirectly on this newsletter. Views expressed are those of individual authors, and do not necessarily reflect the view of Edmonds Judd. Articles appearing in Commercial eSpeaking may be reproduced with prior approval from the editor and credit given to the source.
Copyright, NZ LAW Limited, 2022.     Editor: Adrienne Olsen.       E-mail: [email protected].       Ph: 029 286 3650