Edmonds Judd

Your Own Business

Water Services Act 2021

How does this affect the rural sector?

Water has been very much in the news lately, particularly with the government’s proposed Three Waters Reform Programme. The Three Waters Reform generally deals with the transfer of water infrastructure (drinking water, wastewater and stormwater) to four new water service delivery entities.

What hasn’t been in the news as much is a very important piece of legislation with regard to water that will impact on the rural community: the Water Services Act 2021. This came into force on 15 November 2021. The purpose of this legislation is to ensure that ‘drinking water suppliers’ provide safe drinking water to consumers. Previously, responsibility for drinking water was dealt with under the Health Act 1956 but, as a result of the water contamination issues in Havelock North in 2016 and the subsequent inquiries that resulted from that, it was determined that the supply of safe drinking water was so critical that it needed its own legislation and regulator — Taumata Arowai.

What is a ’drinking water supply’?

A ‘drinking water supply’ means the infrastructure and processes used to abstract, store, treat or transport drinking water for supply to consumers or to another drinking water supply. It includes the point of supply, any endpoint treatment device and any backflow prevention device, but does not include a temporary drinking water supply or a domestic self-supply.

Who is a ‘drinking water supplier’?

The Act defines a supplier as a person who supplies drinking water through a drinking water supply but does not include a ‘domestic self-supplier’. Therefore, the legislation applies to private water schemes as well as any public water supply.

A ‘domestic self-supplier’ means ‘a stand-alone domestic dwelling that has its own supply of drinking water’. So a single farm house with its own water supply will be exempt from complying with the legislation. A large farm, however, that might supply several houses and other buildings such as woolsheds or milking sheds that have staff rooms with kitchens from the same source through a private water system, would be subject to the provisions of the Act.

Similarly there are a significant number of rural water schemes where one water source supplies several properties (particularly where there have been lifestyle-type subdivisions). Sometimes these schemes are administered by virtue of the easements that were created in the subdivision. Occasionally, however, they are administered by companies that own the water infrastructure with all the landowners being shareholders in the company and shares being transferred at the same time as the land.

Drinking water suppliers must have a plan

If the Act applies to your situation, you are required to have a multi-barrier approach to water safety including:

  • Preventing hazards from entering the water
  • Removing particles and hazardous chemicals
  • Killing or inactivating pathogens by disinfection, and
  • Maintaining the quality of water distribution systems.

Each supplier must have a water safety plan that must include elements of international best practice, be proportionate to the scale of the water supply, and be subject to risk-based auditing and monitoring by Taumata Arowai.

What to do next?

The legislation requires a drinking water supplier to register its water supply. The registration must include certain information such as the legal name and contact details of the owner, the location of the supply, the area the drinking water supplies, the estimated number of consumers, a description of the water supply and any other information required by Taumata Arowai. As usual, the application must be accompanied by the fee or levy prescribed by regulations made under the Act.

Water suppliers registered with the Ministry of Health prior to 15 November 2021 will automatically have their registration migrated to the Taumata Arowai register.

Next you must prepare a drinking water safety plan to be lodged with Taumata Arowai. You also must implement the plan and ensure that the drinking water supply is operated in accordance with the plan. You can comply with your operational obligations by employing or engaging a third party to do this for you.

If you are already registered as a drinking water supplier, you must have your plan registered before 15 November 2022.

If you are an existing supplier and not currently registered, you have until 15 November 2025 to register and until 15 November 2028 to submit your plan.

If you are a new supplier, supplying water for the first time after 15 November 2021, you must register as a drinking water supplier and register your plan before you operate your supply.

For more detailed information, Taumata Arowai has what you need here.

The Act has teeth

What all this means in practical terms is more compliance, more cost and more responsibility in relation to water supply. There are penalties for failing to comply with the Act, including some criminal offences such as recklessness or negligence in the supply of unsafe drinking water or allowing contamination of the drinking water.

As you can see, the Act has teeth and it is now incumbent on both public and private suppliers to comply with the new regime — or face the consequences.

If you need help in working your way through this new legislation, please don’t hesitate to contact us.

 

 

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


No fault is necessary

Many of us are familiar with the tort of negligence — an act or omission by one party that causes loss to another party. Inherent in a negligence claim is the concept of ‘fault’. A recent case[1] illustrates why nuisance, a tort similar to negligence except that fault is not necessary, is still relevant.

Forest trees causing nuisance

Nottingham Forest Trustee Limited (NFT) owned land on which it had planted a commercial forest. Over a period from December 2010 to August 2016 pinus radiata trees growing in the forest, which had been planted many years earlier, fell onto two electricity lines owned and operated by Unison Networks. Unison’s customers experienced power outages while repairs were carried out, and Unison incurred costs as it repaired the damage.

Unison sued NFT both in negligence and in nuisance and sought damages to cover the cost of repairs and also an injunction to prevent future falls of trees.

Background

Unison’s electricity lines crossed over the land while it was a sheep and beef farm, and the power lines were present when NFT acquired the land and planted the forest. In planting the forest, NFT left a corridor under each of the lines approximately 30 metres wide where it didn’t plant trees. The nearest tree to the power line at any point was about 15 metres away.

Over time, however, the trees on the edge of the corridor grew to a height that was greater than the distance from the line. Pinus radiata can grow to 30 metres high. In the High Court proceedings the judge found that by 2010 the trees planted on the edge of the corridor had grown taller than the full distance between those trees and the lines. In those circumstances, there was what the High Court judge described as “a very good chance” that the lines would be hit and damage caused if a tree fell; that started to happen from about December 2010 and again in July 2011. In 2013, a tree fell in a storm causing $20,000 worth of damage to a structure on the line and there were further outages as a result of tree falls in April 2012 and November 2014. In Unison’s view, NFT was liable for the recurring damage (this was in 2015) and wrote to NFT asking that the trees be cleared to prevent further damage. This was resisted by NFT, unless Unison agreed to pay compensation for the loss of the trees.

More tree falls in September 2015 and August 2016 resulted in further damage, with Unison writing to NFT again claiming significant repair costs. This was once again resisted by NFT. NFT’s response was basically that growing trees was a natural use of land; liability for tree falls required fault in tree management and as NFT had complied with the regulatory regime and conducted regular inspections and so on, NFT was not at fault.

Indeed the negligence claim was quickly dismissed by the High Court as Unison  was unable to prove any particular fault on the part of NFT. Unison was, however, successful in its nuisance claim which in essence means if proven ‘strict liability’ follows, there is no need to establish fault. Both parties appealed the findings against them. The Court of Appeal upheld the High Court’s original decision.

About nuisance

A nuisance is defined as ‘any ongoing or current activity or state of affairs that causes a substantial and unreasonable interference with a plaintiff’s land or their use or enjoyment of that land.’ Unison obviously didn’t own any land in the vicinity. It simply owned the power lines that ran over the land. The court, however, held that since a statutory right constituted an interest in land and as the owner of utility works it has the exclusive right to occupy the portion of the soil where the works lie to the exclusion of all others and as such the right was greater than a right given by virtue of easement or licence.

Further, the court said, even if an interest in the land couldn’t be proven, as a matter of policy the existence and importance of works must mean that Unison had sufficient interest to found an action in nuisance. In particular, the court found that NFT created a state of affairs that caused unreasonable and continuing interference with the lines, and was therefore strictly liable even if NFT took reasonable precautions.

What is important to establish in nuisance is to show that a landowner has changed the state of affairs on their land which then causes a loss or damage to either other land or someone with an interest in other land. In this particular case, the change was the planting of the forest where lines already existed on a sheep and beef farm.

A similar case would be, for example, where a landowner interfered with a waterway that resulted in flooding downstream. If the landowner hadn’t interfered or changed the path of the waterway and flooding occurred downstream, there could be no liability under nuisance because that was a natural state of affairs, but by interfering with that natural state of affairs, a nuisance is created.

This case serves as a warning that even where you are not at fault, if you do something on your land that alters its natural state and somebody else’s land (or operation) is affected, you could be liable.

[1] Nottingham Forest Trustee Limited (NFT) v Unison Networks Limited (Unison) [2021] NZCA 227

 

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


Over the fence

2021 resident visa pathway for migrant workers

A new pathway for migrant workers to gain residency was introduced on 29 September 2021 by Immigration Minister, the Hon Kris Faafoi. This is a one-off resident visa that is targeted for up to 165,000 migrants — including around 9,000 primary industry workers.

In order to comply, a worker must have been in New Zealand on 29 September 2021 and be already subject to an eligible visa or have an application for an eligible visa submitted to Immigration New Zealand by this date. They must also meet one of the following three grounds:

  1. ‘Settled’ worker: lived in New Zealand for at least the past three years
  2. ‘Skilled’ worker: earn the median wage ($27 per hour) or above, or
  3. ‘Scarce’ worker: their role is on a scarce role list.

Since 1 December 2021 migrants who have already applied for residency under certain applications will be eligible to apply under any of the above three categories; these applicants will be notified by Immigration New Zealand. From 1 March 2022 all other eligible migrants can apply.

The pathway is particularly targeted at the primary sector to reflect the difficulties in recruiting workers due to Covid.

It is important to note that this is not a permanent resident visa. An eligibility checker is available on Immigration New Zealand’s website here. Applications will be prioritised and, as a result, Skilled Migrant Expressions of Interest will be frozen until 31 July 2022 when the 2021 resident visa pathway closes.

Covid on the farm

Prevention plans

With the ever-changing nature of Covid, prevention plans are key to keep the virus off your farm. When developing a prevention plan, it’s important to communicate and involve all parties. This includes discussions with your staff, contractors and suppliers so everyone can understand the risks involved and the procedures in place to negate them.

Communication should not stop when a plan is formed, it should be regularly revisited and adjusted if required. It is important to have a plan that reflects the new traffic light system that began on 3 December 2021.

What to include

The plan needs to consider both the people involved and animal welfare. It is important to consider ways to minimise contact between individuals, both within your workplace and with people outside of your workplace. Cleaning procedures, physical distancing, and the physical and mental health of your employees must all be considered when implementing a prevention plan.

What if Covid gets onto the farm?

If one of your workers, a member of their immediate family, or you or your family test positive for Covid or are considered a close contact there should be procedures in place so that your farming operations can continue. This includes ensuring livestock and crops are still cared for should any of your team members be required to self-isolate in a quarantine facility. This is why splitting shifts and creating work bubbles could be beneficial. The Ministry for Primary Industries is available to help co-ordinate services to provide for your animals’ welfare should that be needed.

All farmers must notify their suppliers and contractors should someone on your farm test positive.

Vaccinations and employee rights

In late November the Covid-19 Response (Vaccinations) Legislation Act was passed; this has significant implications on the rights of employees. Employees can now be subject to vaccine mandates by either working in an employment sector required to be vaccinated against Covid by government orders, or working for a business or farm that introduces a company policy mandating vaccination.

Employers must follow certain procedures when introducing a vaccine mandate. You must consider a number of factors when determining what roles require a vaccinated employee. These are expected to include the risk of exposure, transmission, proximity and whether the risk can be mitigated. For some rural sector businesses, interaction with customers and with other staff members is limited and therefore the risk is minimal; this may differ vastly to another business. Therefore the risk associated with a role will be dependent on its responsibilities and the nature of the business itself.

Workers whose role requires vaccination, and who choose not to have the vaccination, still have rights. Employers must exhaust all other avenues before termination including considering redeployment elsewhere. If it is no longer possible to carry out work without being vaccinated, a minimum of four weeks’ paid notice is required.

If one of your unvaccinated employees decides during this time to get vaccinated the notice will then be cancelled, unless it would unreasonably disrupt your workplace. Your employee will not be prevented from the standard entitlements granted on termination if they decide to remain unvaccinated and is able to bring a personal grievance against the business.

The situation around Covid matters is ever-changing; therefore we recommend that you check the government’s Covid websites regularly or talk with us.

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


For many of us the recent lockdown brought a sense of déjà vu. Once again, a number of us were back juggling Zoom calls while supervising school work from the confines of our own homes. The landlords and tenants amongst us were again grappling with the issue of how the lockdown affects lease obligations.

Businesses which were not deemed ‘essential’ were prohibited from accessing their premises during Alert Level 4, and for some of you this meant your business could not earn any income during that period or revenue was severely reduced.

Is rent relief available?

The first place to look for rent relief options is in your lease itself. The most common form of commercial lease is the Auckland District Law Society (ADLS) lease. If you’ve entered into an ADLS lease in or after 2012 it is likely to contain clause 27.5 which deals with situations where tenants are unable to gain access due to an ‘emergency’.

Although this clause was originally introduced as a result of the Christchurch earthquakes and tenants being unable to enter undamaged premises which were in the locked down ‘red zone’, the term ‘emergency’ includes epidemics such as Covid. Clause 27.5 states that if a tenant is unable to gain access to their premises in an emergency ‘to fully conduct the tenant’s business’ due to a restriction on occupation by a competent authority then a ‘fair proportion of the rent and outgoings shall cease to be payable’ during the period they are unable to access their premises.

What is a ‘fair proportion’?

Eighteen months after the first Covid lockdown, there is still no guidance from the courts as to what a ‘fair proportion’ is as disputes between landlords and tenants have either been resolved through agreement or by arbitration. While fairness is ultimately in the eye of the beholder, the following factors should be considered:

  • Fairness to both parties: Both the landlord’s and tenant’s situations should be taken into account in determining the extent to which a reduction is ‘fair’. While the income of most tenants will be impacted by a lockdown, many landlords will also have mortgages and other outgoings and rely on the rent to meet those obligations.
  • Nature of a tenant’s business: Businesses will be affected differently by the lockdown. At one end of the scale there are ‘essential businesses’ such as supermarkets which may continue to fully operate from their premises.

At the other end of the scale, cafés and restaurants will not be able to operate at all. Also in the mix are professional services businesses such as law and accounting firms where staff may be able to continue to work from home but have access to the server situated on the premises. Many businesses will have important items stored at their premises so will continue to gain some benefit from the premises during their lockdown. The proportion of the rent reduction is likely to be affected by the benefit the business gains from the premises.

Rent relief period?

Clause 27.5 applies to situations where a tenant is not allowed to access their premises due to an emergency ‘to fully conduct the tenant’s business’. If a tenant can access the premises, but still can’t fully operate, they may claim an abatement of a ‘fair proportion’ of the rent and outgoings for as long as they cannot access the premises to fully conduct their business due to the emergency.

The clause is not intended to deal with situations where a tenant’s turnover has been affected by a market downturn which is not related to access to premises.

Resolving rental issues

We recommend that landlords and tenants attempt to negotiate an acceptable outcome for both parties in good faith. If an agreement cannot be reached it is likely that the lease will require the dispute to be resolved by mediation, and then arbitration if mediation is not successful.

It is in the interests of both parties that tenants survive this difficult period and that they maintain a good relationship.

Lease does not provide for rent relief?

An early November 2021 amendment to the Property Law Act 2007 effectively inserts a new clause similar to clause 27.5 into those commercial leases which do not currently have a rent relief clause. The deemed clause took effect (retrospectively) from 28 September 2021 and only applies in relation to epidemics. The new law does not define ‘fair proportion’, so there will still be a need for negotiation, then possibly arbitration.

The legal doctrine of ‘frustration’ also provides a potential legal argument in favour of tenants.

It is important that any agreement on rent relief is properly documented. We will be happy to assist you with this, and help you with any negotiations with either your landlord or tenant during these Covid times.

 

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


Working from home

Tax status of allowances

Most, if not all, employers and employees will now be familiar with the once illusive and distant concept of working from home (WFH). Since Covid reached our shores, flexible working practices have evolved with more employees now preferring to work remotely in any alert level, either on a full-time or part-time basis.

WFH brings unique challenges that are otherwise not encountered in an office environment. One commonly-faced situation by both employers and employees is the blurred line around work and home life. This is more than just a decrease in the ability to switch off from work; it also relates to work use of a household’s power, internet and phone.

Both employers and employees should be aware of the tax implications of such costs of WFH. Employees cannot personally claim a tax deduction for costs incurred in carrying out their employment duties, such as WFH costs. If employers wish to contribute to their employee’s WFH expenses and compensate them accordingly, in some circumstances that compensation will be taxable income for the employee; in some circumstances, it will be tax-exempt. Inland Revenue has provided a simplified way for employers to determine whether, and to what extent, such a payment is taxable or not; it recently extended this method for the period from 1 October 2021 to 31 March 2023.

Inland Revenue has a great deal of information about WFH; to read this go here 

If you have specific enquiries about WFH tax obligations, do contact your accountant. Employers may also want to draft a WFH policy that outlines their expectations about this new way of working; we can help you with that.

 

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


Since the launch of government-funded Digital Boost in late 2020, more than 40,000 small businesses have signed up. Digital Boost is a joint initiative between the Ministry of Business, Innovation and Employment (MBIE) and the private sector. Its purpose is to get small businesses to not only acknowledge, but also to use, the benefits that come from digital tools and technologies.

Adding to its existing toolbox, Digital Boost recently launched a new Digital Boost Live app. MBIE says that it wanted to make Digital Boost content more accessible to people who work more from their mobile phones and to give businesses up-to-date digital information “in the palms of their hands”.

Features include:

  • More than 500 short three-to-five minute learning videos including how to use digital marketing to increase sales
  • Podcasts with business owners
  • Hundreds of downloadable learning summaries
  • Case studies featuring Kiwi small business owners, and
  • Live Q&A sessions.

Digital Boost Live is available free at the App Store or Google Play. For more about Digital Boost go here

 

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


Waikato DHB cyber-attack

Business owners must stay vigilant

On 19 May, a cyber-attack on the Waikato District Health Board brought down all hospital computer systems and phone lines. On 25 May, an unidentified group claimed responsibility for the attack and demanded payment from the DHB, threatening to release sensitive data about patients, staff and finances. The DHB and the government both refused to pay the ransom. Subsequently, a substantial amount of private information was posted on the dark web including staff data, payroll information, patient records and photographs.

This cyber-attack serves as another reminder for business owners to have effective cyber security protocols in place. Cyber-attacks are becoming more frequent and their disruption can cause significant cost to businesses.

It took the Waikato DHB over a month to restore its IT services, and it had to employ hundreds of additional IT experts to rebuild its systems. Health authorities had to inform more than 4,000 people that their personal information was breached and shared on the dark web after this damaging cyber-attack.

Following the Waikato DHB cyber-attack, the Chief Operating Officer at cyber security company, Safestack, Erica Anderson, was interviewed on RNZ. She explained that ransomware is “basically bad software [and] once it lands onto your computer it tries to do three things:

  1. Lock down access to that computer
  2. Spread to as many other computers as it can reach, and
  3. Give you a popup telling you that you need to pay money to unlock your access.”

She recommended that businesses invest time now to protect themselves rather than being in a situation where there is no access to systems combined with pressure to pay a ransom. She also highlighted the importance of regular backups.

“If you get infected [by ransomware], backups are a way for your business to fall back to a point in time where you weren’t infected so that you can restore and get back to normal a lot faster.”

With the increasing number of cyber-attacks worldwide, all boards and senior management need to take more responsibility to stay vigilant. Your business needs to be prepared.

For a DIY-level understanding of cyber-security, the Autumn 2021 edition of Fineprint has an article, ‘Cyber security 101 for business’ with a list of basic prevention measures to read more go here

If you have not done so already, we recommend hiring an IT advisor so that your business can have effective cyber security protocols in place.

 

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


Bonding agreements

Helping employers recoup training costs

Bonding agreements can be an incredibly useful tool for ensuring employers can recoup costs incurred for training staff.

Used improperly however, bonding agreements may be unenforceable and – in some circumstances – be a clear breach of the Wages Protection Act 1983 (WPA). We look at two of the most common issues with bonding agreements as well as what should be considered for enforceable agreements.

What is a bonding agreement?

A bonding agreement is a benefit given to an employee where you agree to pay for some or of the all the cost of further training in exchange for your employee agreeing to stay under your employment for a period of time; this is usually around one to two years after the training is complete. The result is an upskilled employee who has better qualifications and future employment prospects, and your business has the benefit of a more valuable employee who usually will stay for the period of the bonding agreement.

These arrangements can be recorded in the original employment agreement or in a subsequent document both the employer and employee sign which records the bonding agreement as a formal variation to the employment agreement that is already in place.

Wages Protection Act 1983

Section 12A of the WPA states that an employer may not ‘seek or receive any premium’ for employing a person. In a 2016 case[1], it was found that bonding employees to recoup recruitment costs, such as skills testing, was considered a breach of s12A as it was the employer who primarily benefitted, not the employee. Any bonding agreement for training, testing or costs incurred by the employer only would likely

be considered a breach of the WPA.

Workplace health and safety

All employers are responsible for ensuring that they provide a safe environment for their employees. For most businesses this means that, at a minimum, each workplace must have some staff trained in first aid. In more dangerous workplaces there must be additional measures, such as training employees in handling combustible materials or dangerous goods.

As an employer, if you have insufficient staff members trained in workplace safety and are required to provide training to up-skill existing staff in this area, it is unlikely that you could use a bonding agreement to recoup the cost of that training, as it is your responsibility to provide a safe workplace in the first instance. If any additional training goes above and beyond the requirement for safety, and significantly improves your employee’s future employability, a bond may be valid.

Making clauses work

There are many circumstances in which bonding agreements are appropriate and enforceable.

When considering a bonding agreement, the following three basic principles are a good guideline.

  1. Mutual benefit: the additional training being undertaken by your employee must be of a mutual benefit to you both. Another acceptable, but rare, situation is where the additional training is of sole benefit to your employee, such as up-skilling in a different field while continuing to work in the current role.
  2. Transparency of cost: costs should be agreed as much as possible up-front, including how and when those costs will be repaid if your employee leaves during the bonded term. If the costs cannot be recorded clearly in the agreement, for example accommodation costs while on training, your employee should be given reasonable notice of the cost before it is incurred and the opportunity to opt out or for you both to choose a cheaper alternative.
  3. Reasonability: the bonding term and repayment schedule should be reasonable in consideration of the costs incurred by the business. For the majority of bonding terms, a reasonable timeframe is somewhere between six months and two years, though there are certainly some circumstances where longer bonding terms are appropriate.

Like many elements of employment law, bonding agreements are very case specific. This means that in this article, we cannot cover all the issues that arise with them. Any issues in the workplace such as harassment or constructive dismissal can shake the foundation of a bonding agreement. Even when an agreement is considered enforceable, there is no guarantee you will be able to recover the funds from an employee who leaves your business.

If you are considering a bonding agreement, whether you are an employer or an employee, please contact us to discuss your specific needs.

[1] Labour Inspector v Tech 5 Recruitment Limited [2016] NZEmpC 167 EMPC 114/2016.


Climate Action Toolbox

We all need to do our bit to reduce carbon emissions and look after the planet better than we have previously

In late March, the Climate Action Toolbox was launched in a major collaborative effort involving the Sustainable Business Network, a number of government agencies and some private sector businesses.

The Climate Change Commission had identified a need for tools to help smaller businesses take action on climate change. Its goal is to help businesses create a tailored step-by-step plan they can use to reduce emissions.

Many small to medium-sized businesses want to do their bit, but are unsure on how to start or what could make the most impact. The Climate Action Toolbox provides tailored advice and support around moving people, moving goods, office operations, site operations and equipment, and designing and making products.

Businesses can work through a self-assessment to identify which areas are relevant to them. Under each area you can choose from a range of specific actions to improve the climate impact of your business. Activities range from limiting non-essential travel, using heating and cooling options efficiently, buying sustainable products, recycling and reducing what goes to the tip, buying products produced locally, using equipment efficiently and upgrading to cleaner technology where possible.

To find out more about how your business can reduce its carbon footprint, go here.


Post-Covid working world

Keep employment agreements and policies up-to-date

Over the past 18 months, we have seen significant changes to employees’ hours of work, rates of remuneration and the expansion of flexible working arrangements as businesses have adapted to the Covid economy.

With most sectors of our economy recovering, and despite some occasional changes in alert levels, both employers and employees should ensure that any agreed post-Covid terms of employment or changes to the workplace are accurately recorded in their employment documentation.

Changes to hours of work and remuneration

In 2020, a significant proportion of businesses reduced their employees’ hours of work and rates of remuneration in response to the economic impact of Covid and claimed the government wage subsidy.

While many employees have returned to their previous hours and rates of pay, there is still a significant number who have not. It is important that employees’ rates of pay and hours of work are formally recorded; this will help avoid uncertainty and clarify how long the new hours/pay are intended to stay in place. The best way to achieve this is to prepare a variation letter for them to sign and return. This sets out an employee’s new hours of work and/or remuneration. They should of course seek independent legal advice.

Working from home

Covid has been extremely disruptive to our traditional ideas of what it means to be ‘at work’ and has been a catalyst for many businesses to introduce, or expand, flexibility for their employees. The introduction of working from home means that your employee’s home should also be recorded as a place of work in their employment agreement. This re-classification, however, raises some other issues that should be worked through.

Health and safety is important. For home-based workers who can perform their roles remotely, the main issue is whether their home is adequately set up to be a place of work. For example, are their desk, chair and computer screens ergonomically correct? If not, you should consider whether your business is prepared to subsidise or cover the cost of purchasing this furniture.

We recommend you consider whether the health and safety provisions in your employment agreements are fit for purpose in light of your employees’ homes being treated as a place of work.

Another issue is working from home expenses, such as internet and phone usage. You may wish to consider whether a weekly/fortnightly allowance is appropriate to subsidise employees’ expenses when working from home. Tax consequences will also need to be taken into account.

You will also want to ensure that sensitive business information remains confidential despite being in your employee’s home, and to ensure you have policies in place to address these issues.

What ‘flexible working’ looks like for a particular workplace is a major consideration. While many employees appreciate the flexibility that comes with working from home, you must take into account how allowing a large proportion of staff to work that way impacts your workplace culture and cohesion.

We recommend employers consider introducing flexible working policies in consultation with their staff in order to identify how often their employees can work from home and the rules and expectations around how they will stay connected while they are out of the office.

Overseas travel

With travel bubbles open (and sometimes closing) with Australia and the Cook Islands, both employees and employers must be mindful of the possibility of employees being unable to return from overseas trips due to unanticipated Covid outbreaks.

Employers should develop overseas travel policies, in consultation with staff, to establish the process for authorising or declining an overseas travel request. If overseas travel is allowed, employers should consider whether their employees should take their work computer with them (if they are capable of working remotely) so there would be minimal business disruption if they are unable to return for some time.

Final thoughts

Covid has thrown a spanner in the works in the way we carry out our day-to-day business. It has, however, given us all an opportunity to work in different ways. It is important to ensure your employment documentation reflects your workplace’s new normal.