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Your Own Business

Guest editorial: Having a cyber resilient business

Commercial, Your Own Business
0

It’s hard to ignore the headlines; the past few years have brought floods, plagues and an unprecedented rise in cyber-attacks. New Zealand businesses have taken the brunt of these events. Some have been pushed to breaking point.

 

Floods and plagues are tangible events. We can usually see them coming and prepare for the worst. Cyber-attacks are like a bolt of lightning, one minute it’s a sunny day, and the next minute your business is on fire and you are scrambling to mitigate the damage.

 

Cyber resilience is a measure of how well you can manage a cyber-attack or data breach while continuing to maintain business operations effectively. There are some simple steps you can take to make your business more resilient to cyber-attacks.

 

Step One: Know what you are trying to protect

All businesses have information that, if lost, would compromise the viability of the business. When considering what you need to protect, think of your information as assets in terms of maintaining their confidentiality, integrity and their availability of access. Which ones are the most important for your business to protect?

 

Knowing what you need to protect makes it easier to determine whether your cybersecurity protections are sufficient.

 

Step Two: Mind the gaps

Cyber resilience is more than just having anti-virus installed. Pay attention to the resilience of your people, processes and technology; cyber health checks will identify gaps and recommend improvements. Specialist cyber resilience companies such as Intelligensia provide impartial assessments of your cyber resilience and can liaise with your IT provider to get you the right the level of protection.

 

Step Three: Know your risk appetite

Know how much risk you are willing to accept for your business. This helps you decide how much you need to invest in cybersecurity protections. For example, if you keep sensitive client information, invest in offline back-ups that can’t be compromised if you succumb to a ransomware attack. An investment in off-line backups will not only minimise the loss of information, but also your downtime.

 

Step Four: Business impact

During the recent floods, power, phones and the internet were disabled for some time. A cyber-attack on your managed IT services provider or software vendor could similarly leave you with no access to your computer systems or information for extended periods. Think about the business impact if you can’t access your customer, financial or bookings information for an extended period. Use a scenario of not having access to vital tools and information for up to a month. During large scale cyber-attacks, your IT providers will be juggling competing demands to get multiple businesses operational again. Check your service level agreements and know the level of support you can expect.

 

Step Five: Incident response plan

An incident response plan lets you take a methodical approach to deal with a cyber-attack when it occurs. Many businesses think that calling their IT provider to fix the problem is all that is needed. Certainly, they can fix the technical problems, but you have obligations as well. For instance, you may need to notify the Privacy Commissioner if personal information has been stolen. Failing to report information breaches can result in a hefty fine. Informing customers that you’ve lost their information is another requirement. The way you manage a cyber-attack will determine the impact on your business’s reputation and your customers’ level of trust.

 

Essential to be cyber resilient

Cyber-attacks are on the rise. They increased 600% during the pandemic; security commentators predict that this year a business will suffer a ransomware attack every eleven seconds. More than 90% are caused by someone clicking on a phishing email. It’s not a case of ‘if’ you get attacked, rather ‘when’. Being cyber resilient puts your business in a much stronger position to weather the storm and recover quickly from a cyber-attack.

 

If you want your business to survive in today’s digital economy develop your cyber resilience now.

 

Jan Thornborough established Intelligensia in 2021 after realising that although big organisations were dealing with cyber risks, small and medium-sized business and not-for-profits were being left behind. Intelligensia’s mission is to bring the same level of expertise enjoyed by large companies and government agencies to smaller organisations.

 

Previously, Jan was head of the cyber resilience unit at New Zealand’s National Cyber Security Centre that helps nationally significant organisations become more cyber resilient.

 

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

Keeping your employees during the ‘big quit’

Commercial, First Job, Your Own Business
0

Retention tools and some risks

Since 2021 and the lessening of the effects of the Covid pandemic, many countries have experienced an increase in staff turnover and lost productivity. This is informally referred to as ‘the great resignation’, ‘the big quit’, ‘brain drain’ and ‘quiet quitting’.

 

These trends are concerning as turnover and lost productivity present further challenges to businesses that may already be struggling in a weakening economy.

 

Employers can implement retention tools to minimise turnover and ensure employee engagement. As with all employment contractual changes, care needs to be taken to ensure that these do not result in unexpected consequences for either party. We look at the most common retention tools that employers might consider along with some alerts when using these incentives.

 

Incentives are variations to the employment agreement

All incentives are a variation to your employee’s individual employment agreement. When considering any form of incentive, you must ensure that all changes are consulted on, and agreed to, by your employee. The agreed changes should be documented appropriately, usually with your lawyer’s assistance, and signed by both parties.

 

You must document and record all changes to employment terms and benefits. When employment variations are made and you don’t keep accurate records and act in accordance with those records, you are at risk of a personal grievance claim from your employee. In addition, inaccurate recordkeeping can attract penalties from the Labour Inspector for not complying with the Employment Relations Act 2000 and the Holidays Act 2003.

 

When considering an incentive for your employee, consultation regarding tax consequences, including fringe benefit tax (FBT), with your accountant or tax advisor is essential.

 

Cash and performance-based bonuses

The most commonly used, and arguably most straightforward tool to increase employee engagement and performance short-term, is a cash bonus. This payment can be made as a lump sum for existing performance, or it can be a bonus based on agreed and documented requirements for future performance.

 

If you pay a discretionary cash bonus, one costly mistake you could make is to unintentionally increase your employee’s ‘gross earnings.’ If a payment is not correctly identified as a discretionary additional payment, then the increase to their ‘gross earnings’ can also affect payment required for their other entitlements such as annual leave.

 

In landmark cases in 2020 and 2021[1], the court considered whether or not a bonus scheme was part of ‘gross earnings’ for an employee. Originally the bonuses were considered part of the ‘gross earnings’ and the company had to pay out significant additional annual leave entitlements. On appeal, this was overturned.

 

Ultimately, the court decided that a primary indicator as to whether a bonus counted as ‘gross earnings’ was whether the employer retained discretion to not pay the bonus, even if the performance targets had been met. Importantly, the law was clear that the payment needed to be a true ‘discretion’, and merely labelling or titling it as ‘discretionary’ did not suffice.

 

Being careful on how this payment is documented and ensuring it is ‘truly discretionary’ will help prevent unnecessary increased annual leave payments. If it is discretionary, you will need to ensure it’s recorded as such in your payroll system.

 

Retention bonus

Another common tool is a retention bonus where your employee is guaranteed a lump sum cash payment at the end of a retention period (often between 12-36 months).

 

All agreements should contemplate what happens if your employee decides to leave during their retention period. This could be a resignation, dismissal due to poor performance or, if the market required, your employee’s role/position may be made redundant. The nature of the event giving rise to the dismissal will likely determine whether the bonus is paid or not, and if paid, whether partially or in full.

 

Retention bonuses can also become payable on the occurrence of a prescribed event. Regardless of when payment is made, the impact on annual leave must be considered in the same way as for a performance bonus.

 

Bonding clauses

Another way to retain your employees is to provide payment for further education or formal qualifications in exchange for your employee staying for a period of time after the training or further education has been completed. If your employee leaves, they might be asked to repay some, or all, of the training costs covered.

 

While bonding clauses can increase employee engagement as well as enhancing the value of your employee to your business, when considering bonding clauses you should seek specific legal advice to ensure the bonding clause is enforceable. The enforceability is dependent on many factors including fairness to your employee. If the bonding clause is deemed to be unfair, you may not be able recover the training costs already paid when your employee leaves earlier than their bonded term.

 

Shares or equity in the business

One of the most effective long-term retention tools for key employees is to offer shares in the business. These shares can be restricted so that the value the employee receives for the shares is minimal if they leave within a prescribed period. If they stay longer than the prescribed period, they can sell the shares for their actual value. This is an excellent tool as not only does it provide a good incentive for your employee to stay, but it also incentivises them to grow the value of the business during their tenure.

 

This process should always be guided by your lawyer; there are several steps and the requirements will be unique to each business. For new shareholders, a shareholders’ agreement should be prepared that covers all shareholder rights such as pre-emptive rights for the majority shareholder (the main business owner) to buy back the shares and voting rights of all the parties. Often this process will require a valuation of the business, and there will be significant considerations regardless of the structure implemented.

 

Meeting the market

Looking at the wider labour market and demands for particular roles will help you identify employees who are most at risk of leaving. Often, if employees are in short supply, the market remuneration will have increased and you should consider meeting the market rates to reduce staff temptation to leave.

 

Other incentives that can make an employer competitive are increased annual leave, wellbeing payments, health insurance, allowing personal use of work phones or vehicles, flexible working and interest-free or low interest loans (some of which have FBT consequences).

 

Have a highly engaged culture

Ultimately, retaining staff is a complex area that involves much more than just financial incentives. Ensuring your workplace has developed a highly engaged culture that supports your employees’ individual needs and that your employees feel valued will all help with your overall retention strategy.

 

With the rapidly changing employment market it can be understandably challenging to retain key staff. If you have an employee you think you are at risk of losing, think about what retention tools will mean the most to that person; and remember to talk with us about what steps you should take before offering any incentives.

 

[1] (Metropolitan Glass & Glazing Limited v Labour Inspector, Ministry of Business, Innovation and Employment [2020] NZEmpC 39 and subsequent appeal of that decision in Metropolitan Glass & Glazing Limited v Labour Inspector, Ministry of Business, Innovation and Employment [2021] NZCA 560).

 

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

Contract compliance

Commercial, First Job, Your Own Business
0

Fair Trading Amendment Act 2021 now in force

 

If you have customer contracts, inter-business contracts or contracts valued under $250,000, the Fair Trading Amendment Act 2021, that updated the Fair Trading Act 1986, should be on your radar. The changes came into effect on 16 August 2022.

 

Unfair terms, unconscionable behaviour and direct sales are all targeted in the updated legislation that includes an expansion on the regulation of ‘unfair terms’ impacting all consumer contracts and standard, trade and small contracts. This means all businesses should be reviewing these changes to ensure they comply with the 2021 Act to avoid penalties.

 

In this article, we focus on the ‘unfair’ contract term changes as these will impact almost all businesses.

 

What is an ‘unfair’ contract term?

Contract terms that are now considered ‘unfair’, and therefore unenforceable, are any terms that meet all of the following requirements:

 

  • The contract or term causes a significant imbalance in the parties’ rights and obligations arising under the contract
  • The term is not reasonably necessary to protect the legitimate interest of the party who is advantaged by it, and
  • The term would cause detriment (financial or otherwise) to a party if it were applied, enforced or relied upon.

 

There are a few exemptions to the above requirements, including where the contract specifies a transparent price term, upfront price, defines the main subject matter of the contract or is expressly permitted by another law.

 

Examples that could be considered unfair include terms that:

 

  • Refer to other hidden or ambiguous terms and conditions, such as committing your customer to ‘standard terms that will be provided with the supply of goods’
  • Prevent someone from taking legal action
  • Give one party a unilateral ‘final decision’ status
  • Make your customer bear all the risk
  • Restrict your customer from transferring their rights under the contract (i.e.: non-transferable), and
  • Allow you to transfer your contract without their consent.

 

If it is unclear whether a term is ‘unfair’, the Commerce Commission can make that determination or ask the court to do so. In making its decision the Commission or court is required to consider any matter it considers relevant; the two most important matters are, however, the contract as a whole and the unfairness of the term.

 

Does this apply to your contracts?

This legislation applies to a vast number of contracts including consumer contracts, standard contracts, in trade contracts and small contracts. While most people understand that a consumer contract is one engaged between a business and a customer, to properly understand if any of the contracts you use in your business come under this legislation, it is important that three key terms – ‘standard’, ‘in trade’ and ‘small’ – are clarified.

 

Standard contract 

A ‘standard contract’ is any contract in a templated form. This template is not subject to negotiation and is more of a ‘tick box’ of a contract. Most terms of trade and standard issued terms and conditions would be considered a ‘standard form contract’.

 

In trade contract

Using an ‘in trade contract’, you or your business must undertake any trade, business, industry, profession, occupation, activity of commerce or undertaking related to the supply of goods, services or interests in land.

 

Small contract 

‘Small contracts’ are contractual business relationships that result in less than $250,000 in anticipated value in the first 12 months of the relationship.

 

In addition, and importantly, almost all independent contractors will be caught up in these changes. Contractors should review their agreements to ensure they remain compliant with the legislation.

 

Penalties

If your contract, or terms of trade, is considered unfair, a court may determine any number of remedies should be applied including:

 

  • Removal of the clause
  • Refunding money or pay damages
  • Preventing the business from using the clause in any way, and
  • Fines of up to $200,000 for an individual or $600,000 for a company or body corporate.

 

If a clause is considered unfair in a standard contract, there is a risk it could extend to all the contracts issued by your business and every consumer or business negatively impacted by that clause could be entitled to a remedy.

 

The new law reflects the reality that many small businesses are sole traders or small family-owned businesses that require more protection from unfair contractual terms than large corporations. On the flipside, it also means all businesses should take additional care to ensure their contractual terms are fair and reasonable, and comply with the legislation.

 

If you are uncertain if your contracts are compliant or would like to discuss this change, please contact us.

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

Hybrid working

Commercial, First Job, Health Issues, Your Own Business
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Now an option for many employees

 

The Covid pandemic has reshaped the way New Zealanders work. Southern Cross Health Insurance conducted a nationwide survey[1] for its Workplace Wellness Report 2021 and found that since the Covid outbreak in 2020, 34% of businesses surveyed have changed their position on remote working and now offer it as an option to employees.

 

AUT Business School Professor Jarrod Haar[2] has monitored the New Zealand workforce since February 2020 and, as of November 2021, 48% of Kiwi workers were engaged in hybrid working. It is likely the percentage of hybrid workers has increased since the AUT study.

 

As hybrid working appears to be a fixture in the employment landscape, what are the benefits of hybrid working and why are so many employers agreeing to opt into this flexible working regime?

 

Benefits of hybrid working

Hybrid working provides a great deal of flexibility for both employees and employers. A worker who feels tied to their desk all day may feel overwhelmed and stressed by their inability to tend to at-home tasks. Hybrid working provides employees with more flexibility which directly correlates with efficiency. AUT’s Professor Haar found hybrid workers had the highest scores of happiness and innovation compared with entirely remote workers and full-time office-based workers.

 

The government recently increased minimum sick leave entitlements from five to 10 days. This increase has allowed organisations to enforce strict rules around staying at home when their employees are unwell. In doing this, employers can protect both the people who are unwell and fellow colleagues from working with someone who is sick but doesn’t want to take the day off. Those people who do not want to take a sick day, but still feel able to work, can do so from home.

 

The Southern Cross report found that the year 2020 had the lowest rate of employee sick leave absences recorded by one of the Workplace Wellness Reports. It is interesting to note that the average number of days a manual worker took off was 5.3 days, whereas a non-manual worker, who could work remotely, took 3.4 days off on average, indicating those who could work from home would work instead of taking a day of sick leave.

 

Disadvantages of hybrid working

There are, however, disadvantages that come with working remotely. The Southern Cross report stated that 73% of the organisations surveyed reported that some of their employees felt isolated when working at home and preferred to be in the office environment. This percentage increases in smaller businesses with fewer than 50 staff members.

 

Remote working can have an impact on team culture, feelings of connectivity and collaboration between colleagues in a workplace. Many employees enjoy their workplace not only because of the work they do, but also the people they work with.

 

Many new initiatives and problem-solving exercises happen in the office through collaboration. Although colleagues can communicate with each other via Microsoft Teams or Zoom, these platforms do not have the same benefits of interacting with an office colleague.

 

Communicating via an online platform can also result in smaller questions being brushed under the rug, due to the effort involved and fear of having to call and ‘interrupt’ a colleague to ask a question.

 

Health and safety considerations

The Health and Safety at Work Act 2015 requires employers to ensure the health and safety of all their workers, so far as reasonably practicable. If your employee is working from home, their home becomes a workplace and is subject to health and safety requirements. Relevant considerations include:

 

  • Ergonomics: desk workers who spend most of their day sitting are prone to strains and injuries relating to posture. Not having the correct equipment when setting up a home office is one of the biggest contributing factors.
  • Hazards: employees should be warned about hazards around the home including overloading power sources and confined work environments which may lead to tripping over cords and so on.
  • Mental health: employers’ health and safety obligations extend to mental wellness, not just physical wellbeing. A worker’s mental health can be difficult to assess if they are at home and out of sight. Personal and work boundaries can become blurred leading to overwhelming feelings of stress.To address this, workers should be encouraged to use a specific area of the house for work and shut off that area when they finish for the day. Alternatively, workers could be encouraged to wear ‘work’ clothes during work hours, and they can change into more casual clothes to mentally separate themselves from all work associations.
  • Confidential information: the obligation to ensure employer information remains confidential is still applicable; it is probably more heightened working from home. Hybrid workers should be reminded of their obligations and advised to be particularly diligent when dealing with confidential information at home; provisions should be included in policy documents to this effect.

 

The way of the future

It is clear hybrid working is the way of the future. Although there are some disadvantages in working this way, these look to be outweighed by the vast number of benefits, including overall increases in a worker’s happiness. The key is finding the correct balance and ensuring there are days that all staff are in the office together so everyone can get the best of both worlds.

[1] PowerPoint Presentation (businessnz.org.nz)

[2] Happy workers are hybrid workers – News – AUT

 

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

Greenwashing

Commercial, News, Your Own Business
0

‘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

Insta # dismissal?

First Job, Your Own Business
0

Employers, disrepute and social media

Whether we like it or not, social media affects almost every aspect of our daily lives, including employment relationships. How can employees’ ‘private’ social media posts bring an employer’s business into disrepute and lead to an employee’s dismissal? Shouldn’t employees have privacy out of work? On the other hand, if a post adversely affects an employer, shouldn’t they be able to act?

 

The problem with social media

Gone are the days of casual conversations with a limited audience. Social media can reach thousands of people with the click of a button and filter into real life to have an impact on our working environment. An employee’s social media posts ‘shared’ only with family and friends, may ultimately be far from ‘private’. That post or a screenshot can be forwarded and shared with a limitless audience.

 

A social media post (or a like, comment, hashtag or tweet) is often made emotionally or in the heat of the moment, but can be permanent and can quickly cause damage and/or have effects on a business — with far-reaching consequences.

 

Bringing your employer into disrepute

As an employee, if your conduct impacts (or potentially impacts) adversely on your employer’s business or reputation, you could be deemed to bring your employer into disrepute. It is conduct that intrudes on your workplace relationships and obligations, or your ability to do your job. It could be during working hours or outside of it, but there must be a clear link between the conduct and employment.

 

The line between personal opinion and employer disrepute is murky. Employers need to consider whether an objective, fair-minded and independent observer aware of the circumstances could have considered an employee’s actions/posts have brought or carry a reasonable risk of bringing it into disrepute.

 

Some examples leading to dismissal

The range of behaviour is wide but whether it is bad enough to warrant dismissal will depend on an employee’s position and the sector in which the employer operates.

 

In a recent case[1], the dismissal of a nurse was justified after she posted her views on vaccination on Facebook. While she argued the posts were private, was unaware of their reach and posted opinions often shared by others, the Employment Relations Authority (ERA) disagreed. There was a significant risk of harm to her DHB employer’s reputation if her posts had been viewed by the wider public, especially as she was a community nurse.

 

In some cases, liking or commenting on someone else’s posts may be enough to bring an employer into disrepute. In a 2014 case[2], an employment advocate (who was representing an employee) made negative posts about that person’s employer. The employee (whose Facebook identified her employer) liked the advocate’s posts.  She was endorsing disparaging views and ensuring the posts were shared with her ‘friends’ who were other employees or customers. Her dismissal was justified.

 

Social media posts may also affect the work environment, or lead to claims of bullying and harassment within it. Examples include employees sharing explicit videos with other employees (even outside of work) via Facebook Messenger or making offensive comments about other employees. All employees should think twice before posting embarrassing work party photos, as this could also be found to be bullying or harassment.

 

What about privacy?

As an employer, you may become aware of social media posts because you are a ‘friend’ or ‘follower’ of your employee or have been provided them by someone who is.

No privacy breach will occur if a legitimate recipient provides this to you; as social media is objectively in the public domain and may go beyond ‘friends’ and ’followers.’ You cannot force your employee to give you access to their private accounts or coerce others into doing so.

 

When the matter ends up before the ERA, it has the power to order disclosure of this material, if it is relevent. The ERA may also order your employee not to make any posts on social media about your business, employees or any confidential information.

 

What can you do?

Employees must always think twice when posting on social media. If you are posting anything which may be associated with your employer, your workplace or that may impact on your ability to do your job you should err on the side of caution. Where your workplace has a distinctive brand or uniform ensure these are not in any post unless your employer has authorised this placement.

 

Employers should have a social media and internet use policy in place and/or a clause in employment agreements. Investigate any allegations and follow a full and fair process before making any decisions, particularly where there is the possibility your employee may be dismissed. You must also be careful of your own social media posts of, or about, employees.

 

Social media can be a minefield from an employment viewpoint. If you need any guidance, please don’t hesitate to contact us.

 

[1] Turner v Wairarapa District Health Board [2022] NZERA 259

[2] Blylevens v Kidicorp Limited [2014] NZERA Auckland 373

 

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

Commercial, First Job, News, Your Own Business
0

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

Business briefs

Commercial, First Job, Health Issues, Your Own Business
0

Hiring migrant workers: What the new AEWV means for you

Immigration New Zealand (INZ) has introduced the Accredited Employer Work Visa (AEWV) that replaces and consolidates six temporary work visas.

 

Employers must now apply for accreditation to hire migrants under the AEWV pathways by showing they are a good employer who will:

 

  • Run a viable, genuine business which meets certain financial criteria
  • Comply with New Zealand employment and immigration law
  • Commit to pay all recruitment fees, and
  • Assist the migrant with settling in New Zealand.

 

Once accredited, you (as the employer) can apply to INZ for ‘job checks’ and, in doing so, must provide evidence that:

  • You have recently advertised the role on a national job listing website for at least two weeks to determine whether any suitable New Zealand candidates exist
  • The job meets INZ’s requirements, and
  • You have provided an acceptable offer and an employment agreement to the applicant.

 

If INZ grants the job check, the relevant role must be filled within six months, or you will have to reapply. INZ will then add the relevant migrant’s details into Immigration Online and send the AEWV applicant a unique link to apply for their visa.

 

If you have any questions about the AEWV or the accreditation process, please don’t hesitate to contact us or an immigration advisor.

 

Changes to the Holidays Act on the horizon

For many employers, the Holidays Act 2003 is a constant source of frustration, especially when it comes to calculating pay for annual leave or days in lieu. Getting these calculations wrong, or failing to meet the requirements of the Act, can result in tens of thousands of dollars’ worth of penalties for serious breaches.

 

The government has signalled upcoming changes to streamline and simplify compliance, hopefully coming in 2023, including:

 

  • Annual leave payments will be calculated based on the hours in the employment agreement, or averaged over the previous 13 weeks
  • Employees will be entitled to take annual leave in advance, including during their first 12 months of employment
  • Eligibility for alternative holidays will be based on whether an employee worked more than half of the corresponding days over the previous four or 13 weeks (e.g.: if the public holiday is a Monday, the employee must work more than half of the previous four or 13 Mondays to qualify for an alternative holiday)
  • ‘Casual employee’ will be defined for the first time
  • Only casual employees will be eligible to be paid 8% ‘pay-as-you-go’ holiday pay, and
  • Employers will be required to provide pay slips to their employees each pay period.

 

These proposed changes look very promising, but the current laws will still apply to the upcoming Christmas and summer holidays. Until the changes take effect, all employers must ensure they are compliant with current law.

 

FMA review of ethical investing highlights need for improvement

The Financial Markets Authority (FMA) is urging fund managers to improve disclosures relating to ethical investing after a recent review found that, despite growing demand, New Zealand investors struggle to select managed funds based on ethical and socially responsible credentials.

 

Based on the review, New Zealand investors will be keen to monitor fund managers’ responses to the FMA’s recommendations. The FMA recommends that fund managers should consider the following:

 

  • Consolidating disclosures relating to ethical investment practices into an easy-to-read format that investors can easily understand
  • Clearly explaining the criteria used to exclude investing in certain companies or sectors
  • Providing better information to investors about risk and return trade-offs, and the benefits of the fund. One suggested example is to avoid using vague terms such as ‘the fund’s returns will be financial and a reduced climate impact’
  • Ensuring the non-financial outcomes are meaningful, and clearly state the consequences of failing to achieve them, and
  • Ensuring investors better understand the purpose and value of organisations providing assurance, measurement standards or endorsement, such as the Responsible Investment Association of Australasia.

 

The FMA’s review highlights the need for fund managers to provide a greater level of detail and clarity in disclosures to support their ethical investing claims. If you would like to read the review in full, please click here.

 

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

Postscript

First Job, Your Own Business
0

Fair Pay Agreements Bill

The Fair Pay Agreements Bill was introduced earlier this year; it proposes a framework for collective bargaining of fair pay agreements. The Select Committee is working its way through submissions and will report back to the House in early October.

 

The government believes the current situation of an employer and employee being free to negotiate the terms of employment without being subject to fair pay obligations (provided employment law minimum entitlements are met) marginalises some employees. The draft legislation would introduce a regime where an agreement is established across an entire industry or occupation for mandatory minimum employment terms (such as wages or hours of work).

 

It is fair to say, no pun intended, that the proposed legislation has not been met with open arms by employers. Unions, however, have greeted the provisions in this Bill much more positively. We will let you know the status of this legislation in the next edition of Fineprint.

 

Scams: be vigilant

Scams affect us all – in our bank accounts, credit cards, over the phone, social media, via email or simply being sent a ‘strange’ communication offering you some ‘benefit.’

 

If you are contacted unexpectedly – always hesitate and consider that a communication from someone you don’t know could be a scam. Never, ever click on a link that you don’t know. Keep an eye on your credit card statement; unsavoury characters can hack your credit card details and ‘phish’ your money in the blink of an eye.

 

For help and information on scams, go to www.consumerprotection.govt.nz and click on the Scamwatch button. Netsafe New Zealand is also very helpful, go to www.netsafe.org.nz.

 

New whistleblowing legislation now in force

The new Protected Disclosures (Protection of Whistleblowers) Act 2022 came into force on 1 July.

 

The government says this new legislation provides clearer protection for people to speak up about wrongdoing, while protecting the whistleblowers themselves. It ensures confidentiality around who has made the disclosure, immunity from disciplinary action for making the disclosure and protection from retaliation through the Employment Relations Act 2000 and the Human Rights Act 1993.

 

If your business hasn’t already done so, we recommend you urgently review your whistleblowing policies and procedures so they comply with this new legislation. If you would like some help with this, please be in touch.

 

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

The economy – tougher times ahead?

First Job, Your Own Business
0

Guest editorial by Miles Workman, Senior Economist, ANZ

In another of our occasional Fineprint guest editorials, we introduce the ANZ’s Senior Economist, Miles Workman, who has written on the state of New Zealand’s economy. It would be fair to say the economic outlook in the short-to-medium term is not massively rosy, but there is, however, some solace in that the Reserve Bank wants to contain inflation as much as possible.

Global and domestic inflation risks remain intense, but front-loaded official cash rate (OCR) hikes by the Reserve Bank of New Zealand (RBNZ) are mitigating against the risk that inflation continues to go the wrong way.

Many other central banks across the globe are now underway with their tightening cycle too and making all the right noises. ANZ Research fully expects them to tame inflation in time. The question is, how much tightening will it take and how much economic pain will it require?

War, high inflation, acute capacity constraints, falling house prices and weak consumer and business confidence all suggest downside risks to economic activity. But Covid-volatility is making it hard to separate the noise from the signal.

Provided New Zealand manages to avoid lockdowns in 2022, GDP data should settle down over the second half of the year (Q3 GDP data is released in December 2022).

That means Kiwis need to continue to look beyond GDP for a steer on economic momentum. And there are plenty of indicators suggesting underlying momentum is slipping.

Despite the very low unemployment rate, ANZ’s Consumer Confidence survey shows confidence is softer than during the 2008-09 recession, which is not a time retailers remember fondly.

While building consents are at high levels, ANZ Research’s Business Outlook suggests residential construction is poised to slow. Building cost inflation, construction delays and difficulty achieving presales as house sales and prices fall could very well see some of these consented projects scrapped. Anecdotally, that’s happening already.

There are other reasons to think tougher times lie ahead:

  • While New Zealanders are now free to travel abroad, international tourism isn’t expected to start picking up meaningfully until the 2022-23 summer – so tourist operators could have to navigate through a tough winter.
  • Conditions for key exporters are tough. Key export commodity prices are now slipping with global consumers less willing, or able, to pay top dollar for our produce. Soaring fertiliser prices along with difficulties in getting product to market and finding workers are also weighing on agricultural production.
  • Households are going backwards financially as inflation outpaces income growth. While ANZ Research expects growth in real (CPI-adjusted) hourly earnings will be positive by the end of the year, it’s a mixed blessing for the RBNZ that is, quite rightly, concerned about the possibility of a wage-price spiral developing.

All up, the drivers of economic momentum are particularly complex right now.

Overall, 2022 (which still has some Covid-related volatility to work through) should see GDP growth come in a little below trend (2.2% over the year to December), slipping further in 2023 (2.0%) and 2024 (1.7%). Risks to growth are to the downside.

Inflation will ease; it’s just a question of how high rates need to go (and for how long)

At around 7% year on year, CPI inflation is running at a 30-year high. While there are some significant inflation pressures stemming from global developments, domestic inflation is the primary concern for the RBNZ.

Non-tradables inflation (aka domestic inflation) is running closer to 6% year on year. This is the sticky kind of inflation that tends to be difficult to tame, and right now it’s far too high to be consistent with the RBNZ’s inflation target.

ANZ Research expects OCR hikes, supported by the general monetary tightening underway globally, will successfully take the heat out of inflation in time.

Given current inflation and capacity stretch, ANZ Research expects the RBNZ to deliver more out-sized (50 basis point) hikes in the near term, before pivoting to 25 basis point hikes from October, taking the OCR to a peak of 3.5% in November 2022.

It’s a fine balance for the RBNZ as it weighs up the risk of oversteering (engineering a hard landing for housing, economic activity and inflation) against ensuring inflation pressures don’t spiral out of control.

All up, the rebalancing act the RBNZ and other central banks are currently performing is riddled with risks and uncertainties. But the one thing we can be sure of is that they will be successful in taming inflation, it’s just a question of how high (and for how long) rates need to go.

The views and opinions expressed in this communication are those of the author and may not necessarily state or reflect those of ANZ.

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

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