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Your Own Business

Contractors

First Job, Latest news, Your Own Business
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A veritable minefield of employment law

From a legal perspective, hiring contractors has always been tricky. The onus of correctly identifying who is an employee versus a contractor, and ensuring legal compliance, remains an employer’s responsibility. The financial consequences of misidentification can be significant for a business owner.

With the rise of the ‘gig economy’, employers are increasingly relying on contractors to fulfil essential roles, so correctly identifying these people’s employment status is more important than ever. The Employment Relations Authority has been very clear that it does not matter that a ‘contractor agreement’ is in place, if the individual behaves like an employee, their employer is responsible for ensuring compliance with the Employment Relations Act 2000 and will be penalised if they fail to do so.

We explore the key features to differentiate between contractors and employees, and what changes may lie ahead for those who fall into the grey area in between.

Defining a contractor

A contractor is a self-employed person who is engaged to provide services privately under contract law and issues invoices for those services. As such, the Employment Relations Act 2000 and all associated entitlements do not apply to the relationship. Key identifying features of a contractor are:

  • They have their own business and are responsible for all their own taxes and associated expenses such as ACC levies
  • They are considered to have an equal bargaining position to the business they are contracting with (in contrast to the power imbalance between an employer/employee)
  • The relationship may not be exclusive
  • They will ordinarily have an element of control or discretion over their daily tasks and work, and
  • Under normal circumstances they are freely able to accept or decline work.

Who is an employee?

Anyone who is not clearly a contractor should be considered an employee until determined otherwise. Red flags should be raised to treat an individual as an employee if there is little discretion on daily tasks, an exclusivity of relationship or they do not complete all their own financial accounting and reporting.

If they are an employee, you will need to assess if they are casual, part-time or full-time and are provided with the appropriate employment agreement and entitlements.

Consequences of getting it wrong

Misidentifying your employee as a contractor can give rise to a personal grievance (PG). The outcome of that PG could result in your employee being entitled to backdated entitlements such as annual leave and sick leave all the way through to the beginning of the relationship. There may also be other financial penalties imposed by the Employment Relations Authority.

Introducing the ‘dependent contractor’

A grey area arises when a person clearly runs their own business but works exclusively for one company or depends heavily on one contract for an income, and has very little discretion in daily tasks.

An example of this is a courier driver who owns their own vehicle, runs their own accounts, is free to contract with third parties and take on additional duties. For the majority of the time, however, they work for one company, are dependent on one income source and have very little control over the day-to-day activities as this is dictated by that company.

The government has consulted on a proposal to introduce legislation designed to protect this type of vulnerable worker. A new category under employment law is proposed called the ‘dependent contractor’ that is designed to protect and enhance the entitlements of this type of contractor such as a courier or rideshare driver. These contractors’ protections would be extended into parts of employment law which means a dependent contractor may be entitled to certain benefits such as sick leave.

These proposals have not been finalised and further consultation is expected this year. If this proposal is enacted, employers will need to be proactive in promptly reviewing and reclassifying (if necessary) their workforce to ensure all dependent contractors are given their new protections and entitlements.

Classify your employees

Ensuring your employees are correctly classified as contractors or employees is essential. Roles such as marketing, social media management, IT support, website management and virtual assistants are all examples of valid contractors who, under the right engagement circumstances, could be considered employees or, if the new proposal becomes law, a dependent contractor.

If you have concerns about correctly classifying an existing contractor or you are a contractor but believe you are probably an employee, please feel free to discuss this 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

Grounding your jet-setters

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The Covid dilemma of annual leave and holidaying offshore

Since Covid appeared in New Zealand in early 2020, employers have navigated a variety of complex matters relating to vaccinations, vaccine passes, alert systems and workforce management.

In this third year of the pandemic, many employers now face difficult decisions around annual leave and international travel ambitions of their valuable staff.

Can employers legitimately deny leave if their staff disclose an intention to travel internationally? What happens when employees are stranded overseas?

As with many employment law areas, responses will depend on the individual circumstances, but we look at some of the general principles that will govern these scenarios.

Disclosure is optional

While most employees freely disclose their leave plans, they are not legally required to tell you what they will be doing in their personal time — including how they take annual leave. As an employer, you may only request additional information relevant to the good faith assessment of the leave request, ensuring that it is not ‘unnecessarily unfair to your employee in the circumstances or unreasonably intrusive on your employee’s personal affairs’[1]. Quizzing employees about their plans could be considered a breach of the Privacy Act 2020 and employer good faith.

Approving/denying leave

You must consider ‘in good faith’ every leave request submitted by your employees. This means you may only reject the leave request on objectively reasonable grounds.

Reasonable grounds to reject leave may apply if your employee:

  • Is required to be present in your workplace during their proposed leave due to prior commitments or key business dates
  • Is required to be present immediately after, or shortly after, their proposed leave and that quarantine or self-isolation may jeopardise that availability, or
  • On their return to New Zealand they may present a significant health and safety risk to themselves or your workplace.

It is anticipated that the majority of leave that is reasonably denied will be due to essential staff shortages and a requirement to be physically present either during the leave period requested or shortly after. It is important to remember, however, that your employees must be allowed to take annual leave within 12 months of their entitlement arising, so perpetual rejection of leave is not permitted.

An argument that a returned employee could present a health and safety risk is unlikely to be considered ‘reasonable’ given that the government is already enforcing stringent public protection measures such as quarantine, self- isolation and ‘trans-Tasman bubble’ pauses. This could change, however, if the government relaxes protection measures and increased responsibility falls on employers to provide a safe workplace.

Someone stranded!

What happens when you have granted annual leave and your employee is stranded overseas or in MIQ? When can you terminate their employment and move on?

Again, the principle of acting in good faith will be the prevailing principle and each situation will be unique.

Some of the most relevant factors to consider are:

  • How long is your employee stranded? If it’s only an additional two to four weeks for MIQ, it’s likely you will have to make do until their return. The appropriate time frame before termination will vary, but in almost all circumstances it would be months before termination was considered a reasonable response.
  • Can your employee work remotely in some capacity? If so, you should support them to work in this way. Dismissing an employee who can work remotely (even if it’s less desirable than in person) would likely be valid grounds for a personal grievance claim.
  • Can your business take alternative measures such as hiring casual or fixed-term contractors? If so, it is likely the role will need to remain open for a much longer time frame before terminating your employee.

During the time your employee is stranded overseas, you must continue to communicate proactively with them and consult with them on how to best rectify the situation. If you have a Covid policy (which is now recommended  for all businesses), this should be followed.

If, after considering all relevant information, it is unlikely that your staff member can return in an acceptable time frame, you may be able to terminate their employment in accordance with their employment agreement.

Employers must ensure their staff have appropriate opportunities to rest and enjoy their accrued entitlements and, generally, this leads to a healthier and more engaged workforce. However, business disruptions can and do happen. Ensuring your Covid policy is up-to-date and undertaking good consultation with employees can lay the foundation to manage whatever circumstances arise.

If you have any difficult annual leave conversations ahead and would like additional support, please contact us.

[1] Privacy Act 2020 Principle.

 

 

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

Business briefs

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Charges against Bunnings dismissed

Certain rules for interpreting whether broad marketing statements comply with the Fair Trading Act 1986 (FTA) were clarified in a 2021 case brought by the Commerce Commission against Bunnings[1].

The Auckland District Court dismissed charges that Bunnings had misled consumers regarding its prices when it made statements such as ‘lowest prices are just the beginning’, ‘lowest price guaranteed’, ‘lowest prices on all your DIY jobs’ and ‘unbeatable prices’. The Commerce Commission claimed such statements breached the FTA by misleading consumers into thinking Bunnings had the lowest price on all of its items, when in practice it did not.

In finding Bunnings successful, the court considered the following key factors:

  • Bunnings routinely conducted surveys of competitors’ prices and had processes for adjusting prices if a competitor’s pricing was found to be cheaper
  • A reasonable consumer would be aware that a store the size of Bunnings could not know on a daily basis exactly what competitors were charging for every product and that a small number of products may be more expensive
  • The guarantee to beat a lower priced product by 15% implied that some items may be cheaper elsewhere, but it provided a means to ensure consumers could get a lower price at Bunnings, and
  • There was no evidence that consumers had complained of being misled by Bunnings and only one of its competitors had made a complaint.

This case provides guidance to businesses when making broad marketing statements. You should, however, be aware of your obligations under the FTA; if you are unsure about any aspect of the legislation, we can help.

Directors found trading recklessly may face multiple fines

In October last year, the High Court found a director who traded recklessly not only breached his directors’ duties under the Companies Act 1993, but also breached the Fair Trading Act 1986 (FTA)[2].

Panama Road Development Limited (PRDL), a property development company, was encountering delays on a project and its funding was due to expire. Mr Gapes, a director of PRDL, was working to secure further funding. Dempsey Wood Civil Limited (Dempsey) had provided services to PRDL and Mr Gapes assured Dempsey that PRDL had funds to pay for ongoing work. However, PRDL was unable to secure further funding and was put into liquidation.

There were insufficient funds in the liquidation to pay Dempsey for its work, so Dempsey sued Mr Gapes personally. Dempsey alleged that Mr Gapes had not only breached his directors’ duties, but that he also breached the FTA by misleading Dempsey into thinking PRDL had sufficient funds to pay it.

The High Court ordered Mr Gapes to pay $100,000 to PRDL for the breach of his directors’ duties, and an additional $280,000 to Dempsey for breaching the FTA.

This judgment is good news for unsecured creditors who may have an additional avenue for recovering funds in an insolvency situation. It is also a cautionary tale for directors to be careful about any representations they make regarding the financial position of a company should it encounter financial difficulty.

Important upcoming legislation drafted

Two bills introduced in Parliament in 2021 will, if passed, make small but significant changes to the law as it relates to business.

Company law: The Companies Act 1993 requires directors to act in the ‘best interests’ of the company, which was traditionally understood to mean maximising return to shareholders.

If passed, the Companies (Directors Duties) Amendment Bill will clarify that a director may also consider environmental, social and governance factors when determining the best interests of the company,  including:

  • Recognising the principles of the Treaty of Waitangi
  • Reducing adverse environmental impacts
  • Upholding high standards of ethical behaviour
  • Following fair and equitable employment practices, and
  • Recognising the interests of the wider community.

Sexual harassment: The Employment Relations (Extended Time for Personal Grievance for Sexual Harassment) Amendment Bill, if enacted, will extend the time frame for raising a personal grievance for sexual harassment from 90 days to 12 months in an effort to recognise that being exposed to sexual harassment can be traumatic and may take time to process before coming forward.

While it’s expected both bills will become law, they are currently awaiting their first readings and may be changed before being enacted. We will keep you posted.

[1] Commerce Commission v Bunnings Limited [2021] NZDC 8918.

[2] Dempsey Wood Civil Ltd v Gapes [2021] NZHC 2362.

 

 

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

Water Services Act 2021

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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

‘Nuisance’ is still relevant in court

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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

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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

Lockdown rent relief – are there remedies?

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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

First Job, Latest news, Your Own Business
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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

Digital Boost – a tool for small business

First Job, Latest news, Your Own Business
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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

Your Own Business
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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

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