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Business briefs

Unfair contract terms regime extended to small business contracts

The Fair Trading Amendment Act 2021, which was passed into law in August, bans unconscionable conduct in trade and prohibits businesses from having unfair contract terms in their small business contracts.

The Act amends the Fair Trading Act 1986 in two key ways.

  1. Unconscionable conduct: The legislation prohibits unconscionable conduct in trade. It does not define what ‘unconscionable conduct’ is, but it does provide a list of factors for the court to consider when assessing unconscionable conduct, including:
  • The relative bargaining power between the person engaging in the conduct and the person affected by the conduct
  • The extent to which the trader and an affected person acted in good faith, and
  • Whether unfair pressure or undue influence was used.
  1. Unfair contract terms: The Act extends the existing protections against unfair contract terms in standard form consumer contracts to include small business contracts.

The legislation defines this as a contract for the provision of goods or services between businesses where the value of the relationship between the businesses is less than $250,000 (including GST).

These two changes will come into force on 16 August 2022. This gives businesses just under one year to review their small business contracts to ensure they comply with the new requirements. The Commerce Commission is expected to release guidance on what unfair terms might look like for small business contracts.

Be aware, however, that some minor changes in the legislation are already in force.

If you would like some guidance on how this legislation affects your business, please feel free to contact us.

Many welcome new sick leave provisions

One employee’s sick leave may have doubled, but another employee’s sick leave may still only be five days. How does this work?

On 24 July 2021, minimum employee sick leave entitlements increased from five days to 10 days per year[1]. Key points for employers are below.

When does the entitlement start? Not all employees will get the increase in sick days at the same time. Employees will get an extra five days’ sick leave when they reach their next entitlement date. This is either after they reach six months’ employment or on their existing anniversary.

For example, if your employee’s anniversary date was 10 June, they become entitled to 10 days’ sick leave on 10 June 2022, but until then, their entitlement remains at five days.

What remains the same?

  • Employees who already get 10 or more sick days a year will not be affected by this change
  • The maximum amount of unused sick leave that an employee can be entitled to accrue remains at 20 days, and
  • The change applies to all employees whether they are full-time or part-time.

Remember, it’s your obligation as an employer to ensure you’re aware of your employees’ entitlements.

Changes to the retention money regime for construction contracts

The new Construction Contracts (Retention Money) Amendment Bill proposes to change the way contractors hold retention money under construction contracts.

The current regime allows contractors to mingle retention money with working capital, which can result in subcontractors missing out on money owed to them if the contractor goes into liquidation. This happened in the liquidation of Mainzeal Property and Construction Limited in 2013.

The proposed legislation aims to put clear rules in place around how retention money is to be held to provide protection for subcontractors.

Key changes: The Bill proposes that contractors must:

  • Place retention money on trust as soon as possible and keep it separate from other money or assets, and
  • Hold retention money in a trust account in a registered bank in New Zealand or in the form of complying instruments (such as an insurance policy or a guarantee).

The Select Committee is expected to report on the Bill in November 2021. Contractors will need to be prepared for the changes when the Bill passes, as failure to comply could result in significant fines.

[1] Holidays (Increasing Sick Leave) Amendment Act.


Emission control

What the Zero Carbon Act means for business

One of the most significant pieces of new legislation introduced last year was the Climate Change Response (Zero Carbon) Amendment Act 2019, more commonly referred to as the ‘Zero Carbon Act’.

The legislation outlines the government’s targets over the next 30 years (by the year 2050) of net greenhouse gas emissions of zero and to reduce methane emissions by up to 47%.

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On-farm emissions reduction

Five-year joint action plan launched

On 24 October 2019 the primary sector launched the ‘Primary Sector Climate Change Commitment: He Waka Eke Noa – our future in our hands to manage agricultural emissions.’

He Waka Eke Noa kicks off a collaborative five-year joint action plan between the agriculture sector, the government and iwi with the target of decreasing farming emissions and developing a farm emissions pricing scheme. If the action plan produces satisfactory results, agriculture will not be brought into the Emissions Trading Scheme (ETS) under the proposed Climate Change Response (Emissions Trading Reform) Amendment Bill.

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Complex task ahead

In contrast to the review of the NAIT system that we discussed in our previous post, it will be challenging for the government to get a consensus on the recently announced review of the resource management system. The four leading political parties have differing views on how to manage resource management issues. In particular, the Coalition government has three partners – all of which have somewhat contrasting policy positions.

The review will be undertaken by a resource management review panel made up of people with skills in relevant areas. The panel is chaired by Tony Randerson QC, a retired Judge of the Court of Appeal. Additional members will be appointed in the coming months.

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Emissions Trading Scheme

Implications for owners of forestry blocks

New Zealand’s Emissions Trading Scheme (ETS) was established by the Climate Change Response Act 2002. The ETS was created as the vehicle for New Zealand to meet its obligations for the reduction of greenhouse gas (GHG) emissions under the Kyoto Protocol. The purpose of the ETS is to achieve a reduction in GHG emissions through emissions trading. Emissions trading is the exchange of carbon credits between those parties with surplus credits and those who are required to contribute credits as compensation for their production of GHG emissions.

Although the ETS affects nearly all New Zealanders in some way, it has significant impact if you are buying or selling forestry blocks, and/or own a forestry block. The first part of this article focuses on the implications of buying and selling of forestry lots, or land destined to be planted in forests. The second part gives you some background on the ETS, New Zealand’s obligations under the Kyoto Protocol and this country’s acceptance of the Doha Amendment. Continue reading


Welcome

Welcome to the Edmonds Judd blog. Here we update the latest news and events at both Edmonds Judd and in the legal world.

Here is the link to the latest Rural eSpeaking

Rural eSpeaking

In this issue:

  • Personal Property Securities Act Pitfalls: take care when goods are leased or being stored elsewhere
  • The ‘Moderated’ Emissions Trading Scheme: what’s the deal?
  • Over the Fence: Sharemilkers and Fonterra’s capital restructure – New minimum wage rates – Holiday entitlements for Easter – Holiday entitlements for ANZAC Day

The next issue of Rural eSpeaking will be published in mid-July.