Edmonds Judd

FPA

Fair Pay Agreements Repeal Act 2023

Commercial, Employment, First Job, Your Own Business
0

What this has meant for you

Many people welcomed the introduction of the original Fair Pay Agreements Act 2022 (FPA) to set minimum pay and working conditions across various sectors. Others worried it could limit flexibility or create extra compliance costs. Now, the Fair Pay Agreements Repeal Act 2023, enacted just over a year ago, has turned back the clock on these industry-wide agreements.

 

Why repeal?

The main reason for the repeal stemmed from a change in government policy. The FPA, introduced by the previous government, aimed to improve wages and standardise conditions for employees in historically low pay sectors such as cleaners, hospitality workers and early childhood educators. Critics argued that this approach was too broad, as it could force employers to follow terms that they hadn’t agreed on, leading to reduced flexibility in workplaces.

 

By repealing the FPA, the current government signalled that pay and conditions should largely be negotiated between individual employers and employees or through standard collective bargaining processes rather than a universal, sector-wide system. Supporters of the repeal believed this would allow businesses to be more agile and able to respond quickly to changing market conditions.

 

Implications for employees and unions

For employees who would have benefitted from agreements under the FPA, the repeal has meant a return to individual employment agreements or traditional collective bargaining through unions. Workers in industries where wages are typically low may feel the difference most, especially if they were expecting a lift in pay or improved working conditions under the FPA process.

 

Unions have lost a tool for coordinating negotiations. The FPA regime gave unions a clear pathway to start negotiations on behalf of employees across an entire sector, even if there was initially low union membership. Without the FPA, unions are now focussing again on bargaining at a company level or encouraging voluntary industry-wide agreements. This may be a setback for union-led initiatives to raise pay and conditions in sectors with historically vulnerable workers.

 

Implications for employers

Employers now have more freedom to negotiate pay and conditions directly with their teams, without the worry of being locked into sector-wide rules. Businesses that operate in specialised markets or have unique staffing needs may welcome this. They can continue to tailor employment agreements to suit their circumstances, offering different pay structures, benefits or flexible arrangements.

 

On the other hand, before the repeal some employers saw a benefit in a level playing field for everyone in their industry. If all competitors had to meet the same pay and conditions then there was less concern about undercutting each other on labour costs. Those businesses may now have to keep a closer eye on what others in their sector are doing, particularly if new entrants offer lower pay.

 

Looking ahead

With the Fair Pay Agreements Repeal Act 2023 having been enacted just over a year ago, any ongoing negotiations under the FPA system may have continued in the same manner. In many cases, however, collective bargaining would have reverted to the familiar structures of individual employment agreements or smaller-scale union negotiations.

 

Unions and advocacy groups are now working on other ways to improve working conditions, such as lobbying government for different legislation or regulations. Meanwhile, most businesses wanting to be seen as good employers have developed their own internal policies to offer competitive pay and benefits. Despite the repeal, it’s unlikely the debate over fair pay will disappear. The broader issues of cost of living, pay equity and income inequality remain hot topics, particularly for Māori, Pasifika, women and young people.

 

Final thoughts

By repealing the FPA, the government returned New Zealand’s industrial relations framework to a more traditional form of negotiation. That shift has had significant effects on those who had hoped the FPA would boost minimum wages and conditions.

 

Whether you are an employee wondering about your pay, a union leader planning next steps or an employer seeking certainty around labour costs, the key takeaway is the same: make sure you understand your current rights and obligations, and be ready to adapt.

 

If you’re unsure about how this change has affected you, do talk with us. With the future of workplace legislation still in flux; staying informed and being proactive will serve you best.

 

 

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

Relationship Property Claims by Children – Part 2

Kids, Property, Relationships
0

Our last article discussed claims by a partner on separation or death.

 

Conversely, some blended families want to provide for their new partner on their death and seek to minimise the risk of a claim by their respective children.

 

Under the Family Protection Act (FPA), parents owe a moral obligation to make adequate provision for their children in their Will.

 

To minimise the risk of FPA claims, couples may change the ownership of their assets so that those assets do not form part of their estate and are not open to claims under the FPA.

 

Some common ownership structures include:

 

  1. Transferring property into a discretionary family trust; and/or
  2. Transferring property into joint names so that it passes by survivorship on death.

 

These ownership structures make it more difficult for children to make claims against estates.

 

However, section 88 of the Property Relationships Act (the Act) allows an executor to make an application for division of relationship property against the surviving partner, where refusing them the right to do so would cause a “serious injustice”. If an executor is not willing to make the claim, the deceased’s children may apply to the court to have them removed.

 

If most relationship property is jointly owned or was transferred to a trust during a relationship, then that could meet the threshold for a serious injustice. In these circumstances the court may divide relationship property so that the estate has property available for the children to make an FPA claim.

 

A contracting out agreement is one of the only tools that can help to prevent these types of claims.

Libby McDonnell

Decision in ‘Alphabet case’ could change succession landscape

Kids, Property, Relationships, Trusts
0

Significant issues raised

In June 2023, the Supreme Court heard the ‘Alphabet case.’ To understand the significance of what is at stake in this case, it is worth considering the facts that gave rise to the litigation and the High Court’s decision.

 

Abuse of A, B and C by Mr Z

Mr Z and Ms J married in 1958 and separated in 1981. They had four children: G (1960-2015), A (b 1961), B (b 1963) and C (b 1971).

Mr Z severely abused Ms J and the children physically, psychologically and sexually. A was repeatedly raped between the ages of seven and 13, but she did not disclose the abuse to anyone until 1983. She did not tell her mother until 1991. A was unable to face taking action against Mr Z.

Mr Z died in 2016 leaving an estate valued at $46,839. He had, however, settled a trust two years previously for the express purpose of preventing his family from “chasing” his assets, to which he had gifted his home and investments worth $700,000. The children were not beneficiaries of Mr Z’s estate or the trust; rather, the trust’s beneficiaries were the children of Mr Z’s former partner.

 

Children’s claims

That should have been the end of the matter because the Family Protection Act 1955 (FPA), that allows children to challenge their parents’ wills, only applies to assets a deceased owned in their personal names; it doesn’t apply to trust assets.

However, the children argued that their father owed them a fiduciary duty and, that because of the abuse, he continued to have obligations to them even after they became adults. They said that Mr Z had breached that duty when he gifted his home and shares to the trust in order to prevent his children from claiming against those assets under the FPA.

 

In the High Court

In the High Court,[1] Justice Gwyn agreed with the children and said they could bring claims under the FPA against the assets that had been transferred to the trust.

The trustees of Mr Z’s estate and trust appealed to the Court of Appeal.

 

Court of Appeal divided over case

The Court of Appeal[2] accepted that Mr Z owed a fiduciary duty to his children and that he breached that duty when he abused them. The issue was whether Mr Z continued to owe those fiduciary duties to his adult children at the time he gifted his assets to the trust.

The majority of the Court of Appeal judges disagreed; they said that the appropriate remedy for the breach of fiduciary duty was equitable compensation (and the children had run out of time to make that claim).

However, one judge said that in some circumstances the inherently fiduciary relationship between a parent and a child may continue after a child becomes an adult (for example, in the case of a severely disabled child).

The judge (who was in the minority, so their views don’t affect the final outcome) decided that A’s position, owing to the abuse she suffered, was analogous to that of a disabled child. Mr Z therefore had a continuing duty to take steps to remedy, as best he could, the enormous harm he inflicted on A, not only when she was living in his care, but also during her adult life. This meant he was required to protect her interests when considering gifting his principal assets to the trust, and failed to do so.

 

Decision awaited

The Supreme Court will tell us whether Mr Z owed a continuing fiduciary duty to A into her adult life because of the abuse he perpetrated on her. Many commentators believe that it is stretching the concept of a child/parent fiduciary duty too far.

If legal principles cannot evolve, however, a situation may emerge where extraordinarily meritorious claimants are left with no effective relief, simply because too much time has passed, and/or because their parent transferred their assets into a trust to prevent claims after they have died.

That raises two questions:

  1. Should time count against people such as A, who have been so seriously abused by a parent?
  2. Should parents be allowed to transfer their assets into a trust in order to prevent their children making claims after their death?

[1] [2021] NZHC 2997.

[2] [2022] NZCA 430.

 

 

DISCLAIMER: All the information published in Trust 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 Trust 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

Business briefs

First Job, Latest news, Your Own Business
0

Fair Pay Agreements Bill on the table

The long-awaited Fair Pay Agreements Bill was recently introduced in Parliament proposing a framework for collective bargaining of fair pay agreements (FPA).

What is an FPA? An FPA is an agreement that establishes mandatory minimum employment terms (such as wages or hours of work) across an entire industry or occupation that exceed the minimum entitlements outlined in employment law. Currently, an employer and employee are free to negotiate the terms of employment without being subject to fair pay obligations, provided the minimum entitlements in employment law are met.

What is the FPA process? A union initiates the bargaining process by applying to the Ministry of Business, Innovation and Employment (MBIE). If MBIE approves the application, the union begins bargaining with an employer association (that represents employers in the relevant industry).

What does this mean for employers? If the negotiation is successful, all the employers in an industry covered by an FPA would have to provide their employees with at least the minimum entitlements required by the FPA, regardless of whether the employer engaged in the bargaining process.

The Bill also proposes granting employees and unions other rights such as the right for a union to enter a workplace without an employer’s consent to meet with employees to discuss FPAs. This may be confronting to some employers, particularly smaller businesses that may be new to collective bargaining.

Next steps: Public submissions on the Bill closed on 19 May 2022, so we now await the Select Committee’s report. The Bill is expected to become law by the end of 2022.

Proposed legislation to address modern slavery and worker exploitation

The government has released a consultation paper proposing new legislation to reduce modern slavery and worker exploitation in New Zealand and internationally. As currently proposed, the legislation may have a material impact on the way businesses operate in this country.

The paper defines ‘modern slavery’ as severe exploitation that a person cannot leave due to threats, violence or deception, including forced labour, debt bondage, forced marriage, slavery and human trafficking. ‘Worker exploitation’ is behaviour that causes material harm to the economic, social, physical or emotional well-being of a person, which essentially includes non-minor breaches of New Zealand employment standards (such as providing no less than minimum wage or annual holiday entitlements).

The legislation as proposed would require:

  • Organisations to take action if they become aware of modern slavery or worker exploitation in their operations or supply chains
  • Medium and large organisations to report on steps they are taking to address modern slavery or worker exploitation in their operations or supply chains, and
  • Large organisations to undertake due diligence to prevent, mitigate and remedy modern slavery and worker exploitation in their operations and supply chains.

Although this proposed legislation is not yet law, businesses should start considering now how these changes will affect the way they operate, and the consequences associated with any breach such as monetary penalties and reputational risk.

Incorporated societies – what’s next?

After many years of consultation and deliberation, the new Incorporated Societies Act 2022 was finally passed on 5 April 2022. The Act’s changes will affect all of New Zealand’s 23,000+ societies.

The legislation puts in place a modern framework of legal, governance and accountability obligations for incorporated societies and the people who run them.

All existing societies have at least until 1 December 2025 to ensure their constitution complies with the new requirements and to apply to re-register under the new Act. Societies that do not re-register by that date will be removed from the register.

Although the Act is now in place, there are still regulations to be developed before existing societies can start the re-registration process. These regulations are expected sometime in the next 12 months.

We can help if you are unsure of your obligations under the Act or would like some help with the transition.

 

Next stage of vaping legislation coming into effect

Changes made to New Zealand’s vaping laws are being phased in, with the next changes taking effect over the coming months. The latest changes require all packaging for smokeless tobacco products and vaping products containing nicotine to include specific labels warning of the health dangers and addictive nature of the products. Critical dates for this labelling are:

  • 11 May 2022: manufacturers and importers (should be achieved by now)
  • 25 June 2022: distributors, and
  • 11 August 2022: general and specialist vape retailers.

The staged approach is to allow for stock rotation of products with non-compliant packaging.

You can find more information on vaping regulation here or don’t hesitate to talk with us if you need some help.

 

DISCLAIMER: All the information published in Commercial eSpeaking is true and accurate to the best of the authors’ knowledge. It should not be a substitute for legal advice. No liability is assumed by the authors or publisher for losses suffered by any person or organisation relying directly or indirectly on this newsletter. Views expressed are those of individual authors, and do not necessarily reflect the view of Edmonds Judd. Articles appearing in Commercial eSpeaking may be reproduced with prior approval from the editor and credit given to the source.
Copyright, NZ LAW Limited, 2021.     Editor: Adrienne Olsen.       E-mail: [email protected].       Ph: 029 286 3650