Drones: know the rules

Your Own Business

Helping employers recoup training costs

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

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

What is a bonding agreement?

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

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

Wages Protection Act 1983

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

be considered a breach of the WPA.

Workplace health and safety

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

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

Making clauses work

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

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

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

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

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

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

Post-Covid working world

July 19, 2021

Your Own Business

Keep employment agreements and policies up-to-date

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

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

Changes to hours of work and remuneration

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

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

Working from home

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

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

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

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

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

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

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

Overseas travel

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

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

Final thoughts

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

Wellbeing Budget 2021: Key points

June 4, 2021

House, Kids, Latest news, News, Your Own Business

A better-than-expected economic recovery after the scourges of Covid has enabled the government to propose significant investment in health and welfare, housing (particularly for Māori), infrastructure to rebuild from the impact of the pandemic and to continue to make this country safe from the virus. Continue reading

To jab or not to jab?

June 4, 2021

Your employee doesn’t want a Covid vaccination?

While many Kiwis are queuing up and eagerly awaiting their Covid vaccinations, not everyone is willing to take ‘the jab’. Recent headlines of sacked border staff who refused their Covid vaccinations have highlighted the difficulty many employers will face in deciding if their staff can reasonably be required to be vaccinated.

Over the fence

August 25, 2020

Tougher firearms legislation now in force

The Arms Legislation Act 2020 received Royal Assent on 24 June 2020 and came into force immediately. The legislation imposes tighter controls on the use and possession of firearms. A key change is the introduction of a firearms registry, which will track how many firearms are in legal circulation, who holds them, who is selling them and who is buying them. People holding a firearms licence will be required to update the registry as they buy or sell guns.

Further changes include:

Postscript

August 14, 2020

Health Issues, Kids, Latest news, Relationships

Smoking in motor vehicles with children now banned

Smoking in motor vehicles when children under the age of 18 years old are present is now prohibited. The passing of the Smoke-free Environments (Prohibiting Smoking in Motor
Vehicles Carrying Children) Amendment Act 2020 has made this an offence.

Police will now have the discretion to issue on-the-spot fines of $50 for those who are caught smoking in cars with children, or they may issue warnings or refer people to stop-smoking agencies.

Action Plan for Healthy Waterways

February 3, 2020

Government’s proposal to clean up waterways

Water quality is no new issue in Aotearoa New Zealand, but it is a growing one. On 31 October 2019, the government closed submissions on the Action Plan for Healthy Waterways. The Plan has since been referred to an independent advisory panel that will consider the public’s submissions and report back to the government. The panel consists of five members with expertise in a range of areas including dairy farming, environmental law, hydrology and water management.

Introducing the Plan, Environment Minister, David Parker spoke of the loss of New Zealand’s once-swimmable rivers and lakes. Damien O’Connor, Minister of Agriculture and for Rural Communities, commended the effort made by farmers to date:

Property Briefs

June 17, 2019

Healthy Homes Standards: what you need to know

Becoming law in 2017, the Healthy Homes Guarantee Act establishes regulations to improve the quality of rental housing in New Zealand.

Following public consultation in 2018, the Healthy Homes Standards Regulations were approved by Cabinet on 13 May; you can find them here. The compliance timeframes in the regulations require rentals to comply with the regulations in all tenancies entered into after 1 July 2021 and all rentals will need to comply by 1 July 2024.

Postscript

May 20, 2019