Client Update – June 2022

Client Update – June 2022

Finally, we bring you a client update that does not canvass COVID-19 related issues:

New whistleblowing legislation

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

‘Serious wrongdoing’ now includes behaviour that is a serious risk to the health and safety of any individual.  Also, the protections in the Protected Disclosures Act will apply to the person making the disclosure even where the person is wrong, and there is no serious wrongdoing, unless the disclosure is made in bad faith.

The protections in the Act extend to someone who discloses information in support of, or relating to, a protected disclosure (again unless that is knowingly false or the person is acting in bad faith).

Contracting out – any provision in an agreement that stops someone from disclosing information that could support or relate to a protected disclosure will have no effect.  This would presumably include confidentiality clauses in settlement agreements.

Disclosure can now be made directly to an appropriate authority at any time.  There are a number of other changes – we recommend that you seek advice if you are unsure of the implications for you.

Engaging independent contractors

Changes to the Fair Trading Act 1986 come into force in August 2022.  Those may have consequences to businesses engaging independent contractors.  “Trade” in this legislation includes (but is not limited to) any business, industry, profession, occupation etc relating to the supply of goods or services.

Protections against unfair contract terms have been extended to cover standard form small trade contracts.  ‘Standard form’ means ‘take it or leave it’ contracts with no opportunity for negotiation.  ‘Small trade contracts’ are between parties engaged in trade (not a consumer contract) where the value is less than $250,000 annually, from when the relationship first starts.  Unfair contract terms might include a contract that allows one party to terminate, or vary the terms, but not the other.  There is also a new prohibition against unconscionable conduct and various other changes.

Potential employment law changes

Employment law bills

The Employment Relations (Extended Time for Personal Grievance for Sexual Harassment) Bill is currently before Select Committee.  If enacted, this would extend the timeframe for raising a personal grievance for sexual harassment from 90 days to 12 months.

The Fair Pay Agreements Bill is also before Select Committee.  This provides a framework for collective bargaining for fair pay agreements for minimum terms and conditions of employment across industries or occupations, rather than just between unions and particular employers.

A new bill that would remove the restriction on trading and selling alcohol on Good Friday and Easter Sunday had its first reading in late May.

Restrictions on restraints of trade for lower-paid workers?

There are a number of employment related bills in the Parliamentary ballot.  One to watch out for is MP Helen White’s Employment Relations (Restraint of Trade) Amendment Bill.  This would restrict the use of restraint of trade clauses for lower-paid workers.  If enacted, restraints of trade would have no effect if an employee earns less than three times the minimum wage.  Employers would be required to pay half the employee’s weekly earnings for each week that the restraint of trade remains in effect, and the maximum duration for any restraint would be 6 months.

Compulsory redundancy compensation?

The Government is considering public submissions on the proposed Income Insurance Scheme, designed by the Government, Business New Zealand and the New Zealand Council of Trade Unions.  If introduced, permanent employees made redundant or who have to stop working because of a health condition or disability, would get four weeks’ notice, and their employer would continue to pay wages for four weeks at 80 percent of their usual salary when the job ends.  After this second month, the income insurance payments would begin, again at 80 percent of their usual salary, up to the current ACC cap. The payments from the employer would be in addition to any other redundancy provisions in an employment agreement.

The scheme would be administered by ACC, and funded by levies on wages and salaries, with both employers and workers paying an estimated 1.39% each.  The proposal includes up to twelve months of support for re-training.

Case law

Employees vs volunteers:  the Employment Court’s recent decision involving the Gloriavale Christian Community examined whether three people born into the community, who began working at the age of six, were in fact employees.

The question of whether an employment relationship exists involves looking at the real nature of the relationship – the label used by the parties to describe the relationship is not determinative.  Each case will depend on its own particular facts.

The defendant argued that work done by the plaintiffs between the ages of six and 14 were chores, that work done when they were 15 was part of their schooling, and work undertaken from 16 years of age was done on a voluntary basis.  The Court disagreed, and held that from the age of six, the plaintiffs were employees.   The work undertaken as children was strenuous, difficult and at times dangerous, was for the benefit of Gloriavale’s commercial activities, and were performed over a long period of time. It could not be considered chores.  At age 15, the work undertaken could not be described as educational work experience, and for other reasons, the work undertaken from the age of 16 could not be considered volunteer work.

There are a range of arrangements that sometimes call into question whether there is in fact an employment relationship, for example, students, trainees, interns, independent contractors, volunteers, and people following a spiritual calling.  We recommend seeking advice if in any doubt about whether an employment relationship exists: significant consequences in terms of wages, leave, and other minimum entitlements can arise.

Restraint of trade: earlier this year, the Employment Relations Authority issued its determination in Tova O’Brien v Discovery New Zealand Limited.   Ms O’Brien left Discovery for a new role at Mediaworks.  She argued they were not in competition as they both operated in different media formats and targeted different audiences, and therefore her restraint should not apply.   Discovery succeeded in upholding the restraint but lost on the duration of the restraint.  The notice period was taken into account – the notice period, plus the restraint period, together came to 6 months which was longer than necessary to protect Discovery’s proprietary interests. The restraint of trade period was reduced to 7 weeks (on top of the 3 months’ notice period).

Holidays Act 2003: for those that may have missed it, the Court of Appeal overturned the Employment Court’s decision in Metropolitan Glass & Glazing Ltd v Labour Inspector, Ministry of Business and Innovation and Employment.   The Court of Appeal held that Metropolitan Glass’ short term incentive bonus scheme was a discretionary payment and did not form part of the “gross earnings”.  The incentive scheme was not part of the calculation for annual leave holiday payments.New Zealand Law Awards 2022

Nominations for these awards are now open.  We would be grateful if you have the time, and are prepared, to nominate us for the employment law category of the firm awards.  If so, the link is below:

For any advice from our employment law specialists, please contact us via email or by mobile:

Paul McBride (Partner) – or 021 614 215

Guido Ballara (Partner) – or 021 782 891

Frances Lear (Senior Associate) – or 021 237 7811

Saadi Radcliffe (Solicitor) – or 021 557 236

Alec Nash (Solicitor) – or 021 352 288


Disclaimer – this newsletter is necessarily brief and general in nature.  You should therefore seek professional legal advice before taking any action in relation to any matter addressed above.  © McBride Davenport James

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