Employment law: how to do right by your workers

Despite a recent spate of businesses caught out for deliberate breaches of employment regulations, most Kiwi business owners want to do the right thing. Here’s how you can stay on the right side of the law.

In December last year, we learned that more than 150 employers had been added to the Labour Inspectorate’s naughty list throughout 2017 (although, the technical term used was ‘standdown list’) for breaching minimum employment standards. And it seems that, since the beginning of this year, the media has been brimming with the plights of exploited and underpaid workers.

The cases aren’t isolated to any type of business or industry sector, either. Whether it’s in agriculture, hospitality or retail, there are local and migrant workers who have been let down by employers.

So, what’s going on? Is this a case of New Zealand’s business community acting in bad faith to reduce labour costs, or is there general confusion over how employment law should be applied in their businesses?

According to Jason Ennor, CEO and co-founder of the Auckland-based MyHR, the reality is likely to be a little of both.

“There’s a tendency in the media to automatically assume the worst of employers,” Ennor said. “But the reality is that most business owners want to do the right thing. They know it’s better to do the right thing by their workers because it’s so hard to find and maintain good employees that add value to their businesses.

“Among that group, there are a few business owners who can unknowingly get tripped up by employment legislation, and this can represent an additional cost to their business to get sorted out.”

Unfortunately, the number and severity of some of the cases presented in the media make it clear there are some shoddy operators out there.

“You read about some of these business owners who have targeted vulnerable, migrant workers in order to minimise one of their most significant costs, which is labour,” Ennor told The Pulse.

“When you see these extreme cases of people working for less than the minimum wage and, in some cases, having to pay back some of their wages to their employer for fictitious reasons, it’s clearly deliberate and it’s incredibly disappointing.”

For that majority of business owners who want to maintain a sustainable, lawful business model, knowing where to turn for accurate information is critical.

Seeking affordable, practicable advice

Ennor’s business, MyHR, is designed as an affordable port of call for businesses of all kinds and sizes to seek employment advice without having to employ their own HR staff or spend large amounts on fees to lawyers and specialist HR consultants. But he’s also first to admit that businesses have access to plenty of free, accurate advice direct from the Ministry of Business, Innovation and Employment (MBIE).

“The MBIE has a free helpline to answer your questions, so just ring and ask them for advice,” he said. “But they also have a really useful website. It’s not just longwinded how-to guides on there, they have highly functional tools for business owners like their employment contract builder.”

Visitors to the MBIE page can find out just about anything they might need to know when it comes to matters of employee entitlements, health and safety and much more besides, with sections relevant to each industry sector.

Sector-specific advice may be sought from the likes of:

“These industry groups offer cost-effective support in the area of employment law, on top of a whole host of other services, so there’s no excuse for getting this kind of stuff wrong.”

Get it right or pay the price

While employment law may sound complex and intimidating, this isn’t really the case and, as Ennor explained, New Zealand’s legislation in this area is some of the simplest of any country.

“In all Common Law countries like New Zealand, Australia and the UK, HR-related laws are relatively straightforward, they’re clearly prescribed and they’re based on principles of fairness and good faith.

“In Australia, some of the law around employee entitlements may differ from state to state and understanding the award rates can be a little difficult, but here in New Zealand it’s even simpler than that. We literally have a single, minimum wage of $16.50 for all adults. Full-time employees receive four weeks of leave per annum, public holidays as well as sick and bereavement leave.”

Penalties for severe breaches of employment law can be crippling to a business, with employers facing tens or even hundreds of thousands of dollars in fines and – in some extreme cases – prison time.

“By far the most common sentences handed down are the kinds of steep finds that can put people out of business,” Ennor said, “but there have also been some examples of employers given prison sentences.

“And with the current government vowing to increase the number of auditors working to ensure businesses remain compliant in these areas, I expect we’ll see plenty of operators redoubling their efforts to make sure they’re following the letter of the law.”

Employment law: quick tips for business owners

  1. New Zealand employment legislation is simple – You don’t have to put a hole in your budget to get up to speed, just start with the MBIE website and give them a call if you’re unsure on any point
  2. The Holidays Act 2003 could be a sticking point – According to Ennor, this is the most common part of employment law that confuses business owners. If you’re at all in doubt about any element and need targeted advice, this may be something worth contacting your relevant industry association for, or seek a professional
  3. Cutting corners will lead to heavy penalties – While margins are tight and wages represent a significant overhead, there’s no excuse for taking advantage of your employees and it’s only a matter of time before you’re exposed. If business is tough now, it’ll be even tougher then!

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