Recently, a Bay of Plenty kiwifruit contracting business was found to owe more than $226k to its workers. It incurred additional penalties for breaching employment law. With cases like this in mind, it is vital that businesses understand the importance of having a fully compliant employment agreement in place and that workers receive their minimum legal entitlements.
The Employment Standards Legislation quietly came into effect from 1st April 2016, which made five key amendments to employment law. Although subtle, these changes can have a major impact for your business and should be considered seriously.
The changes to employment law include:
- an increase to the minimum wage (now $15.25 per hour);
- extended parental leave provisions;
- addressing hours of work or zero hour contracts;
- record keeping obligations for employers; and
- tougher sanctions for breaches of employment legislation.
Compliance to the new standards is mandatory from 1st April 2016.
Costs associated with non-compliance are rising. In my experience, such sanctions are largely avoidable, but employers are often reactive to employment issues, addressing them as they occur, instead of being proactive and taking measures to avoid them in the first place. It is vital that business owners understand and accept their legal obligations early enough to avoid such costly penalties.
Unfortunately for business owners, employment law is an area that is constantly changing. Whether you are a small business or large corporation, possessing knowledge of employment law and good HR practice is essential for business success. The number of employment law issues you have to be aware of can be overwhelming. I have created some tips to consider to help avoid future problems.
- Closely monitor patterns of work being performed by any employee through regularly checking the wage, time and leave records
- Formally change the employment status of any employee from casual to permanent-part time the moment their hours of work become regular in practice
- Ensure the correct employment agreement is always in place
- Always calculate holiday pay in accordance with the provisions of the Holidays Act 2003
- Ensure payment for public holidays is always calculated in accordance with the Holidays Act 2003, namely the employee is entitled to a paid holiday when any of the public holidays specified in the Holidays Act 2003 fall on a day when the employee would normally be required to work
I see business owners making the wrong decisions on a daily basis that could expose their company to expensive legal action. All that is needed is the development of a better understanding of their employment obligations.
It doesn’t matter how small your business is, every employer is obligated to fully comply with these changes and indeed all employment law. Please remember, tougher sanctions have been introduced and ignorance will not be accepted as a reasonable explanation for any breach. Employers must get it right!