As a small business owner, you have to wear a lot of different hats – finance, marketing, sales and people management. If you are like me, you didn’t get into your business to do accounts or worry about how you are going to get your ad words in google to work. The reality is that when you are growing your business you can’t always afford a specialist to help and you have no choice but to do it yourself.
When it comes to managing staff most business owners simply want their staff to get on with the job. When things go wrong (and they do) they find themselves in a bit of a bind. Let’s imagine that you have discovered that one of your staff members has stolen a product from your retail shop. You discover the loss during a stock take and review your camera footage to see what happened. You can see your employee taking the item and putting it in their bag. So, what now? Your first reaction is going to be to call them an tell them what you found and tell them they are fired – you would be justified right? Well kind of.
In NZ employment law you need to give the employee a chance to tell you their side of the story, they need to have all the evidence that you have and have the chance to have a representative or support person at this meeting. You also need to assume that they are innocent until you have all this information. A hard thing to do if you have camera evidence!
While you would be justified in terminating their employment for theft but if you don’t follow the process you would still end up losing a personal grievance claim in the Employment Relations Authority, which can be very costly. Costs for losing a Personal grievance can run up to $30,000 when you factor in paying lost wages (usually 3 months lost wages) and hurt and humiliation payments of between $17,000 to $20,000. This seems ridiculous when you consider that the employee stole from you.
Getting this process right is both simple (with a little specialist help) and much cheaper than paying the personal grievance costs. So, you may think that getting help will be expensive, but it will save you in the long run.
The Employment Relations (Triangular Employment) Amendment bill is currently in process in parliament. Based on the premise that labour hire workers are being exploited and not afforded the same rights as their permanent counterparts, this bill seeks to redress this “loophole”. I am sure that every business at one time or another has needed a short-term temporary worker and engaged a labour hire company or temp agency to provide that assistance. What this bill will mean to employers if it is passed is that a temporary staff member engaged through an agency can bring a personal grievance against both companies.
Usually if you hire a temp through an agency you can give one days’ notice that you no longer require their services – and you don’t need a reason like you do for a permanent employee. Now, the employee will be able to raise a personal grievance against the temp agency and the company that they temped for, for unjustified disadvantage and unjustified termination. This bill places this whole industry in jeopardy and adds incredible risk to small businesses.
I think we are about to see a massive change in both the recruitment industry and temp labour industry. While the final bill has not been enacted yet this will be making temp agencies very nervous about their impending risk. Clients will no longer be able to terminate the services as needed and we may even see temps being exposed to the same disciplinary processes and restructuring processes that permanent employees need. This will completely remove the flexibility in the industry and tie businesses hands. What was once a great back up for unexpected absence or increased production need will now become a mine field of employment legislation and risk for both businesses and agencies.
We will keep an eye on the bill’s progress and update you as needed. Call if you have any questions or concerns.
I usually write a super work focused blog for my website once a month, but this month I am going to mix it up. At the end of July, it was the one-year anniversary of starting my business – EasyHR. Over the last few weeks I have been reflecting on what I have learnt in the last year and I thought I would share these thoughts with you.
So, here is to the next year (and hopefully many more), hope you guys will join me on the journey!
For many businesses the loss of the 90 day trial period that the new Labour government have promised will mean a lot of changes to the way they manage staff. Under the current 90 day trial period legislation all employers are able to hire a new employee (provided that they sign their agreement before they start, they haven’t worked for you before and the trial period is in the agreement) and terminate them within their first 90 days of employment without the risk of a personal grievance for unjustified dismissal.
The proposed changes will limit the trial period to only those employers with less than 20 employees. But employers with 21 or more employees cannot use the period anymore. According to research completed by the Employers and Manufacturers Association (EMA) most employers were using the trial period to take a chance on a new employee – sometimes someone they would not have hired otherwise.
So, if you are an employer that is likely to lose your right to use the trial period what can you do instead? The general advice is to revert back to the probationary period. An employee could still raise a grievance for unjustified dismissal under a probationary period so structure is going to be very important.
I suggest that you have a very structured probationary period and you document this in your employment agreements. The clause should have three set review periods (say monthly), set performance targets based on the role and an understanding from the employee that if they do not meet these standards they may be terminated for poor performance.
That may sound quite harsh but as the EMA survey noted 90 of respondent said that they kept their employees on after the trial period and 94% of these employees stayed between 12-18 months with the company.
We will keep a close eye on the new legislation and let you all know what the final bill means for you.
I am sure that you have all seen the press around employers getting the Holiday’s Act 2003 entitlements wrong. The Ministry of Business Innovation and Employment itself identified that they had paid holiday entitlements incorrectly. This week the new Labour government announced that a review would be started into the Holidays Act – thank goodness! The MBIE website states that a new regime is at least 2-3 years away and the new or amended legislation will not absolve employers from compliance with the current Act or remove their responsibility to re-mediate workers for historical underpayments. So even through things may get easier in the future, employers will still need to resolve their current problems.
For a small business, interpreting the Holidays Act is a tough call. Most businesses (including many large businesses) have historically relied on their payroll provider to ensure that calculation of holiday pay and entitlements were correct. Many of these business are now finding that this was a mistake but without the ability to have in-house expertise is an understandable position.
So why is the Act so complicated? It was drafted 15 years ago to reflect what working practices were like at the time. As I am sure everyone is aware, these have changed and it is not uncommon for employees to work flexible hours, days or even work casually for a number of employers. The Act simply cannot be easily applied to these kinds of workers. In addition, it uses different units of measure – days for sick leave, bereavement leave and alternative holidays and weeks for annual leave. This means that your payroll system needs to perform three different calculations in three different units if measure – hours, days and weeks.
If you are a small business and your employees work varying hours and days, you need to make sure that you get some good HR advice on what you should be paying people for their holidays. Remember that if you have paid employee’s incorrectly you have to recalculate their holiday entitlements going back 6 years. This also includes employees that have left the business. This is a huge undertaking and employers are encouraged to get outside assistance in auditing their current payroll practices and assisting with the recalculation if needed.
In a recent Employment Relations Authority case an employer has been found to have unjustifiably dismissed their employee after the employee questioned why his wages were not paid on time.
You can review the case at this link if you want some more information.
In summary, the employee noticed that his salary payment had not been made by his employer. The next day he approached his employer to ask about the missing payment and an argument ensued. The employer told the employee to leave the premise and return the company property.
The employee was aware that his boss was prone to angry out bursts so decided to return the next day to discuss the situation. He met with the employer and was told that he was being made redundant.
The employee was awarded $12000 by the Employment Relations Authority but his compensation was deduced due to his contribution to the dismissal, as he knew his boss was prone to angry outbursts.
This case raises a number of issues for employers. You must follow the correct procedure when making employees redundant – the ERA will not tolerate shoddy restructuring processes. Consultation is mandatory before the decision is made. Resignations made in emotional times – known as “heat of the moment” resignations cannot be taken at face value and the employer is responsible for ensuring that they contact the employee after such a resignation (usually the next day) to see if that is still their intention.
I know that as an employer when your emotions run high and things are heated it can be hard to make the right choice, that’s why having an independent impartial employment advisor can help you make the right decision. If you need some help – call Tarryn 027 530 1255 today.
Tarryn has worked in HR for over 14 years and loves to solve problems. She is a self professed employment relations junkie! She lives in Auckland with her dedicated husband, tireless toddler and three special needs cats.