Welcome to the Federated Farmers Employment Bulletin, your dedicated employment newsletter. This edition highlights the employment issues that we are advocating for on behalf of our members, including the extension of the 90 trial period, amendments to the current Holidays Act and our annual Farm Employee Remuneration Report in conjunction with Rabobank. To compile the Report, we will send out the Remuneration Survey for all members to complete over the next few weeks. The Report is a brilliant tool that can be used by farmers to see remuneration information specific to their sector, as well as including information on accommodation costs and total remuneration package values. Information on permanent and casual employees is also included in the final Report, as well as hourly rates and trends dating back to 2002. By filing in the Remuneration Survey you have the opportunity to ensure the resulting report is a true and accurate reflection of the current remuneration landscape and the more responses we get, the better we can reflect what is actually happening in this area.

If you have any queries relating any of the information in this edition of the Employment Bulletin or around any employment matter please call us on 0800 327 646. Federated Farmers has dedicated policy staff and employment lawyers who can advise you on employment matters. We also sell a range of employment contracts tailored to suit your specific needs at member only prices - just another great benefit of being a Federated Farmers member. 

MAKE SURE YOU ALWAYS HAVE AN AGREEMENT IN PLACE

Employers are required to provide every new employee with a written employment agreement. Failure to comply with the legal requirements relating to employment agreements can result in the employer being penalized (fined), which could be up to $10,000.

A well drafted employment agreement, and job description, sets out the employer's expectations for conduct and performance and provides a measure of protection for the employer. It is not just a legal requirement - it is in the employer's best interest to have an employment agreement in place.

Employment rights begin when the offer of employment is accepted. This could be a verbal offer, made over the telephone, which is immediately accepted. At that point the candidate becomes an employee but you haven't agreed any detail which may protect you.

You have just made it very difficult to negotiate an employment agreement - because the employee is already an employee, and doesn't have to agree to or sign your employment agreement.

Ideally, you should only offer employment, in writing, on the terms of the proposed attached employment agreement. This means you need to draft the proposed employment agreement so that the candidate can see in detail what you are offering. The letter of offer should advise the employee that they are welcome to take advice about the proposed agreement and that you will discuss the proposed terms of the offer if they wish to. If and when they accept the offer however, they are accepting all terms. You may discuss changes, but you are not obliged to modify the offer and any modified offer must be in writing. The candidate can accept the offer by signing the proposed employment agreement and returning one copy to the employer and you are entitled to withdraw the offer at any time and the offer can be automatically withdrawn if you have not heard from the candidate by a specified time and date.

If you want to include a 90 day trial period, you can refer to this in your letter of offer, proving your intentions from the outset helping to ensure that the trial period is effective. Remember, at this time you can only use the 90 day trial period clause if you have 19 or fewer employees and only if you have not employed this candidate before.

AND WHO IS AN EMPLOYEE?

There has been a major shift in legal thinking in recent years and consequently the rules on when a contractor can be engaged by a business owner and when the relationship should be categorised as an employee relationship.

This distinction regarding who is a contractor, and who is not, has a major impact on taxation, given withholding tax is only 20 percent, on when a dismissal can be effected and also when holiday pay, and other compulsory benefits, are required. Independent contractors are also not covered by the Employment Relations Act.

Getting this wrong can hurt you as an employer, so it is crucial to take counsel early. This is a complex decision and many judges have differing views on what is acceptable as a contractor and what is not.

Often the aims you have can be met via an employee's contract. A trial period can be used if you have 19 or fewer staff and this entitles you to dismiss without any legal right of the employee to raise a personal grievance in the first 90 days.

If you have more than 19 staff, then Federated Farmers can help you manage the employment problems you may encounter via 0800 327 646.

NEW IMMIGRATION ACT 2009 COMES INTO EFFECT ON 29 NOVEMBER 2010

The key change for employers in the Immigration Act 2009 is that holding an IR 330 form (Tax code declaration) will no longer be a ‘reasonable excuse' for employing a non-New Zealand citizen who is not entitled to work in New Zealand. Instead, an employer would have to show that they took reasonable precautions and exercised due diligence to check whether the foreign national was entitled to work in New Zealand

The Department of Labour has introduced an online system, VisaView, which will allow an employer to easily obtain information on a potential employee's work entitlement.

An employer needs to provide is a passport number and the last name of the applicant. VisaView will check this against the Department of Labour's database and in most cases provide a ‘yes' or ‘no' answer, together with any specific work conditions that may apply. VisaView also maintains a history of enquiries, which will be a useful way for an employer to demonstrate due diligence in relation to Immigration Act requirements.

The penalties for employing someone who is not entitled to work in New Zealand are serious. Under both the current and new immigration laws, penalties can be up to NZ$10,000 for allowing a foreign national who is not entitled to work in the employer's service to do that work and up to NZ$50,000 for allowing a foreign national to work while knowing that person is not entitled to do so.

Federated Farmers currently has concerns around the clarity and restrictive manner of the Holidays Act. We feel that the Holidays Act is confusing and is overly restrictive for employers, such as farmers, that do not operate under standard business hours. Because farming is a 365 day operation, both employers and employees require a range of options to ensure their respective needs are met. As a result of our concerns, Federated Farmers has recently submitted in favour of the proposed amendments, which allow employees to request that up to one week of annual leave is paid out as well as allowing for the transfer of public holidays. We believe these amendments will provide both employers, and employees, with a greater amount of flexibility in the workplace.

Federated Farmers consistently advocates in favour of more flexible and more balanced employment laws and it is this type of advocacy that has led us to reinforce our support for the current 90 day trial period in a recent submission. For all businesses, but especially small businesses, it is particularly important for new employees to quickly make a positive contribution to the business and to forge effective relationships. Put simply, small businesses cannot afford to ‘carry' non-performers, or put up with bad relationships for extended periods. In our recent submission to the Transport and Industrial Relations Select Committee we supported the extension of the 90 day provisions to all employers as well as advocating for a further extension of this period to 180 days.

Employers who employ 19 or fewer employees are able to offer trial periods of up to 90 days to new employees. Any trial period that is agreed to with a new employee must be agreed to in good faith and in writing as part of their employment agreement. The written employment agreement must also be signed by both parties at the beginning of the employment relationship.

UNDER A VALID 90 DAY TRIAL PERIOD

An employer is not obliged to notify an employee that they propose to end the employment and employer is not obliged to offer an employee the opportunity to comment upon the proposal to end the employment. However, an employer is not entitled to refuse to give an explanation for the dismissal, nor is the employer entitled to give an explanation that is misleading or deceptive.

WHAT DOES THIS MEAN?

If you are an employer you are entitled to dismiss someone under the 90 day trial period legislation, subject to having the correct agreement etc. You do not have to tell the person that you are intending to end the employment, now do you have to give them an input in the decision to end the employment or give them the opportunity to improve. However, if the employee asks you why their trial period has been terminated then you must tell them the truth - simple.

Remember, it is a legal requirement to have an employment contract for EVERY employee and Federated Farmers members can purchase these at the special price of $45 (non-member price $150). The Individual Employment Agreement can be purchased by clicking here or by calling 0800 327 646.

We often get asked by farmers if they can make a deduction from the last pay or from holiday pay for having to clean up a house they have supplied to an employee as part of their employment package. The answer is ‘yes', as long as the employment agreement makes provision for that. The Federated Farmers Individual Employment Agreement, which can be found be clicking here, includes such a provision.

These employment agreements have what is called a ‘deductions' clause, which specifies that the employer is allowed to deduct money from an employee's wages for things such as holidays taken in advance and overpayments. However, at all times deductions must be made in accordance with the Wages Protection Act 1983. The Act makes clear that an employer is required to pay the entire amount of wages to an employee, without deduction, when they fall due, subject to two exceptions.

Exception one: Where the employee has given their consent to a type of deduction being made, or where they have requested a deduction be made. This is when the Employment Agreement contains the abovementioned deductions clause. An employee is allowed, under the Act, to vary or withdraw consent by giving the employer written notice of that change and the employer is required to give effect to that notice within two weeks of receiving it, if practicable. This effectively means the employee can nullify a deductions clause at the same time they resign, however most don't do this.

Exception two: Where an employer may recover an overpayment without the actual consent of the employee where the employee has been absent from work without the employer's authority, or has been on strike, locked out, or suspended without pay.

When the employer wants to recover the overpayment, there are three rules they have to abide by. It must not have been reasonably practicable for the employer to avoid paying the overpayment, the employee has to be given notice of the employer's intention to recover the over payment and the overpayment must be recovered no later than two months after that notice is given.

For more information, call 0800 FARMING (327 646)