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FORFEITURE OF WAGES CLAUSE IN CASES OF ABANDONMENT OF EMPLOYMENT OR FAILURE TO GIVE NOTICE

21/9/2018

It seems unfair – an employer cannot dismiss an employee on the spot, even for serious misconduct, and yet an employee can abandon his employment or not give the required amount of notice, seemingly without any penalty. It makes employers feel angry and helpless. That is why clauses began to be written into employment contracts that allowed the employer to, in such an event, withhold some or all of the employee’s final wage or holiday pay. It’s a good start. However, in a case before it in 2013, the Employment Court determined that such a clause does not give an employer carte blanche to withhold a sum that is disproportionate to the inconvenience caused by the employee leaving before working the notice period specified (Livingston v G L Freeman Holdings Ltd). In other words, the forfeiture clause cannot act as a penalty against the employee; it must simply be a reflection of any actual costs that the employer incurs, e.g. hiring a temporary worker to cover the position until a permanent replacement is found, having to pay overtime to existing employees, or losing work due to the employee leaving in an untimely fashion. And, before you ask, no, an employer cannot claim that the stress caused by an employee leaving thus, is an actual cost. Companies are not recognised as human, and it is most often a company which is the employer.
Of course, at law, there is nothing to stop an employer having a forfeiture clause that allows for a penalty as well as any costs incurred, but it would have to be proportionate to the loss. Ms Livingston was penalised just $500 by the Court under secs. 134 and 135 of the Employment Relations Act for breach of contract, while the employer had to pay the nearly $2,000 it had withheld from her. She had worked just two weeks of a required six weeks’ notice period.
So where does this leave an employer whose employee has breached their contract? I would suggest, to save legal costs, filing a request for a penalty themselves. It is a very straightforward process that is done through the Employment Relations Authority. There is a cost of around $75 to do this, and the staff at the Authority are always more than happy to walk an employer through it. It is not difficult. For many employers, it’s not so much the inconvenience and stress of such an event, but the unfairness of it, especially when such employees often demand that their final wage and holiday pay be given to them. I am all for both parties being held accountable for their obligations under their contracts, so I strongly recommend employers take this course of action.

ABANDONMENT OF EMPLOYMENT

This is a different animal to an employee not working a required notice period. This is when an employee fails to show for work and fails to contact the employer. A good employment contract would have a clause that allows for that eventuality, stating that after a specified period of time, normally 2-3 days, the contract is deemed terminated by the employee, not the employer, due to his or her unnotified absence. It is required of the employer that it make one or more attempts to contact the missing employee; after all, he/she may be lying in a hospital bed with broken limbs, unable to fulfil the obligation of ringing in, or some such other event that is not the employee’s fault. Then the situation changes to perhaps allowing sick leave, annual leave, or even unpaid leave to give the employee time to recover from the event. So it is an important point for an employer to remember if an employee goes AWOL. However, in the absence of such a situation and the employer invokes the abandonment clause, and said clause also has a forfeiture clause, then all the above stated for failure to work out a notice period also applies to this form of termination of employment.

TRIAL PERIODS

1/9/2017

Trial periods have been part of New Zealand's employment law since 2009 under section 67A of the Employment Relations Act 2000. They are a valuable asset for employers who need some assurance that the employee they are hiring can do the job and is a suitable person for their organisation. However, basic mistakes are still being made by many employers when taking advantage of them. Firstly, the trial period needed to be agreed to by the employee BEFORE starting work, in other words, the fact that there will be one needs to be stated in the letter of offer, or in the employment agreement that is signed before the employee begins work. Secondly, the wording of the clause must include certain information to be valid. It has to specifically mention that, if dismissed within the trial period, the employee cannot pursue a claim of unjustified dismissal. It also needs to state how long the trial period is for. The law allows for up to ninety days but an employer may wish to make the period, say, thirty or sixty days. This is permissible so long as the actual time frame is mentioned.

Another error commonly made is in the matter of termination. Some employers do not realise that if a specific notice period or wages in lieu of notice provision is not included in the trial period clause, then the termination clause that will be elsewhere in the agreement must be adhered to. Thus, if an employer's normal period of notice for employees is two weeks, then two weeks must also be given to an employee who is dismissed within the trial period. However, if the employer wishes to make that a shorter time, or give wages in lieu of notice, then that must be stated in the trial period clause. Some employers mistakenly believe that they can give instant dismissal within the trial period, but this is not correct.

Employers understand that a reason for dismissal need not be given within a trial period. However, even though section 67A does not mention anything about providing training and support during it, the Employment Relations Authority and Employment Court have laid down in case law that an employer must remember its good faith requirement under the Employment Relations Act and do just that. This is only fair. An employee in the trial period does not have the same rights as those outside one, therefore the Authority and Court wish to ensure that every chance is given for the employee to succeed.

Finally, trial periods are only for new employees. If someone has worked at the organisation previously, even on a casual basis, they cannot be subject to a trial period.

employee obligations

31/8/2016

There is much emphasis these days on the behaviour of employers, specifically, it seems, on what they cannot do, e.g. fire employees on the spot even if he/she is actually caught in an act of serious misconduct; discipline them without following a rigorous process which includes giving them notice that they face such a process, allowing them to have a support person, and then giving them time to respond; cannot vary previously agreed conditions of employment without the employee's consent. Much of this is only fair and reasonable. However, because employers are now held to such a high standard of behaviour, the point is often overlooked that employees, too, have obligations under law such as acting only in the best interests of the employer, behaving in good faith within the relationship, and complying with all lawful and reasonable instructions. In my work as an employment relations consultant, I frequently see employees with no notion of any of those obligations and, whilst the employer must go to great pains to deal with the results of that, the employee can wreak havoc on a work place as the employer dutifully follows due process. I would even go so far as to say that some employees feel that they can call the shots in their place of employment as they have the idea that the employer is severely limited in what it can do. One such recent case was that of Bhikoo v Stephen Marr Hair Design Newmarket Ltd. The relationship between Mr Bhikoo and his employers broke down. Mr Irvine, one of his employers, initiated an investigation into Mr Bhikoo's behaviour at the work place. Mr Bhikoo's lawyers objected to Mr Irvine being a decision maker once the investigation was completed, and it was agreed that another director of the company, Ms Vincent, would be the person responsible for making a decision about Mr Bhikoo based on the results of the investigation. He objected to this as well and refused to take part in the investigation. He was subsequently dismissed and filed a personal grievance of unjustified dismissal. The case went all the way to the Employment Court which found that he had not been unfairly dismissed and that, in fact, Mr Bhikoo had breached an employee's duty of good faith which required him, under sec. 4(1A)b of the Employment Relations Act 2000, to be responsive and communicative. This would mean attending disciplinary meetings and engaging in the process that his employers were following. The judgement, in fact, is quite damning of Mr Bhikoo's attitude to his employers, saying that his behaviour was sufficient to seriously undermine the trust and confidence that an employer needs to have in its employee. That last point of behaviour is one that is often levelled against employers, but could, in my view, be used far more often than it is against employees as well.
I am indebted to Buddle Findlay.com for knowledge of this case.
Another case which highlights an obligation of employees is that of Sunair Aviation Ltd v Walters. Mr Walters worked for Sunair for seven years at which point Sunair was required to go to tender for fire services at Tauranga Airport. If Sunair was not successful in its bid, its employees faced possible redundancy. Mr Walters decided that he, too, would put in a bid for the work despite having a clause in his employment contract with Sunair that he would not, during the course of his employment with it, not become involved in any way with a business that would be in competition. Mr Walters was ultimately successful in his bid and Sunair had to make its employees redundant. It then came to Sunair's notice who had won the tender and it sued Mr Walters for breach of contract and breach of an employee's implied duty of fidelity, which is a common law duty that all employees must act in their employer's best interests. In this particular instance, that translates to Mr Walters attempting, by his tender bid, to take work away from his employer. Sunair won its case on both its contractual and common law basis.
I conclude by saying that, in stating the above, I am not making a case that employees are more badly behaved than employers; I wish only to make an often overlooked point, which is that they, also, have obligations under the law.

DISCLOSURE OF INFORMATION TO EMPLOYEES IN REDUNDANCY

9/3/2016

Any discussion on disclosure of information to employees has to include the subject of good faith in the employment relationship. That is because Part 1 section 4 of the Employment Relations Act 2000 (ERA) requires that both parties MUST deal with each other in good faith and, further, in sec. (4) (e) of the same part, redundancy is specifically mentioned. In sec. 1A (c) (i) of Part 1, which this blog is concerned with, the employer is required to provide an employee access to information relevant to the employee’s continuation of employment if the employer is considering making the employee redundant. Therefore, the question arises, how much information is required to comply with this section of the ERA? The answer to that is in the next clause of the Act, (1B), which states:
However, subsection (1A)(c) does not require an employer to provide access to confidential information--
(a) that is about an identifiable individual other than the affected employee if providing access to that information would involve the unwarranted disclosure of the affairs of that other individual:
(b) that is subject to a statutory requirement to maintain confidentiality:
(c) where it is necessary, for any other good reason, to maintain the confidentiality of the information (for example, to avoid unreasonable prejudice to the employer’s commercial position).
Or, to put that in plain English, employers do not have to disclose confidential information if there is good reason to maintain the confidentiality of that information. Good reasons include:

complying with statutory requirements to maintain confidentiality;
protecting the privacy of individuals;
protecting the commercial position of an organisation from being unreasonably prejudiced.

Clause (1B) does not affect an employer’s obligations under the Official Information Act 1982, or the Privacy Act 1993.
To sum the above up, an employer must give any employee who may be affected by redundancy relevant confidential information about themselves. An employer does not have to give him or her confidential information about another employee if, by doing so, it would involve an unwarranted disclosure of the affairs of that person. This would be a good place to give a definition of confidential information. It is information subject to an express or implied mutual understanding of secrecy.
This area of employment law is difficult for employers because even with the guidance provided by the ERA, it can sometimes be very difficult to determine what is, or is not, confidential information. For example, what information will or will not cause unreasonable prejudice to an employer’s commercial position? An employer may think one thing; his lawyer may think another; and his accountant yet something else. And, on that very unhelpful note, I will close because I may think something else as well.
P.S. No, seriously, the place to look for the answer is the judgements of the Employment Relations Authority and the Employment Courts. I just wished to make the point that, for many employers, they simply wouldn’t know. If he or she is thinking of making an employee redundant, it may pay to get some advice on the process rather than possibly face an unjustified dismissal claim.

CHANGES IN REST AND MEAL BREAKS MARCH 2015

22/3/2015

The following is taken directly from the government website www.dol.govt.nz. Why reinvent the wheel...?

OVERVIEW
The changes to the rest and meal break provisions balance the importance of these breaks for employees with the practical needs for each workplace. The current strict rules are replaced with a more general right for employees to have a reasonable opportunity to rest, eat, drink and deal with personal matters. The new provisions seek to encourage employers and employees to negotiate, in good faith, rest and meal breaks, without compromising business continuity and flexibility.
The Act says:
·         when employers can make reasonable restrictions on rest and meal breaks
·         that employers can specify when breaks are taken, if employees and employers cannot agree on when and how long breaks should be
·         that an employer is exempt from giving breaks – when employees agree to reasonable compensation or where the employer cannot reasonably give the employee rest and meal breaks
·         that reasonable compensatory measures are to be provided when an employer is exempt from the requirements to provide breaks
·         rest breaks must be paid
·         any other law that requires an employee to take rest and meal breaks takes priority over the
rules in the Act.

Employees and employers can’t contract out of the right to rest and meal breaks - an employment agreement that required an employee to take no breaks, and did not provide compensatory measures, would exclude an employee’s entitlements. Therefore that part of the agreement would have no effect. In other words, an employee either gets a break or a compensatory measure; the employer cannot fail to give either.

Entitlements to breaks
An employee is entitled to rest and meal breaks that:
·  give the employee a reasonable chance during their work period to rest, refresh and take care of personal matters
·         are appropriate for the length of the employee’s work period.
There are no specific rules for how long, or when, rest and meal breaks should be. Employers and employees should bargain in good faith over the timing and length of breaks.
Common practice is that rest breaks are 10–15 minutes long and meal breaks are at least 30 minutes long, but this varies across industries and occupations. If an employee is unsure what is appropriate, they can check with their industry association or union on what the general practice in the industry is.
When an agreement is reached, then breaks should be taken in line with that agreement.
Where meal breaks are unpaid, the parties can agree that the meal break will be for a minimum length (eg 30 minutes) and employees can take a longer break (eg up to 1 hour) if they wish. The employee would still need to complete their agreed paid hours of work if they take a longer break than the agreed minimum.

If employers and employees cannot agree on the timing and duration of breaks, then the employer can set reasonable times and lengths for breaks. An employer can arrange breaks so services or production continues, taking into account the operational environment or resources, and employees’ interests.

Good practice for determining what breaks are provided, when and for how long, takes into account:
·         how long the employee’s work period is
·         the nature of the employee’s work
·         any health and safety issues related to the work, for example fatigue
·         the time of day or night that the employee’s work period starts – eg can any meal breaks match normal meal times?
·         the interests of the employee – eg to allow enough time for rest, refreshment and to take care
of personal matters
·         the employer’s operational environment or resources – eg does the employer need employees to take their breaks in stages or according to a roster, in order to continue production or services, or do all employees need to take their breaks at the same time?

Where there is no agreement between employer and employee
The employer must give an employee a reasonable chance to negotiate the timing and length of the employee’s rest and meal breaks, and try to reach agreement in good faith.
Where the employer and employee cannot reach agreement, the employer may set reasonable times and lengths for breaks so the employer can maintain service or production. What is reasonable will depend on the employee’s interests and the operational environment or resources.

Example – An employer and employee agree to the timing and duration of breaks
Lesley works at a fast food restaurant on a 5-hour shift. She and her employer have agreed that she will have a 30 minute meal break after she has worked 2.5 hours.

Example – An employer has specified the timing and duration of a break
Paul is a machine operator in a factory and he works an 8-hour shift. Paul wanted to forgo his 30 minute lunch break but his employer identified that this may cause fatigue and could become a hazard, and said Paul must take this break. In addition, Paul has two 15 minute rest breaks – one after he has worked 2 hours, and the other after he has worked 6 hours.
By contrast Kate works as a cleaner for 2 hours every afternoon. She does not have any breaks because the duration of her work period is so short that it is appropriate to take no breaks.

When an employer can restrict rest and meal breaks
Employers can only restrict rest and meal breaks when the restrictions are reasonable and either of the following condition is met:
·         The restriction is necessary, considering the nature of the employee’s work – in this case the employer can specify what restrictions apply, OR
·         The restriction is agreed to by the employer and employee, whether in an employment
agreement or not.
The law allows restrictions to breaks because sometimes it is reasonable that an employee cannot fully enjoy their breaks without interruption, or may need to partially focus on work during a break. However, a high standard is set for when restrictions are possible. Employers and employees should discuss in good faith whether restrictions are reasonable and necessary.
Restrictions on an entitlement to rest and meal breaks are only permitted when it involves:

·         the employee continuing to be aware of their work duties or (if needed) continuing to do some of their work duties during the break
·         the employee’s break being interrupted in certain circumstances
·         the employee taking his or her break in the workplace or at a specified place within the
workplace.

Restrictions that are reasonable might include:
·         to allow healthcare workers to deal with an emergency
·         for a sole-charge worker to respond to customers
·         where another team member needs urgent help.

Reasonableness will depend on the circumstances of the workplace. For example, it may not be reasonable to require an employee’s break to be interrupted where an employer has failed to roster enough staff on to cover a normal busy period of work.

Employers and employees can agree to no rest or meal breaks
An employee and employer can agree to compensation instead of breaks. The law requires employers to compensate employees if no break is given where a break would be appropriate.

When an employer is not required to provide breaks
An employer does not have to give rest and meal breaks if breaks cannot reasonably be given, considering the nature of an employee’s work. But the law requires employers to compensate employees if this happens.

What is appropriate compensation?
There is some flexibility about what kind of compensation an employer can give, but it must always be reasonable.

The law also says that giving an employee time off work instead of a break is reasonable if:
·         the employee gets the same amount of time off as they would otherwise have taken as a
break
·         the time off is given on the same basis as the break that the employee would have otherwise taken. For example if the break that was not taken wouldn’t have had restrictions, then the compensatory break also cannot have restrictions.

Employers can give other types of compensation, as long as they are reasonable. Compensation is reasonable if it is of a similar value as the break.

How do the rules on breaks affect employers’ duties under the health and safety laws?
The changes do not affect an employer’s duties under the health and safety laws to control hazards (including an individual’s behaviour) that could cause harm to themselves or anyone else. Where physical or mental fatigue is a hazard, an employer must address that hazard.

Where an employer considers that breaks are a good way to avoid fatigue identified as a hazard, the changes do not stop an employer providing those breaks. Employers must also make sure employees’ health and safety is not undermined by:
·         any restrictions on breaks
·         the timing or duration of breaks
·         compensation instead of breaks taken.

These are reasonably significant changes. New Zealanders, for generations, have taken for granted their morning and afternoon 'smoko' breaks. I wonder how many employers will actually dare to challenge that.

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FORFEITURE OF WAGES CLAUSE IN CASES OF ABANDONMENT OF EMPLOYMENT OR FAILURE TO GIVE NOTICE

TRIAL PERIODS

employee obligations﻿

DISCLOSURE OF INFORMATION TO EMPLOYEES IN REDUNDANCY

CHANGES IN REST AND MEAL BREAKS MARCH 2015

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