Common legal pitfalls in employment law

Eloise Callister-Baker and Gillian Service offer some valuable advice to help business owners understand and meet their legal obligations as an employer.

Staying on top of evolving employment laws is essential to running a business. However, plans often fall through the cracks for a variety of reasons, including limited time and resources and insufficient prior knowledge of the legal field.

If you’re finding this a challenge as a business owner, rest assured, you’re not alone. In fact, the employment expert found that when SEEK spoke to more than 100 of his companies, almost half were worried about understanding and dealing with legal issues as an employer.

SEEK research reveals that the biggest legal concerns for Kiwi employers are:

  • Comply with and comply with legal obligations.
  • Salary and Compensation.
  • Fire an employee.
  • Interview for new employees.

With a deeper understanding of compliance and legal requirements, you can turn common legal concerns into an everyday part of your business operations. So here’s some important guidance to help you feel more confident about these common legal concerns.

Comply with and comply with legal obligations

It is the employer’s responsibility to ensure that they remain up to date with and compliant with the law. The Ministry of Business, Innovation and Employment’s (MBIE) New Zealand Employment website is a resource to help employers understand their obligations. The website has a ‘News and Updates’ section where employers can find alerts on the latest developments in the field of employment law.

Employers should seek legal advice if they are unsure about their obligations.

Salary and compensation

Employee salaries must be paid in cash.

New Zealand has a statutory minimum wage, which is the minimum wage that employers can pay their employees (subject to limited exceptions). The minimum wage rates as of April 1, 2023 are:

  • Adults $22.70 per hour.and
  • $18.16 per hour for new or in-training employees.

If an employee is covered by a fair pay agreement, they are entitled to the higher of the minimum wage and the minimum wage to which they are entitled under the fair pay agreement.

Employers are not obligated to increase their employees’ compensation. However, employers cannot reduce remuneration without the consent of the employee. Even if agreed, for cuts to be effective, there usually needs to be corresponding reductions in work or time.

If an employer requires an employee to be available for work hours in addition to guaranteed hours or to be “on call,” there are certain rules regarding how the employee’s salary will be paid.

In such cases, the employee must have an availability clause in the employment contract that provides for reasonable compensation for the employee’s availability, among other requirements. If an employee is paid a salary, the employer and employee can agree that this availability compensation is included in the salary.

fire an employee

In New Zealand, an employer can only dismiss an employee for “just cause”. This means that your employer must have a valid reason for firing you. Legitimate reasons include serious or repeated misconduct, persistent poor performance, lack of medical capacity or attrition.

Additionally, employers must follow a fair and appropriate termination process. This involves:

  • Suggesting the employee dismissal as a potential outcome of the process.
  • Provide employees with all information related to the proposal.
  • Give employees the opportunity to provide feedback on suggestions.
  • Encourage employees to bring a support person or representative to meetings to discuss the proposal.
  • Seriously consider employee feedback and consider whether reasonable alternatives to termination are appropriate.and
  • Communicate final decisions to employees.

Although not required, we recommend documenting this process in writing.

New employee interview

A job applicant is not an employee until he or she accepts a job offer. This means that employers do not have the same obligations to job applicants as they do to current employees.

However, employers seeking to fill that role still have obligations to the people they interview.

One of our key obligations relates to privacy. When employers ask questions during interviews, they collect personal information from job applicants. Employers must comply with the Privacy Act 2020 regarding the collection, use, storage and disclosure of information.

Employers interviewing you will also need to be mindful of their obligations under anti-discrimination laws. It is illegal for an employer to ask a question that indicates, or could reasonably be understood to indicate, an intention to unlawfully discriminate against a job applicant. Examples of potentially illegal question topics include questions about a job applicant’s age, gender, marital status, religious beliefs, employment status, family status, or sexual orientation.

Eloise Callister-Baker (pictured above) is a senior lawyer and Gillian Service (pictured below) is a partner at MinterEllisonRuddWatts.

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