Legal Compliance

Legal Compliance Issues for Staffing from a Start-up Company’s Perspective

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This PowerPoint file formed part of a seminar given in 2004 by John McLean (U-Turn Internet Services Ltd.’s Managing Director) to a group of post-graduate potential employers at the University of Auckland.

Disclaimer:  U-Turn Internet Services Ltd. (or any of its partners, subsidiaries or affiliates) is not responsible for any results attained or not attained from reading or applying this resource. You should always consult a qualified professional attorney, business, or tax/bookkeeping advisor for advice as to how the law pertains to your particular situation and business.  The accuracy or completeness  of this resource is also by no means guaranteed.  Use at your own risk.  This resource should not be used as a substitute for professional or legal advice.

On the Agenda…Company RegistrationHiring StaffEmployment Relations Act, 2000Other ActsTax ObligationsProblems with Employees and

Redundancy IssuesGapsResearch Proposal

Company RegistrationWhy a ‘Company’?

Name Protection Separate Legal Entity Tax Advantages Professional Advantages Financial Advantages

Register online www.companies.govt.nz Entire process can be done for $60

Hiring StaffAre you really an employer?

Does the person have to do the work themselves? Can you tell the person when/how/what to do? Do you pay the person a set rate? Can the person get overtime? Does the person work set hours/given number of

hours each week/month? Do you specify the place of work? Do you set standards for the work’s quality?

So you’re an employer? You must register

https://www.ird.govt.nz/cgi-bin/form.cgi?form=ir334

Employment Relations Act, 2000The act:

Recognises that employment is not purely contractual.

Is made to encourage ‘good faith’ employment relationships.

Specifies minimum standards. Protects employees/prospective

employees from the imbalance of power. If ‘good faith’ is maintained, there

should be no need for court arbitration

Employment Relations Act, 2000Employment agreements

Every employee must have a written employment agreement. $5,000 fine for an individual, $10,000 for a company

Employment agreements include things like: Parties involved Job position with duties described Both parties’ obligations Place/hours of work Bonuses Holiday Pay Redundancy/Termination of employment

Drafts can be created at: http://www.ers.dol.govt.nz/relationships/builder/

Collective Employment AgreementsCollective EAs are for unionsCollective EAs must contain:

Coverage clause Obligations How to make a complaint An expiry date

The agreement may also contain company policies If they are on the EA, they are binding

Employment Relations Act, 2000

Individual Employment Agreements Individual Employment Agreements

must contain: Names of those involved Description of the work Where the work is to be done Hours of work Wages/salary How to make a complaint

May contain company policies

Employment Relations Act, 2000

Rights and responsibilities Employees have the right to choose to join,

or not to join a union. Employers cannot put undue pressure on the

employee to join or not to join a union.

Employment Relations Act, 2000

Bargaining/Negotiating EAs Both individual and collective agreements can

be negotiated Bargaining must be fair and in ‘good faith’ If a union makes a proposal, the employer

Has a legal responsibility to meet with them and consider their suggestions.

If their proposal is rejected, reasons must be given. Employer must allow employee to seek advice

Give them sufficient time to do so.

Employment Relations Act, 2000

Offering EmploymentJob Advertisements

Must comply with the Human Rights Act,1993 Must not discriminate

Must comply with the Fair Trading Act, 1986 Must not use deception

You must be very clear what the job entails Must be outlined in the employment agreement A good idea is to derive your ad from the EA

Employment Relations Act, 2000

Before interviews are conducted Be prepared with an employment agreement

Once a suitable candidate is found A written job offer and the EA must be sent The cover letter/job offer must meet

requirements of the Act Templates can be found at:

http://www.ers.dol.govt.nz/relationships/letters.html

Employment Relations Act, 2000

Other ActsHolidays Act, 2003

Annual and Public Holidays Three weeks paid leave Public holidays

Sick Leave Five days paid sick leave per year If not taken, can add up to 20 days

Bereavement Leave Three days paid leave

Minimum Wage Act, 1983 $9.00 per hour for adults $7.20 per hour for youths

Wages Protection Act, 1983 If an employer wishes to reduce wages,

he/she must have employees’ written consentEqual Pay Act, 1972 and Human Rights

Act, 1993 No discrimination in pay rate, hiring, firing

Other Acts

Other ActsParental Leave and Employment Protection

Act, 1987 12 weeks paid parental leave (taxpayer funded) Must hold job open Must not dismiss/discriminate due to pregnancy

Health and Safety in Employment Act, 1992 Must maintain safe/healthy workplace Eliminate > Isolate > Minimise Stress now a ‘hazard’

Tax Obligations All employers must

Get their employees to fill out a tax code declaration Send the IRD Employer Monthly Schedules (IR348) Send the IRD Employer Deductions (IR345)

All records must be kept for seven years These include

Cheque books Deposit books Petty cash books Log books Bank statements Wage books

Tax ObligationsPay As You Earn (PAYE)

How much depends on employee’s tax code Student Loan Child Support ACC levies

Employers can work out how much to deduct using the IRD’s payment calculator

https://www.ird.govt.nz/cgi-bin/form.cgi?form=paye2004

Accident Compensation Corporation (ACC) Non-work-related injuries are covered in PAYE You are invoiced for work-related cover for

your employees once a year How much you pay depends on

How much you pay in wages The type of work your employees do

http://www.businessdescription.co.nz

Fringe Benefit Tax (FBT) ‘Perks’ you give your employees are also

taxed

Tax Obligations

Goods and Services Tax (GST) Any employer/self-employed business owner

earning over $40,000 per annum Are you earning over $3,333 per month?

If yes, you’d better registerhttps://www.ird.govt.nz/cgi-bin/form.cgi?form=ir360

Withholding Payments When employers pay workers that are not

‘employees’ No PAYE ACC/Student loan repayments are the private

contractor’s responsibility

Tax Obligations

Problems with Employees and Redundancy

If you need to terminate an employee ‘Good faith’ must be maintainedFair investigation needs to take place

Mediation

Employment Relations Authority

Employment Court

Serious misconduct Dismiss without warning

Still entitled to holiday pay etc

Poor performance/less serious conduct Oral warning Formal written warning Final written warning Dismissal

Redundancy Must have genuine commercial reasons Remember good faith! No legal requirement for payout

Unless in employment agreement Paying out still a good idea, however.

Problems with Employees and Redundancy