On 1 April, substantial changes to our employment laws were made
that all business managers, owners and HR managers should be aware
Why the changes?
The changes are aimed at ensuring that employers comply with
minimum employment standards, such as paying the correct holiday
In the past it has become clear that a number of employers have
failed to meet their obligations, even following an order from the
Employment Relations Authority. Many of these then chose to
avoid having to pay what they owed, by closing down their business
and starting again as a new business, therefore leaving the
disaffected employee without redress.
The changes may also be aimed at employers who may have
previously worked abroad and are unfamiliar or unwilling to become
compliant with New Zealand's minimum employment law
What are the changes?
The new legislation changes the Employment Relations Act 2000 (the
It introduces the concept of 'Officers' within an
employing entity, such as a company, trust, or any other
organisation that has employees.
Officers can include directors, partners, those in a position
comparable to that of a director if the employer is not a company
(such as a partnership or limited partnership) and those who can
exercise significant management or administration influence.
Therefore, a CEO, CFO or HR Manager could be an Officer.
The changes allow both the employing company and any Officers to
How do the changes affect managers, business owners and
Where an employer has breached minimum entitlement provisions (for
example, not paying minimum wage), and the breach is serious (for
example, involving a significant amount of money, is repetitive, or
was intentional or reckless) a Labour Inspector can apply to the
Court for a declaration of breach against the employer and any
What are the penalties?
Once a declaration of breach has been made, the Court can then make
the following orders against the Officer or employer:
Pecuniary penalty order – The could be $50,000 for
individuals (such as HR Managers) and $100,000 for the employer or
three times the amount of the financial gain made by the employer
from the breach;
Compensation order – This is where the affected
employee(s) affected by the breach have, or are likely to, suffer
loss or damage. The Court can order compensation against a
person involved in a breach for wages or other money payable to an
Banning order – The Court can ban a person from; entering
into an employment agreement as an employer; being an officer of an
employer; or, being involved in the hiring or employment of
employees. A banning order can last for 10 years. A
breach of a banning order will attract a fine not exceeding
$200,000, or a term of imprisonment not exceeding 3 years or
The Court is not limited to only one of the above orders.
It can make multiple orders against a person in relation to the
Do you need help?
If you believe that you may be deemed to be an Officer and/or your
business may not be meeting minimum employment provisions, please
do not hesitate to contact AJ Lodge, the head of our employment
team. AJ's direct telephone number is 03 339 5627.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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