Legal Compliance Legal Compliance Issues for Staffing from a Start-up Company’s Perspective Brought to you by U-Turn Internet Services Ltd. www.uturn.net.nz 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 Registration Hiring Staff Employment Relations Act, 2000 Other Acts Tax Obligations Problems with Employees and Redundancy Issues Gaps Research Proposal Company Registration Why 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 Staff Are 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, 2000 The 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, 2000 Employment 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/ Employment Relations Act, 2000 Collective Employment Agreements Collective EAs are for unions Collective 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 Employment Job 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 Other Acts Holidays 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 Other Acts Minimum Wage Act, 1983 $9.00 per hour for adults $7.20 per hour for youths Wages Protection Act, 1983 an employer wishes to reduce wages, If he/she must have employees’ written consent EqualPay Act, 1972 and Human Rights Act, 1993 No discrimination in pay rate, hiring, firing Other Acts ParentalLeave and Employment Protection Act, 1987 12weeks 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 Obligations Pay 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 Tax Obligations 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 register https://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 Problems with Employees and Redundancy Mediation Employment Relations Authority Employment Court If you need to terminate an employee ‘Good faith’ must be maintained Fair investigation needs to take place Problems with Employees and Redundancy 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.