Legal Compliance

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					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.

				
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