Articles

When Annual Holiday Pay May Be Paid With Employee's Pay

There are very limited circumstances where an employer can pay an employee annual leave entitlement on a "pay as you go" basis.

An employer may regularly pay annual holiday pay with the employee's pay if:-
a)         the employee -
            i.          is employed on a fixed term agreement to work for less than 12 months; or
            ii.         works for the employer on a basis that is so intermittent or irregular that it is impracticable for the employer to                         provide the employee with four weeks annual holiday;  and
b)         the employee agrees, in his or her employee agreement; and
c)         the annual holiday pay is paid as an identifiable component of the employee's pay; and
d)         the annual holiday pay is paid at a rate not less than 8% of the employee's gross earnings.

Note, that the employer cannot insist on paying an employee's annual leave at the rate of 8% per pay. The employee must agree to being paid in that manner.

If an employee is employed by the same employer beyond 12 months on a series of fixed term agreements of less than 12 months each, the employer and employee may agree that payment is to be made on a "pay as you go" basis regardless of the number of agreements.

However, care must be taken to correctly spell out the situation in any agreement.   If an employer has incorrectly paid annual holiday pay with an employee's pay in a situation where the appropriate circumstances do not apply, and the employee's employment has continued for 12 months or more then, despite those payments, the employee becomes entitled to annual holidays in accordance with the Holidays Act 2003. It is possible, therefore, that an employee, who has already received holiday pay may also be entitled to annual holidays.

FIXED TERM AGREEMENTS

The entitlement to four weeks paid leave after 12 months' service provided by the Holidays Act 2003 may not be appropriate when the employment relationship is short term.

Under the Employment Relations Act, fixed term agreements are allowed if there is a genuine reason for a fixed term, and how the employment will end, are set out in writing in the employment agreement.

Examples are:-

  • Where an employee is employed to cover an employee who is taking a certain period of maternity leave;
  • Where the employment is for a specific purpose, e.g. in a vineyard where employment is for the specific purpose of grape picking and ends as soon as all the grapes are picked;
  • Where such a fixed term agreement is for less than 12 months, an employee may agree to the employer adding 8% of the gross weekly earnings in lieu of getting annual holidays, or in lieu of getting an aggregated 8% at the end of the fixed term (refer to previous article);
  • Where fixed term agreements are linked to the completion of a project, care must be taken by the employer that the fixed term does not exceed 12 months, at which time the employee becomes entitled to paid annual holidays despite having already been paid on a "pay as you go" basis.

Therefore, where it is possible that the employment lasts longer than 12 months, "pay as you go" arrangements are not recommended.

INTERMITTENT OR IRREGULAR WORK [GENUINE CASUAL WORK]

Many employees who are referred to as "casual" are part time employees whose employment pattern is actually clear and defined.

The Holidays Act contains no reference to "casual" work because the term is commonly applied to many types of employment arrangements. Instead, the Act refers to intermittent or irregular employment.

Examples are:-

  • An employee who is called upon only in emergencies to cover for sickness;
  • A highly skilled technician who is called upon only when a particular skill is required, such as repairing a broken machine;
  • Where employment results from an event that cannot be accurately anticipated, or where the work pattern is so irregular or intermittent that the idea of four weeks away from work is difficult to apply.

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Sick Leave

Entitlements:

For most employees, there is a minimum provision of five days paid sick leave after the first six months of continuous employment and an additional five days paid sick leave after each subsequent 12 month period.

Sick leave can be taken when the employee is sick or injured, or when the employee's spouse or a dependant person, such as a child or parent, is sick or injured and needs care.

Accumulation of Sick Leave:

Under the Holidays Act 2003, unused leave is automatically carried over. The maximum accumulation under the Act is 20 days leave, although it is open to an employer and employee to negotiate more generous sick leave provisions.

On resignation or termination, accumulated sick leave cannot be exchanged for cash or be part of any final payment to the employee unless the employment agreement provides for this.

All employees are entitled to five days sick leave per annum. Even if a part time employee works three days a week, that employee is entitled to the five days per year, and can also accumulate leave up to 20 days.

Payment for Sick Leave:

Payment is the amount the employee would ordinarily be paid if they had been at work on that day. If hours of work vary, e.g. an employee works eight hours on a Tuesday and four hours on a Thursday, if sick leave occurs on the Thursday a payment of four hours is due. Payment can include overtime when overtime would have been worked on the day.
An employee should inform the employer at the earliest opportunity of the intention to take sick leave. The employer has the right where the employee is away for three or more days to require proof such as a medical certificate of the illness or injury. Note that, the three days are not interrupted for example, by a weekend. Therefore, for an employee taking sick leave on a Friday can be asked to provide proof if they take another day's sick leave on the following Monday, even if that day is only the second day of sick leave.

If the employer suspects the sick leave is not genuine, they can ask the employee for proof of illness or injury within the three day period, but the employer must meet the employee's reasonable expenses in obtaining this proof. If the proof is not provided without reason, the employer can withhold payment for the sick leave until it is provided. Where the employee is using sick leave to care for another person, the employer can, similarly, require proof of sickness for that person.

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Enduring Powers of Attorney – Recent Changes

Under an Enduring Power of Attorney, the donor authorises an attorney to act in the donor's best interests. The donor may subsequently become mentally incapable and is dependent upon the attorney to make decisions for him or her.

The law relating to Enduring Powers of Attorney changed in September 2008 when the Protection of Personal & Property Rights Amendment Act 2007 came into force.

The Act was passed after consideration by a law commission and perceived abuses of the previous legislation, especially by members of the donor's family.

Under the Act, the interests of the donor are paramount. Even where donor's lose capacity the donor's have the right to be consulted about their views.

Under the new legislation, only lawyers, legal executives or officers of trustee corporations can be witnesses to the Enduring Power of Attorney.

There is also a new definition of mental capacity. A prescribed form must be used when health practitioners certify as to incapacity.

There is now a broader range of people who can apply to the Court to review an attorney's action.

The Act will increase compliance costs but, if the Act achieves its aim of protecting vulnerable donors, the legislation will have achieved its desired affect.

If you require any advice on Enduring Powers of Attorney, please contact us on or telephone (03) 379 9705.

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How To Maintain Your Sporting Career

In today's professional area of sports, if sports people do not know what substances they consume, or are indifferent to this, then their careers can rapidly end. Care must be taken not to consume a banned drug or substance, even though these may not even be performance enhancing.

Some ways to avoid inadvertently taking a banned substance:-

  • Be aware of which substances are prohibited. Refer to www.nzsda.co.nz for a list of prohibited substances. This is the website of the New Zealand Sports Drug Agency. This Agency provides a service whereby sports people can check on the status of a medication.
  • Always explain you are involved in sport when a doctor or pharmacist prescribes medication.
  • Be aware of the requirements of your particular sport.
  • Avoid supplements which claim weight can be lost or gained quickly as these will often contain stimulants (weight reduction) or anabolic agents (bulk producing).
  • The NZSDA can be contacted on: 0800 DRUG FREE (0800 3784 3733). This Agency can advise exactly whether any prescription drugs or supplements contain any banned substance.

There are many examples of sports people falling foul of their regulations, seemingly innocently. Shane Warne got into bother over taking diet pills, and New Zealand tennis player, Mark Neilson, similarly was dealt out a period of suspension after taking a substance which was designed to prevent hair loss. The consequences of taking a banned substance can be severe.

If you require any advice on Sports Law, please contact us on or telephone (03) 379 9705.

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Hiring Employees

  1. Describing and Advertising the Position:
    • The Human Rights Act applies to job advertisements, application forms, interviews and job offers. In most cases, jobs must be open to any one regardless of colour, race, ethnic origins, disability, sex, marital status, age, religion, beliefs, political opinion, employment status or sexual orientation.
    • Care must be taken in drafting an advertisement to ensure that what is said is accurate and not discriminatory. As a bare minimum, the advertisement must contain a brief job description, describing the work to be undertaken. It must also state whether the work is full time, part time, permanent, casual or for a fixed term, along with the hours of work and the personal attributes required.
  2. Receiving Applications:
    • All steps must be taken to ensure the confidentiality of applications received and to ensure the security and privacy of the applicant is maintained.
    • Disclosing details of an application without consent is likely to breach the Privacy Act as well as, probably, leading to the ruin of any potential relationship with the applicant.
    • Do not leave a message for the applicant at the applicant's current work place.
    • In the case of unsuccessful applications, all information supplied shall be returned to the applicant or retained for a set period and then destroyed.
  3. Interviewing:
    • You need to identify the best interview method to test against the criteria you establish for the position. This may include:-
      • One on one discussion
      • Interview panel
      • Workshop environment
      • Skills/Attribute test
      • Written project for examination
      • A mixture of the above
  4. Contacting Referees and Making Independent Enquiries:
    • It is important to follow up referees and make independent enquiries which can provide invaluable information and can also be used to test your assessment of an applicant.
    • Under the Privacy Act, it is advisable to specifically obtain the applicant's consent, preferably in writing, to obtaining this information. Such consent could be included in any application form that an applicant completes. It is important to remember that the collection of this information should not intrude unreasonably on the applicant's personal affairs.
    • Prepare appropriately for each referee and ask questions which requires the referee to exercise judgement and express an opinion.
  5. Employment Agreements:
    • Every employee employed must have a written Employment Agreement which can be either an individual or a collective agreement. There are some provisions that must be included in Employment Agreements by law, such as minimum pay, holidays, leave and other rights.
    • Other matters to include are the names of the parties, a job description, where the employee is to work, working hours, etc.

Conclusion:

The hiring of employees is no longer the relatively simple process it was a few years ago. Now, an employer must have a knowledge of the Employment Relations Act, Privacy Act and the Human Rights Act to name but a few.

If you require any advice on the hiring of employees, or any other matter relating to employment law, please contact us on: or Telephone: (03) 379 9705.

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