Do your employment policies comply?

June 2004

When employers invest considerable time and effort on their business assets, surely their employees should expect the same level of attention.

It’s more than just good management practice. Complying with well drafted employment policies and systems can greatly reduce the risk of breaches of the law, and can prevent expensive and time-consuming litigation and settlements.

Such compliance is even more relevant today as government regulations proliferate, and enforcement agencies and courts have proved unsympathetic to those employers unable to maintain compliance.

This newsletter explains the legislation with which New Zealand employment practices should comply and reviews the steps an employer should take to review, revise and implement best practice.

Legislation: the employment framework

New Zealand employment relations are governed by statute and common law.

The principal statute is the Employment Relations Act 2000, which regulates employment relationships and problem-solving mechanisms.

Other major acts and associated regulations and codes of practice include the Health and Safety in Employment Act 1992, Holidays Act 2003, Parental Leave in Employment Act 1987, Human Rights Act 1993 and Privacy Act 1993.

We will briefly outline the major points of each piece of legislation below, and then turn to consider the benefits of establishing clear employment policies.

Employment Relations Act 2000

The Employment Relations Act provides that parties to an employment relationship must deal with each other in good faith and must not, whether directly or indirectly, do anything to mislead or deceive each other, or do anything that is likely to mislead or deceive each other.

An employee is defined in the Act as a person employed by an employer to do any work for hire or reward and includes a person intending to work.

The Act requires certain terms of the relationship be set out in writing – an employment agreement – which, as a bare minimum, must include:

• The names of the employee and the employer concerned;
• A description of the work to be performed by the employee;
• An indication where the employee is to perform the work;
• An indication of the arrangements for the times that the employee is to work;
• The wages or salary payable to the employee; and
• A plain language explanation of the services available for resolution of employment relationship problems, including a reference to the 90 days within which a personal grievance must be raised.

Health & Safety in Employment Act 1992

The Act imposes comprehensive and robust duties on employers and employees to ensure a safe workplace. It also contains specific duties for employers in relation to hazard identification and management, provision of information, training, and supervision.

The Act covers all employment situations including volunteers, persons receiving on the job training or work experience, loaned employees, and work performed by employees on aircraft or ships.

The Act recognises the need for particular standards in different industries by allowing for development and introduction of codes of practice (which provide specific safety standards and policies). There is also a general requirement on employers to provide opportunities for employees to participate in health and safety issues in the workplace through participation schemes.

Holidays Act 2003

The Holidays Act provides an employee with a minimum entitlement to leave and holiday pay. The Act also requires employers to inform employees of their entitlements.

Employees are entitled to three weeks’ annual leave on pay. The Act also provides the formula to calculate the rate of holiday pay.

In addition, employees are entitled to 11 public holidays per year. An employee who works on a public holiday is entitled to an alternative day off (if that day would otherwise be a working day for that employee) and payment of time plus one half for the hours actually worked.

After six months’ continuous employment, an employee is entitled to both sick and bereavement leave. This leave is paid at the employee’s relevant daily rate.
The Act requires employers to maintain records of employees’ entitlements and pay.

The Act also requires employers to update their employment agreements for compliance when they are next renegotiated or before 1 April 2005.

Parental Leave and Employment Protection Act 1987

Employees who have been employed by the same employer for at least an average of 10 hours per week for 12 months before the expected date of birth are entitled to protection under the Act.

New Zealand also operates a statutory paid parental leave scheme for eligible employees.

The Act was amended in 2002 to provide additional protection and entitlements. Further amendments are expected later this year.

Human Rights Act 1993

This primary legislation on discrimination applies to employers, and prohibits discrimination on any of the following grounds:

• Sex, including pregnancy and childbirth
• Marital status
• Religious belief
• Ethical belief
• Colour
• Race
• Ethnic or national origins
• Disability
• Age
• Political opinion
• Employment status
• Family status
• Sexual orientation.

It is unlawful for an employer to discriminate on these grounds in areas of recruitment, terms and conditions of employment, dismissal, and resignation.

Privacy Act 1993

The Privacy Act recognises an individual’s interest in having some measure of control over information about themselves. The Act places strict obligations on employers for the collection, storage and use of personal information held by the organisation.

Defining risks

Once aware of the legislative requirements, an assessment of your risks and liability should begin with a review of personnel policies and documents.

This review should check whether the legally required documents are in place, whether the documents breach any legislation and whether they give rise to potential employment liabilities. The following documents should be reviewed:

• Employment application forms
• Pre-employment tests
• Employment agreements
• Payroll records
• Employee handbooks
• Health and safety policy
• Harassment policy
• Performance appraisals.

Establishing clear policy and setting the tone

Documenting policy is a key element of risk management. It provides a framework for an effective compliance programme, and enables the organisation to monitor and assess the programme’s performance.

Any policy should:

• be presented in plain language;
• be readily available to management, staff and other stakeholders; and
• contain a commitment to assess the policy against pre-determined objectives, assessment criteria and compliance.

Any policy must have the full support of the organisation, including the board, the chief executive and senior management.

Full support does not mean lip service. It means all types of support given by those in a position of authority who expect something to be done.

Like any type of change, policies will not succeed if management is not fully and visibly committed.

Informing and educating employees

All members of an organisation need to be informed of its policies and receive relevant training to ensure they are aware of both the policies and their compliance obligations.

Procedures also need to be established to ensure that new employees receive relevant education. Learning tools should be developed, such as policies and procedures manuals.

Policies and procedures are useless if they are left on a shelf, becoming less relevant by the minute. They should be regularly monitored and reviewed to ensure that they are performing effectively and constantly revised.

Employees should establish robust feedback systems and analyse any compliance failure. Also, it helps to establish formal procedures for monitoring and reviewing compliance, and also to set compliance objectives against which compliance can be measured.

Taking your compliance a step further

The benefits of achieving best practice

Policy manuals and checklists do not, by themselves, constitute an effective system, but a sound and comprehensible manual is essential.

The existence and purpose of an organisation’s employment relations policies and staff obligations should be communicated and publicised in such a way that they are widely understood and are a normal part of everyday organisational practice.

Best practice can be achieved by:

• early identification of potential areas of deficiency;
• developing strategies and policies to prevent issues and risks before they arise; and
• management and staff working together to find “unique” solutions that allow the business to grow and employees to achieve their personal goals.

Being a good employer

Many organisations believe that being a good employer is about working with employees to provide a safe and healthy environment where hazards are recognised and eliminated where possible, where employment opportunities are equal and fair, support is available for all employees if required, and benefits are offered that enhance employee welfare.

This can be achieved by:

• providing and promoting a safe and healthy work environment;
• ensuring all employees are aware of the strategies and policies that are in place to provide and promote workplace welfare; and
• encouraging managers and staff to recognise workplace hazards and ensure these are managed to minimise risks.

Conclusion

Legal compliance programmes are management procedures designed to ensure compliance so that employers comply with or reduce or remove the risk of not meeting legal standards.

Regular employee training and review of HR policies is essential.

Advice and information

Bell Gully’s Employment Team can advise you on all types of issues, including reviewing your employment policies and practices to check for compliance. Contact the team at the numbers below for more information.

Auckland

Rob Towner
Partner

Wellington

Andrew Scott-Howman
Partner