Issue 68, Summer 2015 Fineprint

Issue 68, Summer 2015 Fineprint

Legal Health Check for Businesses

It’s essential for your business to be compliant

Another trading year is almost at an end. You concentrated on increasing business income, you’ve built (or improved) your business systems, you believed in yourself and your product/service and profits have improved.
However, whilst you have been busy minding your own business you may have only briefly considered how changes in legislation or regulations might affect your business, and how you may need to adjust your management systems to include those changes.
Below we note some recent legislative changes that you should already have adopted into your business processes.
We also alert you to upcoming changes so you can make preparations to ensure that your business complies as soon as they come into force.

Employment Relations Act 2000

Changes to flexible working arrangements came into force on 6 March 2015.
Your employees may now request a variation of their working arrangements (without requiring a reason to be given). An unlimited number of requests for flexible working arrangements can now be made.
To ask for flexible working arrangements, your employee’s request must be in writing, stating their name, the date the request is made and that the request is made under Part 6AA of the Act. They must also specify whether the request is permanent or temporary, the dates that the arrangements are to begin (and end, if a temporary arrangement), and provide an explanation in their view of what arrangements within the business you as their employer will need to make to accommodate the new arrangements, if the request is granted.
As an employer, you have a maximum of one month to grant or refuse the request. The decision must be notified to your employee in writing.
A request may only be refused on the grounds contained in the Act and reasons must be provided for relying upon the particular grounds of refusal.
The grounds for refusing a request are an inability to reorganise work amongst existing staff or to recruit additional staff, detrimental impact on quality, the performance or inability to meet customer demand, insufficiency of work during any proposed period of work, planned structural changes and the burden of additional costs.
The request must be refused if a collective agreement applies to the employment.
If you don’t comply with this legislation, the Employment Relations Authority could impose a fine of up to $2,000 per breach. The fine would be payable to your employee.
Key take away: Know the entitlements of your employees. Failing to provide those entitlements can have real and significant consequences for a business.

Changes to consumer legislation

There have been incremental changes to the Fair Trading Act 1986 and Consumer Guarantees Act 1993 with critical dates being 18 December 2013 and 18 June 2014 (see Fineprint issue 63, Autumn 2014 for a full description of the changes).
On 17 March 2016, unfair terms in consumer contracts will be prohibited under the Fair Trading Act. This amendment has been deliberately delayed to allow businesses time to review their standard form consumer agreements, whether they be terms of trade or credit, or some other standard form agreement.
Creating the right balance between consumer protection and protecting your legitimate business interests can be a minefield.
If you’re at all unsure on how to proceed on reviewing your trading terms and consumer agreements, please get in touch with us.
Key take away: Building customer confidence in your product or your service is vital. Inappropriate market behaviour can harm your business.

Companies Act 1993

If you are looking to incorporate a company, since 1 May 2015 at least one director must live in New Zealand or Australia.
If the director lives in Australia then he or she must also be a director of a registered Australian company and must supply his or her name, the company name, address and Australian Company Number (referred to as an ACN).
You must also provide the date and place of birth of each director of the proposed company and details of any ‘ultimate holding company’.
There do not appear to be any exceptions to this. If you have a company, then this should have been completed by 28 October 2015. If not, don’t delay making those changes as there is a risk your company could be removed from the Companies Register.

Key take away: You must know your trading entity. If you are trading as a company then you must understand the associated compliance aspects to maintain the benefits of trading under that structure.

Workplace law changes

The Health and Safety at Work Act 2015 will come into force on 4 April 2016. This replaces the Health and Safety in Employment Act 1992 and its many amendments.
This legislation brings significant changes to workplace health and safety, and means that health and safety matters must be high on your business agenda. We outline below a snapshot of significant responsibilities and obligations.
The legislation places the primary duty of care on the person, or persons, carrying on a business or undertaking (PCBU).
A PCBU must ensure, so far as is reasonably practicable, the health and safety of its employees, while they are at work in the business or undertaking.
If you have a ‘zero-employee’ business, there is also a duty on you to ensure your own health and safety whilst undertaking your business.
Further, a PCBU must ensure, so far as is reasonably practicable, that the health and safety of other people is not put at risk from work carried out as part of the conduct of the business or undertaking.
As you can see, your primary duty of care is not owed to just your employees, but you also have an obligation to other people such as clients, customers and/or visitors who enter your workplace such as product reps, tradespeople and investors.
‘Reasonably practicable’ is defined in the Act. Briefly, a PCBU must do what is reasonably able to be done in relation to
ensuring health and safety, taking into account and weighing up all relevant matters.
This includes weighing up the likelihood of the hazard or risk occurring, the degree of harm that might result from the hazard or risk, the availability and suitability of ways to eliminate the risk and the costs associated with the above, and whether or not those costs are disproportionate to the risk.
This is a principle set out in the purpose of the Act; workers and other people must be given the highest level of protection against harm to their health, safety and welfare from hazards and risks arising from work.
To avoid any harm, no matter how minor, it must be diligently and proactively managed.
Key take away: Proactively manage your risk and don’t be at all tempted to develop a ‘culture of cost cutting’ in your business.
As you can see there is a raft of recent (and upcoming) legislative changes that have significant implications for your business; in this article it’s impossible to cover every point. If you’re unsure on how to tackle any of them or want more detailed information, do talk with us early on so you can be sure your business is legally compliant.

Getting your Personal Affairs in Order

Make sure you have a current Will – make an End of Year resolution
With summer, Christmas and the New Year fast approaching now is a good time to make an End of Year Resolution to get your affairs in order. In this past year you may have bought a house, established a business, moved in with your partner, welcomed a baby, booked your big OE or perhaps there are wedding bells on your horizon. Whatever this year has brought you, now is an opportune time to ensure that your Will reflects your current situation. If you don’t have a Will, now is the time to get one.
Death isn’t a pleasant topic, yet it’s an important one that’s often avoided by New Zealanders, particularly those in their 20s, 30s and 40s.
When a young New Zealander passes away they often do so without a Will. Although discussing one’s mortality can feel uncomfortable, knowing that you have a valid Will can provide you and your family with the peace of mind that your final wishes are known and will be adhered to.
When thinking about a Will there are some important questions you need to ask yourself.
Who should be the executor and trustee?
All Will-makers must appoint an executor and a trustee. An executor obtains probate for your Will from the High Court and your trustee carries out your wishes. Although the executor and trustee are separate roles you may appoint the same person to fulfil both.
Quite commonly a Will-maker will appoint a family member to these positions. However, it’s important that you think about whether a person is suitable for such a role in regard to the dynamics of your family.
Keep in mind that in times of grief many people will operate on the periphery of their personalities. Ask yourself whether appointing certain people could cause strain on your family’s relationships. For example, if your parents are separated, will choosing one over the other cause unnecessary friction?
If you choose not to have a family member or if the distribution of your estate is likely to be complicated, you may prefer to appoint your lawyer or a trustee company.
What are my final wishes?
In your Will you instruct your trustee to distribute your estate to whomever you wish, for example you may like to:
  • Leave your property to your partner, children, grandchildren, other family members or friends you wish to provide for
  • Leave some of your property, money or other assets to a family trust
  • Specifically leave items such as cash, jewellery, artwork or furniture to particular friends or family members
  • Leave money to a specific charity or organisation
  • Give instructions to your executors if you own a business, and
  • Instruct your executor as to how you would like your body to be handled, whether you’d like to be cremated or buried (and if so, where?) and how you would like your funeral to be conducted.
If you are a young person and have assets, which could include insurance policies, but do not have a Will then on your death your parents would need to apply to the court to administer your estate. This is very difficult for a grieving parent as generally under the law they are the ones to inherit. They are left feeling that they are trying to benefit from your death. If, however, you have left a Will under which your parents benefit then they know that was your wish and are left feeling more comfortable.
When drafting a Will keep in mind that you may be obligated to provide for particular people (such as your spouse or partner, children and so on) under the Family Protection Act 1955, the Property (Relationships) Act 1976 and the Testamentary Promises Act 1949.
How will I pay for a funeral?
Money is the last thing people want to think about when grieving. Therefore it’s practical to give this question some serious thought. Many young New Zealanders are only beginning to build their capital and many have substantial debt. Accordingly you may want to contact your insurance provider about both life and funeral coverage insurance.
Funerals can cost thousands of dollars. If it’s unlikely that your estate could cover your funeral costs, preparing for the future will save your loved ones unnecessary financial strain.
The same can be said if you are servicing a mortgage. You may want to ensure that you have insurance cover for your mortgage and also have income protection insurance for your partner and/or children.
Who can draft a Will?
In order for your Will to be legally valid:
  • You must be 18 years old or over
  • It must be in writing
  • It must be signed by you, and
  • It must be witnessed and signed by two people who are not benefitting under the Will.
It’s very important that anyone who has assets also has a current Will. Make yourself a time in the next few weeks to think about the questions we’ve posed above. If your Will needs updating or you need to make your first-ever Will, do get in touch with us as soon as possible to discuss your wishes. It will give you and your family great peace of mind to have this End of Year Resolution ticked off.

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