Newsletter Winter 2020 2020-06-23T09:43:54+00:00

ARL News

Made it! All those years of hard work have paid off!

ARL Lawyers are excited to have Scott Balloch and Sophie Aitken admitted to the bar. It was a proud day for the family and friends of Scott and Sophie and great sense of achievement for them both.






Overview of the redundancy process

Redundancy can be defined as a situation where an employee loses their job because their position is no longer needed or useful to the employer. As in all employment affairs, the employer must act in good faith and follow a fair process during the redundancy process.

The process of redundancy can be an emotional time and cause uncertainty for many employees, and this is one reason why the redundancy option, from an employer’s perspective, should be the last option. Redeployment should always be considered in the first instance, where applicable.

To start the redundancy process, the following steps must be followed:

  1. Employers are to document their proposal in writing. This document needs to clearly explain the changes that will be made to the business, an outline of how the employer will be making their decision, and timeframes for the employer’s decision-making process.
  2. The employer then gives this written proposal to all employees in a similar category of employment and is required to allow employees the ability to meet with the employer to discuss further and provide their feedback.
  3. The employer then gathers the feedback and considers all responses received.
  4. After considering all the feedback, the employer will confirm the new structure of the business. This should be given to all employees in writing followed by a meeting with the employees. The employer is required to advise all employees of their decisions. At this point, the employer would give the employees their notice, in accordance with their Individual Employment Agreement (“IEA”), that their position is no longer required. If there is no IEA in place, a reasonable notice period must be given. This can be decided based on the employee’s length of service, the reason for the redundancy, the industry norms and/or the employee’s ability to find other employment. The employer will have to choose whether to pay the employee for their notice period or have the employee work out their notice period. If an employee resigns during this notice period, the employer is not required to pay for the balance of the notice period owing.
  5. The employer will then make the changes to the business and support the employees throughout these changes. Support can include (but is not limited to) counselling sessions, career advice, interview training, curriculum vitae support etc. As the redundancy process can be a very stressful time for employees, it is extremely important to make sure that all employees are receiving the support they require.

Regarding final payments to employees that have been made redundant, this pay must include any unused annual leave and wages, along with any other entitlements up to the end of the notice period.

If you are an employer or an employee facing this situation, it is best to seek legal advice. Please contact Ben Sheehan or Joshua Pietras.


Employment rights for ACC claims – both sides of the coin

In 2020, it would be hard to come across a New Zealand household who has not either had a member of the household claim ACC for an injury or at least known someone that has had to. Statistics New Zealand reports that in 2018 alone, there were just short of 240,000 workplace injury claims across the country. With so many people relying on ACC to maintain a livelihood, what do employees and employers need to know about their rights in the process?

If an employee is injured in their workplace and meets the ACC pre-requisites to receive compensation for their wage/salary, under the Accident Compensation Act 2001 (“the Act”) the employer must account for the first week of the employee’s wage (of up to 80% of their normal weekly wage) if they are incapacitated due to the workplace injury.

This provision further encompasses employees with multiple jobs, whereby if the injury has incapacitated the employee, resulting in them losing the opportunity to earn a wage in their other jobs also, the employer of the job on which the employee was injured must also cover the wages for the employee’s other jobs for the first week of the employee’s injury leave.

As an employer, if your employee obtains a workplace injury, you are entitled to complete due diligence investigations to ensure their injury and leave is justified. For example, you may pay for the employee to go to a medical or health professional to be assessed and require a medical certificate to be provided that reiterates the state of the injury and medical recommendations.

In recent years, many employers have tried to make employees take their sick/holiday leave whilst on ACC. This cannot be enforced and is a breach of the Act. However, if an employee cannot work because of an injury obtained outside of work, under the Act, an employer can make the employee use any unused sick leave in that first week of incapacity.

Whilst on leave for a workplace injury, the Accident Compensation Act 2001 and the Human Rights Act 1993 provide protections for employees from being dismissed during their injury leave. An employer is permitted to dismiss the employee only if through a thorough process of medical examinations/evidence and professional advice it is determined that the employee will not be able to return to the job or an adapted version of the job at any point.

The case of McKean v the Board of Trustees of Wakaaranga School ([2007] ERNZ 1) sets out a series of factors which should be considered and investigated prior to dismissal by an employer on medical grounds. These factors, amongst others, include the length of employment, type of employment, nature of the injury and probability of recovery.

In many cases, where the injury leave is more than a week, the employer and employee can agree that the employer will top the employee’s ACC compensation wage up to 100% by using existing sick leave available to the employee. However, there is no obligation on either party to do so.

For further advice or assistance please contact Ben Sheehan or Joshua Pietras.


Mortgage-free holiday – overview

During these unprecedented COVID-19 times, the term ‘mortgage-free holiday’ has been heard now more than ever. Many New Zealanders’ incomes have been negatively affected, which can make it difficult to meet mortgage payments (amongst other payments). A mortgage-free holiday may be an option worth considering.

The mortgage-free holiday has always been an option for mortgagors even before COVID-19. Its purpose is to offer some reprieve during unexpected events that come up through life such as a change in income, death of a loved one, an injury etc. Each bank has its own application process and criteria that must be met to be eligible for a mortgage-free holiday. If you are approved, a mortgage-free holiday is usually for 90 days.

During COVID-19 the banks have worked with the government to create a mortgage-free holiday that is for a length of 6 months. The only criteria required is that you have been affected financially by COVID-19.

It is important to keep in mind when considering a mortgage-free holiday that the interest payable will still accrue on the loan amount. This simply means that the principal payments are deferred for the length of the holiday, but since interest is still accruing, your loan amount will increase through the mortgage-free holiday, which means that it will take you longer to pay back your loan.

There are some alternatives to a mortgage-free holiday:

  1. Make interest-only payments. This would mean that the principal amount of your loan would remain the same but the interest would not accrue as you would be making this payment.
  2. Extend the term of your loan. This would likely make the loan payments less than what you have been previously paying, but again this will potentially mean that you will be paying the loan back over a longer amount of time.
  3. Discuss lowering payments with your bank. Many banks will consider the possibility of lowering your payments for a period of time.

It is worth remembering that banks must act in a responsible manner and treat mortgagors fairly and reasonably, which includes when mortgagors are experiencing financial hardship. With that said, if you are experiencing financial difficulty and making your mortgage payments has/will become difficult, the first action you should take is to contact your bank and discuss all your options in full.

In these times of hardship and uncertainty which have come with COVID-19, a mortgage-free holiday is an option to relieve some of the financial stress. However, as mentioned, it is important to understand the repercussions of a mortgage-free holiday in the long term.

For advice or assistance on mortgage-free holidays, please contact Jason Taylor or Luke Havler.