Current FYIs

Suggest an FYI

Employment Law

25 Nov 2009

Legislation Update

The new Employment Relations (Rest and Meal Breaks) Amendment Bill, introduced by Minister of Labour Kate Wilkinson in late October 2009, plans to make significant changes to the existing Rest and Meal Breaks regime. The changes proposed include enhancing flexibility and allowing the employer to set the timings and durations of breaks where no agreement can be reached with employees.

Key features of the new Bill include:

The duration of rest and meal breaks is no longer specified, although the employer must provide the employee with a reasonable opportunity for rest, refreshment and attending to personal matters, and be appropriate for the duration of the employee's work period. Rest breaks must still be paid.
The entitlement can be subject to certain restrictions, but only if they are reasonable and necessary given the nature of the employee's work, and relate to one or more of the following:
- The employee continuing to be aware of his/her work duties, or if required, continuing to perform some of his/her work duties during the break;
- The circumstances in which an employee's break can be interrupted; or
- The employee taking his or her break in a specified location.
There are no default timings for rest and meal breaks. Instead the timing and duration of the rest and meal breaks may be agreed between the employee and the employer. An employer must provide the employee with a reasonable opportunity to negotiate with the employer and reach agreement on the times and duration of breaks.
Where there is no agreement the employer can specify the times and durations of the breaks, but these must be reasonable.
An employer may specify reasonable times and durations of meal breaks that enable the employer to maintain continuity of service or production, having regard to the employer's operational environment or resources, and the employee's interests.
An employer is not required to provide rest and meal breaks in the following situations:
- Where an employer and an employee agree that the employee will be provided with compensatory measures; or
- Where, having regard to the nature of the employee's work, the employer cannot reasonably provide the employee with rest and meal breaks.
To the extent an employer is not required to provide rest and meal breaks, the employee is entitled to compensatory measures. "Compensatory measures" are defined in the Bill as including (without limitation) measures such as a later start time, earlier finish time or time off in lieu.
If an employer provides compensatory measures that involve time off work at an alternative time, the employee is entitled to the same amount of time off work they would have received had they taken rest breaks and meal breaks.

The Bill is intended to receive the Royal Assent no later than 30 December 2009, and to come into force the day after it receives the Royal Assent.

The Holidays Act 2003 - Are you confused?

If you find the Holidays Act 2003 a minefield to work with, you are not alone. In a recent survey, a large number of New Zealand employers indicated they find the Holidays Act 2003 complicated and confusing.

The surveyed attracted over 700 responses, with many employers confirming that there is significant confusion around Holidays Act issues. Key issues which were highlighted as being problematic for employers were:

Whether a casual employee is entitled to receive an alternative holiday when they have been required to work on a public holiday;
Whether casual employees are entitled to paid sick leave and bereavement leave;
How to calculate relevant daily pay; and
What entitlements employees have to annual holidays and sick leave while they are on parental leave and long term ACC.

In response to the high level of concern raised, the National Government has set up a Working Party to review the Holidays Act. The aim is to make the Holidays Act easier for employers and employees to understand and apply. The Working Party is due to submit its report by 15 December 2009, and the Minister of Labour will then present a paper to Cabinet in March 2010 recommending amendments to the Act, if necessary.

It is likely that any changes to the Act will be limited to the issues identified above, as the Government has made it clear that there will not be any changes to employees' minimum entitlements.

"KiwiDonor" - New Payroll Giving Provisions

From 7 January 2010, employers will be able to readily facilitate charitable and other public benefit gifts by their employees under new, optional "payroll giving" provisions. The new payroll giving provisions offer potential benefits for employees, employers and approved donee organisations. In particular:

The new provisions offer employees a convenient way of making regular gifts to approved donee organisations while benefiting from an immediate tax credit, without having to retain receipts and file a tax credit claim at the end of the year.
Employers may opt to use the new provisions to achieve greater employee satisfaction and to connect with the wider community, as an extension of their existing corporate social responsibility programmes.
Approved donee organisations have the opportunity to build partnerships with employers to secure regular funding, without incurring substantial fundraising costs.

The new provisions were introduced as part of the Taxation (International, Life Insurance, and Remedial Matters) Act 2009, which received Royal Assent on 6 October 2009. A three month lead-in period has been given to allow employers and the IRD to prepare their systems for the implementation of payroll giving.

Key features of the new payroll giving provisions include:

The new provisions are an extension of the existing tax credit provisions for charitable or other public benefit gifts. The rate of the credit is the same, i.e. 1/3 of the amount of the employee's gifts in a pay period. The key difference is that the tax credit is applied in each pay period, rather than being claimed at the end of the year.
Prior to 1 April 2008, the tax credit was capped at $630 (so the tax credit could be claimed for gifts of up to $1,890). Under the new provisions, the amount of the tax credit for an employee in any pay period is capped at the amount of PAYE deductions for the employee for that pay period. Any excess tax credit in a pay period will not be refundable to the employee.
It is optional for an employer to offer payroll giving to its employees.
An employer can only use the new provisions if they file employer monthly schedules and PAYE income payment forms electronically, using IRD's Ir-File system.
An employee must ensure that the proposed recipient of their gift is an approved donee organisation, and provide their employer with sufficient details to enable the employer to transfer the gift to that organisation.
An employer must transfer an employee's gift to the relevant organisation within a specified time. The gift is held in trust for the employee until it is transferred.
If an employer does not transfer an employee's gift to the correct recipient, the employer may be charged with a penalty of 150% of the amount of the tax credit applied against the employee's PAYE deductions.
An employee can still make additional charitable or other public benefits gifts and claim a tax credit under existing tax credit provisions at the end of the year. Those existing provisions cannot be used, however, in relation to payroll donations.

The legislation does not prescribe the types of arrangement that may be entered into to facilitate the implementation of payroll giving. As a result, employers are free to determine their own arrangements with employees, approved donee organisations, and payroll giving intermediaries.