New Zealand News Items

1. New requirement for Companies

From 1 May 2015 new registration requirements come into force for applications to incorporate a New Zealand limited liability company. All New Zealand incorporated companies must have at least one director who lives in New Zealand or who lives in Australia and is a director of an Australian incorporated company. Existing companies on the companies register will have 180 days to comply with these New Zealand ‘resident director’ requirements. In addition, from 1 July 2015 all directors must provide their place and date of birth and all companies must supply their ultimate holding company details (if applicable).

Contact us if you think you may be affected.

2. Tax update

Parental tax credit (PTC): For babies born on or after 1 April 2015, the Government will increase the parental tax credit from $150 a week to $220 a week, and extend the payment period from eight weeks to ten weeks. How much you receive also depends on:

• your total family income before tax
• the number of dependent children in your care and how old they are
• the number of new-born children per year

You can either receive PTC or paid parental leave. You can’t receive both at the same time. And you can’t receive PTC if your family income for the full eight to ten weeks includes an income-tested benefit, NZ Super, a veteran’s pension, a student allowance, or accident compensation from ACC (unless you are receiving this for less than three months).

3. Insolvency update

Decision on voidable transactions: The Supreme Court released its much awaited decision in some long-running litigation concerning voidable transactions. The Court adopted an interpretation of the voidable transaction regime that it acknowledged was against the “generally accepted view in New Zealand”. The Court’s decision means that it will now be significantly easier for a creditor to defend voidable transaction claims made by a liquidator. It provides greater certainty to suppliers that they will be able to retain payments received from debtors who subsequently go into liquidation. However, it will make it more difficult and expensive for liquidators to make recoveries on voidable transaction claims, which have been an important source of funds for conducting liquidations. Creditors may now rely on the “good faith defence” namely that they took a payment form a company that was subsequently placed into liquidation in good faith and without knowledge that it was insolvent at the time of the payment being made. Practically speaking, it will be in a creditor’s interests to know as little as possible about the debtor’s financial position prior to receiving a payment. Creditors should seek to avoid making reference to the potential insolvency of the debtor in writing. The decision may also deter creditors from taking enforcement action, which subsequently may be used as evidence of their knowledge.

4. Employment Law update

The government has made some major employment relations changes, effective from 6 March 2015. Changes target flexible working arrangements, rest and meal breaks, continuity of employment for vulnerable employees upon restructuring, the good faith provisions, collective bargaining, and how the Employment Relations Authority gives its determinations.

Flexible working arrangements: until now these arrangements have only been available to caregivers who have been employed at their place of work for six months or more. From March, all employees will have the right to request flexible working arrangements from their first day on the job. There’s no longer a limit on the number of requests an employee can make in a year. When employers receive requests for flexible work arrangements, they must respond within one month, rather than three as before. The response must be in writing and, if a refusal, it must explain why.

Rest and meal breaks: Previously, provisions for rest and meal breaks were strict. They now seek to balance the importance of rest and breaks for employees with what is practical for the business. Essentially, employees are entitled to breaks and, if it’s not possible for the employer to ensure breaks for employees, the employer must offer reasonable compensation. Employees and employers can’t contract out of the right to rest and meal breaks though under some circumstances an employer might be exempt from giving breaks or may restrict breaks when the restrictions are reasonable. Key to the new provisions is that employers and employees agree on whatever arrangements are put in place and that arrangements are reasonable. If you are considering varying the arrangements around rest and meal breaks for your employees, touch base with your employment advisor to discuss your approach. As with other employment matters it is important to follow fair process and document any agreements made with employees so that, if required, you can show you have acted fairly and reasonably.

Continuity of employment: These changes relate specifically to employees in situations where an employer is restructuring or selling a cleaning or catering business and employees are transferring to the new employer. A 2012 review found businesses have difficulty implementing the provisions in practical terms. The changes include set timeframes for employees to elect to move to a new employer; the outgoing employer’s obligation to provide the new employer with detailed information on employees and their entitlements; a way for the outgoing and incoming employers to share responsibility for employee entitlements if they can’t agree on it; protection for employers from unjustified increases in employment costs; and provision for SMEs to be exempt.

Good faith provisions and confidential information: Where the employer proposes to take a decision which will or is likely to affect that employee’s continued employment adversely, changes to the good faith provisions set out what confidential information an employer has to give an employee. The employer must give the employee confidential information where it relates to them but does not have to provide confidential information on anyone else if doing so would involve an unwarranted disclosure of their affairs. Nor are employers required to give confidential information that legally must stay confidential, or where there is a good reason to keep the information confidential (for example, to protect the business’ commercial position). Where allegations are made against an employee, the employee should still know the identity of their accuser and the nature of allegations made against them unless there is good reason to keep this information confidential.

Collective bargaining: The new collective bargaining framework includes provision that collective bargaining does not have to be concluded, though employers will not be able to end bargaining or refuse to enter into a collective agreement just because they object in principle to collective bargaining or collective agreements. A party to collective bargaining can apply to the Employment Relations Authority for a determination as to whether bargaining has concluded. Employers will be able to opt out of multi-employer bargaining from the start.

New employees who are non-union members are no longer covered by terms and conditions of a collective agreement for the first 30 days of their employment. Employers may respond to partial strikes by imposing proportionate pay reductions and unions must provide advanced written notice of any proposed strikes and lockouts.