In New Zealand, directors may become liable for reckless trading (agreeing or causing or allowing the business of the company to be carried on in a manner likely to create a substantial risk of serious loss to the company’s creditors) per the Companies Act, earlier than the point of unavoidable insolvency.

Interestingly, the Supreme Court of the United Kingdom ruled for the first time in October 2022 on what triggers the directors’ duty to have regard for creditors’ interests ahead of shareholders interests (that is the company). The case is BTI 2014 LLC v Sequana SA and others.

The appellants argued that the directors of an insolvent company should be liable to creditors for the amount of the dividend it had paid almost ten years before. Importantly, the company was neither insolvent nor on the verge of insolvency at the time of the dividend.

The appeal was dismissed based on the common law rule in the case, West Mercia. The rule effectively means that the fiduciary duty of directors to act in good faith in the interests of a company is widened when insolvency is imminent. It is only when insolvent liquidation or administration is unavoidable that the shareholders cease to have any interest in the company, and creditors’ interests become paramount.

The United Kingdom court rejected the idea that this can occur earlier, for example, when there is a ‘real and not remote risk’ of insolvency, per some Australian authorities.

In Sequana Lord Briggs’s comments that shareholder interests should remain more important than creditors up to this tipping point are persuasive, after all, liquidation may not happen and insolvency may be temporary.

Conclusion

Currently the United Kingdom view of when director obligations to creditors are triggered differs from New Zealand and Australia, being when insolvent liquidation or administration are unavoidable. The case is relevant because New Zealand courts often consider the outcomes of cases in other common law jurisdictions, such as the United Kingdom and Australia. The findings of this case may or may not influence New Zealand law in the future.

This article is not a substitute for legal advice and you should contact your lawyer about your specific situation.

Please feel free to contact Steven Moe at stevenmoe@parryfield.com or Kris Morrison at krismorrison@parryfield.com should you require assistance.

 

Advertising your fundraising effort

Your business is thriving  and you need substantial additional capital to fund the next stage of your growth.  You have read up on the Financial Markets Conduct Act 2013 (“FMCA”) (available here) and would prefer to raise funds through one of the Schedule 1 exemptions from product disclosure statement requirements (discussed here).  Being proactive, you have already approached your close business associates, relatives, and employees while also taking full advantage of your statutory small offers limit, but it is still not enough.

You decide that it is time to widen the pool of potential investors – you need to reach the deeper financial resources of Wholesale Investors (discussed here) by advertising your offer to them.  But how do you that and what are some of the risks in advertising to Wholesale Investors?

 

Inserting a Disclaimer

To begin with, it is important to be open and honest with the people who come across your offer that your investment is only open to Wholesale Investors.  Doing so will avoid potential misunderstandings and hopefully prevent a flood of enquiries from people that will not qualify for the Wholesale Investor exemption.  We have seen offers include a disclaimer similar to the one below to highlight that the offer is only available to Wholesale Investors:

DISCLAIMER: [These] offers are only open to investors who fall within the exclusions applicable to offers made to “wholesale investors” as set out in Schedule 1, clauses 3 (2)(a)-(c) and 3 (3)(a)-(b)(ii) of the Financial Markets Conducts Act 2013 (FMCA). You can obtain further information on FMCA requirements, and whether you come within the exclusions and their requirements at [our website]

 

Promotional Conduct

Making it clear that your offer is only open to Wholesale Investors is just the first step.  You also need to ensure that your promotional efforts are not misleading or deceptive (see S19 of the FMCA).  The recent case of Du Val Capital Partners Limited v Financial Markets Authority [2022] NZHC 1529 offers some key takeaways in respect of the S19 fair dealing requirements:

  1. In assessing whether your offer may be misleading or deceptive, your target audience matters. In this regard, your choice of marketing channels is relevant: advertising your Wholesale Investor-restricted offer in social media and other online channels may be a factor in the Financial Markets Authority (“FMA”) determining that your offers were targeted at inexperienced investors.
  2. You cannot assume that because your offer is restricted to Wholesale Investors, your advertising audience will be more experienced and knowledgeable. Wholesale Investors are not all inherently more sophisticated than non-Wholesale Investors.
  3. If your promotional material is misleading, it cannot be saved by subsequently making more detailed materials available to investors.

 

Final Caution

The FMCA requires that an offeror know its target audience and engages with them openly and honestly.  This includes ensuring that promotional materials are not misleading or deceptive.  If you have any questions on fundraising, please feel free to reach out to us if you would like specific input on your context.  We have helped many companies with their fundraising efforts and each situation is unique.  You can contact Steven Moe stevenmoe@parryfield.com, Aislinn Molloy Aislinnmolloy@parryfield.com, Michael Belay michaelbelay@parryfield.com or Yang Su yangsu@parryfield.com at Parry Field Lawyers.

 

Introduction to the New Zealand Emissions Trading Scheme

Background and Operation of the New Zealand Emissions Trading Scheme

The New Zealand Emissions Trading Scheme (the “NZ ETS”) was introduced as a tool to combat climate change in Aotearoa New Zealand. It was created under a 2008 amendment to the Climate Change Response Act 2002 (the “Act”) with the purpose to help Aotearoa New Zealand meet its international greenhouse gas emissions obligations under the United Nations Framework Convention, the Kyoto Protocol and the Paris Agreement, and to meet its 2050 targets and emissions budgets.

The NZ ETS achieves its purpose by setting a requirement for businesses to measure their annual greenhouse gas emissions and report it to the Government. The NZ ETS broadly covers all of Aotearoa New Zealand’s emissions and includes the following sectors: forestry, agriculture, waste, synthetic gasses, industrial processes, liquid fossil fuels and stationary energy.

These sectors, excluding agriculture, also pay ‘the price for their emissions’ by having to acquire and then surrendering one New Zealand Unit (“NZUs”) to the Government for each one tonne of CO2 equivalent greenhouse gas they emit. The agriculture sector will be governed by a separate greenhouse gas levy system which will come into effect in 2025. Obligations under the NZ ETS are set high up the supply chain so consumers and smaller businesses are not directly caught by the NZ ETS obligations. Nevertheless, consumers do indirectly pay for emissions as the costs of NZUs are passed down the supply chain.

NZU’s

NZUs can enter the emission trading market in multiple ways. The Government controls two key methods by publicly auctioning NZUs and freely allocating NZUs to certain emissions-intensive and trade-exposed industries. The other main way that NZUs enter the emissions trading market is when participants in the NZ ETS ‘earn’ NZUs from the Government by growing forests and undertaking other activities that remove emissions. All NZUs can then be bought and sold between participants in the NZ ETS through the New Zealand Emissions Trading Register.

Non-Compliance with the NZ ETS

The Environment Protection Authority monitors compliance under the NZ ETS with strict liability offences resulting in fines for low-level non-compliance – please see here for a breakdown of fines. Prosecution is available where there is more serious non-compliance.

 

If you would like to know more about the statutory requirements for the New Zealand Emissions Trading Scheme, please do feel free to reach out to us.

 

The Limited Partnership regime was introduced fairly recently in New Zealand through the Limited Partnership Act 2008.  As such, limited partnerships may not be as familiar to Kiwi entrepreneurs and founders.  In this article, we highlight a few of the advantages and disadvantages of choosing a limited partnership for your business structure.  In our view, they represent a relatively simple structure which can really be useful in the right situation.

 

What is a Limited Partnership?

Limited partnerships are a corporate structure that combine some key features of companies (such as separate legal personality) and partnerships (such as tax pass-through treatment).  In a limited partnership, on entity is the general partner(s) who manage(s) the limited partnership (day to day running) while other investors are limited partners who act as silent partners (see diagram below).

This structure is often used by venture capitalists or fund managers as the corporate vehicle for investor partners to invest their funds.  For more information on the basic requirements of a limited partnership, along with a comparison of other structures, please see here.

Why choose a Limited Partnership?

Positive Comment
Liability is ring-fenced A limited partnership is a separate legal entity, and limited partners’ liability is restricted to contributed capital
Effective practical and legal control Only general partners may manage the affairs of the limited partnership
Tax pass-through treatment Tax consequences of the limited partnership pass directly to the partners
Privacy Identity of limited partners and contents of partnership agreement do not have to be publicised

 

Why wouldn’t I choose a Limited Partnership?

Drawback Comment
General partner is jointly liable with the limited partnership for the liabilities of the limited partnership Often addressed by choosing a limited liability company to act as general partner, providing liability ring-fencing
More involved set-up All limited partnerships require a written partnership agreement
Investors negotiate their rights and obligations E.g. Right to remove/appoint general partner(s), exit rights, pre-emptive rights
Financial Markets and Conducts Act 2013 A partnership interest in a limited partnership may be a financial product requiring FMCA compliance

We have helped many founders and companies structure their business and each situation is unique.  If you think a limited partnership may be a suitable option for your business, feel free to reach out if you would like specific input on your context.

If you enjoyed this content then we also have a guide for people doing business in New Zealand which you can download for free here.

 

 

 

 

 

 

 

 

 

 

 

 

 

There are many business structure options in New Zealand, including companies, partnerships and Trusts, and you want to be sure you are picking the right one. We frequently assist clients who are considering starting a business navigate the different business structure options to find what best suits their needs. The various business structure options each have their own pros and cons. What the best structure is for you will depend on your particular circumstance, desire and purpose.

The simple and easy structure which are well understood, such as a Company or Sole Trader, will work best for most businesses. If you are purpose driven, a Charitable Trust or Incorporated Society may be more appropriate. Increasingly we are also working with clients who want to merge both purpose and profits and for these clients we assist by creating unique dual structure approaches. In this article we have summarised the key points for the most common structures that are used in New Zealand. We are happy to meet and discuss options with you.

Two other critical points before we look at the options:

  • Get your strategy and purpose right before you decide on a legal entity type to use. Each one has positives and negatives so know what your end goal and the impact you want to see is first – after that look at which will help you get there.  They are each just tools for empowering you to have impact.
  • Second, we are offering legal thoughts on key elements of these structures but there are other considerations too – in particular always ensure you get great accounting and tax input on the financial side of these alternatives.

Now turning to the options:

Company
Who Owner = Shareholder
Manager = DirectorThe owners may also be the manager
Liability Is a separate legally recognised entity
Laws The Companies Act 1993 governs companies
Who signs The Director
If things go wrong Companies limit liability for the owner*
Key documents None required.
Can choose to adopt a constitution or shareholders agreement
Visibility Ownership and management is publicly visible on Companies Register
Difficulty to start Moderate

* There are certain limited circumstances when the owners of the company may be liable. If the owners are also managing the company as directors, they are exposed to certain liability as managers.

 

Sole Trader  
Who Owned and managed by ‘sole’ owner
Liability Not separate from entity
Laws No specific law governs sole traders
Who signs The owner
If things go wrong The owner is personally liable
Key documents None required
Visibility Private and not registered
Difficulty to start Easy

 

Partnerships
Who Owner = the Partners
Manager = the Partners manage
Liability Not separate from entity
Laws Partnership Law Act 2019
Who signs Partners
If things go wrong Owners are personally and jointly liable
Key documents None required
Can choose to have a Partnership Agreement
Visibility Private and not registered
Difficulty to start Moderate

* One owner can bind all owners.

 

Limited Partnership
Who Owner = Limited Partner
Manager = General Partner
Liability Is a separate legally recognised entity
Laws Limited Partnership Act 2008
Who signs The General Partner
If things go wrong The General Partner
Limit liability for the owner**
Key documents Requires a Limited Partnership Agreement
Visibility Private for the Limited Partners, public for General Partner
Difficulty to start High

* Each Limited Partner will account for tax in accordance with its individual tax position.

** If the owner participates in the management of the business, they will be liable.

 

Unincorporated Joint Venture
Who Owners = Partners
Management determined by the Joint Venture Agreement
Liability Not separate from entity
Laws Contract law, but no specific law governs Unincorporated Join Venture
Who signs Each partner
If things go wrong Partners separately liable or as decided by the Joint Venture Agreement*
Key documents None required
Can choose to have a Joint Venture Agreement
Visibility Private and not registered
Difficulty to start High

* Owner will account for tax in accordance with its individual tax position.

 

Trading Trust
Who Owner = settlor/donor gives assets (trust fund) to the Trading Trust on trust for the benefit of the beneficiary
Management = the Trustee Company,  manages the trust fund and pass on benefits to the beneficiary
Liability Not separate from entity, creates an equitable relationship
Laws Trusts Act 2019 and Companies Act 1993
Who signs The Trustee Company
If things go wrong The Trustee Company
Key documents Trust Deed
Visibility Private and not registered
Difficulty to start High

 

Charitable Trust
Who Owners = settlor/donor gives property (trust fund) to the Charitable Trust to benefit the community through charitable purposes
Management = Trustees manage the trust fund to advance the charitable purposes
Liability Is a separate legally recognised entity
Laws Trusts Act 2019 and Charitable Trust Act 1957
Who signs The Trustees
If things go wrong The Trustees
Key documents Trust Deed
Visibility Registered on Charitable Trust Register and if a registered charity on Charities Services
Difficulty to start Moderate

 

Incorporated Society 
Who Management = the Committee manages the funds to advance the purpose
Liability Is a separate legally recognised entity
Laws Incorporated Society Act 2022*
Who signs The Committee, but this depends on the Constitution
If things go wrong The Committee
Key documents Constitution
Visibility Registered on Incorporated Societies Register and if a registered charity on Charities Services
Difficulty to start Moderate

* This is a new Act which has recently come into force, for more information on the new Act and requirements see our Incorporated Societies Act 2022: Information Hub.

Co-operatives Companies
Who Owner = Members/shareholders
Governance = Directors
Liability Is a separate legally recognised entity
Laws Co-operative Companies Act 1996 and Companies Act 1993
Who signs The Directors
If things go wrong Companies limit liability for the owners
Key documents Constitution
Visibility Registered on Companies
Difficulty to start Moderate

For lots more information on co-operatives visit Cooperative Business New Zealand – https://nz.coop/

If you would like to discuss or set up the above-mentioned business structure or other commercial matters, you can contact:

What is a Wholesale Investor?

Companies need money, it is the fuel for the engine of their growth.  Very often they will get that money through issuing equity (shares to people who invest) or issuing debt (loans to people who provide finance).  If you do either of these activities you are offering a financial product and captured by the Financial Markets Authority and their rules which state you need to provide extensive disclosure documentation to those investing – unless an exemption applies.

In this article we want to talk about two critical exemptions which we see are commonly used.

Wholesale Investors

A wholesale investor is essentially a person or an organisation with enough previous investing experience that they do not require disclosure documentation. Their experience is often shown by their investment activity, wealth and/or income.  Wholesale investors can be exempted for all offers of financial products or only for some offers of financial products and the critical points to consider if you want to rely on this exemption are:

  • Is the investor an investment business, such as a financial adviser or a licensed insurer
  • Has the investor recently held or acquired financial products of aggregate value of over $1 million
  • What is the investor’s wealth – do their net assets exceed $5 million
  • Is the investor able and willing to certify that they are sufficiently experienced with the particular financial product you are offering
  • Is the investor subscribing for at least $750,000 worth of financial product

Crowdfunding

Another option is crowdfunding – using this exemption, you will have to work with an FMA licenced intermediary to raise the funds.  The licenced intermediary will offer your equity, debt or other financial products to investors for you.  You can use the crowdfunding exception in combination with other exclusions (such as the wholesale investor exclusion above and others which we touch on here), but there is a limit of $2 million in any 12-month period (which includes any ‘small offers’ in that time period).

The FMA has provided a helpful overview of various options and exemptions which you can access here.

We have helped many companies with their capital raising and each situation is unique so feel free to reach out if you would like specific input on your context.

From 16 August 2022, the Fair Trading Amendment Act 2021 will create new obligations that are particularly relevant for small businesses. This is a good opportunity to review your standard form contracts, business practices and policies to ensure you comply.

Unfair Contract Terms

The existing prohibition on unfair contract terms will be extended to include business-to-business contracts valued at up to $250,000 per year.

A term may be unfair where:

  • It would create a significant imbalance in rights between the parties; and
  • The term is not reasonably necessary to protect the legitimate interests of the party relying on it; and
  • One of the parties would suffer detriment (financial or otherwise) if the term was to be relied upon.

A court will also take into account the overall context of the contract and the extent to which the term is transparent.

The new legislation will not apply to contracts entered into before 16 August 2022 (unless renewed or varied from that date onwards). Insurance contracts will be exempt until 1 April 2025.

If a Court declares a term to be unfair, it will be an offence for a party to include, apply, enforce or rely on that term in a small trade contract. The offence is punishable by a fine of up to $200,000 for an individual or up to $600,000 for a body corporate.

If your business uses standard form templates that may be caught by these changes, you should review these to ensure compliance. For assistance with reviewing, please contact:

雇主认证工作签证(“AEWV”)将于202274推出,以减少剥削,鼓励雇主在雇用移民之前培训、雇用和提高技新西兰本地人的技能。

它将取代六类临时工作签证:

  • 基本技能工作签证——将于2022年7月3日关闭;
  • 基本技能工作签证——原则上批准——将于2022年7月3日关闭;
  • 人才(认证雇主)工作签证——已于2021 10月31日关闭;
  • 长期技能短缺清单工作签证——已于2021 10月31日关闭;
  • Silver Fern求职签证——已于2021 10月7日关闭;和
  • Silver Fern实践经验签证——已于2021 10月31日关闭。

在使用经认可的雇主工作签证雇用移民之前,雇主必须:

1、在新体系下申请认证——即“雇主审查”;

2、申请工作检查,以确保他们想要填补的职位不能由新西兰人担任——即“工作审查”;和

3、要求移民工人申请签证——即“员工审查”。

 

雇主审查

 

任何在当前体系下的认证雇主(即与人才(雇主认证)工作和居留签证相关的雇主)如果想在新的AEWV体系下雇用移民,必须申请并满足新认证体系的政策要求。

认证有三种类型:

1、标准型 – 在任何时段能雇佣不多于5名AEWV上的移民员工;

2、批量型 – 在任何时段能雇佣6名或6名以上的AEWV移民员工;和

3、其他 – 与特许经营人和劳务公司相关。

雇主现在就可以申请认证。

 

雇主审查 标准型认证

所有希望在AEWV上雇用移民的雇主必须满足标准认证的如下要求:

1、必须是真正在经营的生意,即:

  • 必须在IRD上注册为雇主;和
  • 如果是以合伙形式或个体户在经营,则企业所有人不得破产或处于无资产程序中;
  • 并且:
  • 在过去24个月内未发生亏损(折旧和税前);或
  • 过去6个月内的每个月都有正现金流;或
  • 有足够的资本和/或外部投资(例如创始人、母公司或信托公司的资金),以确保该雇主的业务保持可行和持续性;或
  • 有一个可靠的、不少于两年的计划(例如有已签订的业务合约)的,以确保该雇主的业务保持可行和持续性。

“可行且持续”包括能够:

  • 履行财务义务,如支付工资或薪金以及所有其他运营成本和费用;和
  • 购买库存(如相关)。

2、不得有违规的记录,例如:

  • 不能在劳动监察局的雇主黑名单中;
  • 必须遵守移民法,且不能受到因移民相关罪行被定罪而产生的永久禁令的限制;
  • 不能被禁止担任公司负责人;和
  • 不能是破产后重组的公司。

 

3、必须采取措施以尽量减少对员工的剥削,例如:

  • 为移民员工提供完成就业学习模块的时间;
  • 做出招聘决策的每个人都必须完成就业学习模块
  • 支付新西兰境内外的所有相关的招聘费用,包括广告费、中介代理费、雇主和工作审查申请费、培训和入职培训、健康和设备安全以及制服,但不包括机票;
  • 向移民员工提供与工作相关的信息(即如何申请IRD号码)和社区援助(例如:如何开立银行账户、寻找出租房);和
  • 雇主不得向移民员工收取就业附加费,不得非法担保员工,也不得进行任何非法扣费。

新西兰移民局处理标准型认证申请的费用是$740.00。

 

雇主审查 批量型的认证

 

想要在AEWV上雇佣6名或更多移民员工的雇主必须满足标准型认证的要求。之后,可能会有一项要求,即表明他们致力于培训和提高新西兰人的技能。

新西兰移民局处理大批量型的认证申请费是$1220.00。

如果您有标准型认证,但以后想要在AEWV上雇用6名或更多移民员工,您可以升级到批量型的认证,需要支付给移民局的费用是$480.00。

 

雇主审查 其他认证

对于特许经营人:

  • 必须满足标准型认证要求;
  • 必须已经营至少12个月;和
  • 必须有雇用新西兰人的历史。

新西兰移民局处理特许经营人申请的费用为$1980.00。

对于劳动力雇佣公司:

  • 必须满足标准型认证要求;
  • 必须将移民员工放置在具有AEWV的“合规公司”上。“合规公司”是指:
  • 是新西兰的注册公司;
  • 不在雇主黑名单上;和
  • 已声明他们没有移民法相关的争议;
  • 必须有良好的系统来监控就业和安全条件;
  • 必须有12个月的劳动合同历史;和
  • 公司第三方劳动力必须有至少15%是全职的新西兰人(即每周至少30小时)。

新西兰移民局处理劳工雇佣公司申请的费用是$3870.00。

对于大多数雇主来说,申请认证将是一个简单且相对较低接触度的评估。然而,新西兰移民局可能要求提供额外信息以评估申请,并可能在认证有效期间进行监控。如果新西兰移民局对雇主继续满足认证要求感到不满意,则可能撤销该雇主认证。

 

因此,我们建议您联系您的律师,以确保您符合要求并且遵守移民法和雇佣法的相关要求。

 

认证期限

 

在新西兰移民局批准认证申请后,雇主将获得为期12个月的认证。

 

延期时,将移民员工放置在第三方公司AEWV上的特许经营人和雇主将获得为期12个月的认证,所有其他雇主将获得为期24个月的认证。

 

工作审查

从2022年6月20日起雇主可以开始申请工作审查。

劳动力市场测试是指真诚地尝试招募新西兰公民或居民。

除非拟定工作的薪酬为每小时$55.52或以上,或同等年薪,或该职位在绿色名单上,否则所有工作都必须通过劳动力市场测试。

劳动力市场测试的有效期为六个月,自批准之日起,或直至雇主不再持有认证,以较早者为准。

 

员工审查

移民员工必须满足:

  • 品行要求,例如:从未被判处5年或5年以上有期徒刑;
  • 健康要求,例如:不太可能对新西兰的卫生服务或特殊教育服务造成重大支出或需求;和
  • 证书和工作经验要求。

薪酬

拟议的工作合同的薪酬必须等于或高于工资中位数,即每小时$27.76,且不能低于该职业在新西兰的市场工资率。

如果工作需要有其他没有在ANZSCO职业中描述的技能来完成,则雇主提供的薪酬必须高于该工作的市场工资率。

但是,建筑和基础设施、旅游和酒店业以及护理劳动力部门的特定工作不受工资中位数的限制。

AEWV的货币

AEWV签证可在提供就业的期限内授予,最多可以是:

  • 3年,如果时薪达到中位数;或
  • 2年,如果工资低于工资中位数,除非这2年的签证会导致签证持有人超过停工条件下允许的最长期限(即2年)。

 

如果工资低于工资中位数的2年工作签证会导致签证持有人超过停工设置允许的最长期限(即2年),则该签证只能在最长期限的剩余时间内发放。

 

审批时间

预计的审批时间范围是:

  • 标准型和批量型认证 – 10个工作日
  • 工作审查 – 10个工作日
  • 员工审查/AEWV – 20个工作日

 

请注意,以上并不能替代法律建议,您应该联系您的律师了解您的具体情况。

 

如果您想开始认证申请流程和工作审查流程,请电话联系我们, 03 348 8480或通过电子邮件发送至我们的邮箱immigration@parryfield.com

 

2022年6月8十

 

The Accredited Employer Work Visa (“AEWV”) will be introduced on 4 July 2022 to reduce exploitation and encourage employers to train, upskill and hire New Zealand workers before hiring migrants.

It will replace six temporary work visa categories:

  • Essential Skills Work Visa – will close on 3 July 2022;
  • Essential Skills Work Visa – Approval in Principle – will close on 3 July 2022;
  • Talent (Accredited Employer) Work Visa – closed on 31 October 2021;
  • Long Term Skills Shortage List Work Visa – closed on 31 October 2021;
  • Silver Fern Job Search Visa – closed on 7 October 2021; and
  • Silver Fern Practical Experience Visa – closed on 31 October 2021.

Before hiring a migrant on the Accredited Employer Work Visa, an employer will have to:

  1. apply for accreditation under the new system – “the Employer Check”;
  2. apply for a job check to make sure the role they want to fill cannot be done by New Zealanders – “the Job Check”; and
  3. request a migrant worker to apply for a visa – “the Worker Check”.

The Employer Check

Any employers accredited under the current system (i.e. in relation to the Talent (Accredited Employer) Work and Resident Visas) will have to apply and meet the policy requirements of the new accreditation system, if they want to hire migrants on the new AEWV.

There are 3 types of accreditation:

  1. Standard – to hire 5 migrant workers on AEWVs at any one time;
  2. High-volume – to hire 6 or more migrant workers on AEWVs at any one time; and
  3. Other – in relation to Franchisees and Labour Hire Companies.

An employer is able to apply for accreditation now.

The Employer Check – Standard Accreditation

ALL employers who want to hire migrants on AEWVs have to meet the standard accreditation requirements, which are as follows:

  1. Must be a genuinely operating business, i.e.:
  • Must be registered as an employer with IRD; and
  • If the employer is a partnership or sole trader, the business owner(s) must not be bankrupt or subject to a No Asset Procedure;
  • AND
    • have not made a loss (before depreciation and tax) over the last 24 months; OR
    • have a positive cash flow for each of the last 6 months; OR
    • have sufficient capital and/or external investment (for example funding from a founder, parent company or trust) to ensure the employer’s business remains viable and ongoing; OR
    • have a credible, minimum two-year plan (for example by having contracts for work) to ensure the employer’s business remains viable and ongoing.

“Viable and ongoing” includes being able to:

  • meet financial obligations such as paying wages or salaries and all other operating costs and expenses; and
  • purchase inventory (if relevant).
  1. Must not have a non-compliance record, i.e.:
  • Not be included in the Labour Inspectorate stand down list;
  • Must be compliant with immigration law and not be subject to a permanent ban following a conviction for an immigration related offence(s);
  • Not be prohibited from being a director; and
  • Must not be a phoenix company.
  1. Must take steps to minimise worker exploitation, i.e.:
  • Provide migrant workers with time to complete Employment Learning Modules;
  • Everyone who makes recruitment decisions must complete Employment Learning Modules;
  • Pay all recruitment costs inside and outside New Zealand, including advertising, agency fees, employer and job check applications, training and induction, health and safety equipment, and uniforms, BUT excluding airfares;
  • Provide migrant workers with work-related information (i.e. how to get an IRD number) and community assistance (i.e. how to open a bank account, find rental accommodation); and
  • Employer cannot receive a premium for employment, unlawfully bond the employee, nor make any unlawful deductions.

Immigration New Zealand’s fee to process a standard accreditation application is $740.

The Employer Check – High-Volume Accreditation

Employers who want to hire 6 or more migrants on AEWVs have to meet the standard accreditation requirements. Later, there may be a requirement to show that they have a commitment to train and upskill New Zealanders.

Immigration New Zealand’s fee to process a high-volume accreditation application is $1220.

If you have standard accreditation, however later want to hire 5 or more migrants on AEWVs, you can upgrade to high volume accreditation for a fee. That fee is $480.

The Employer Check – Other Accreditation

Franchisees:

  • Must meet the standard accreditation requirements;
  • Must have been operating for at least 12 months; and
  • Must have a history of hiring New Zealanders.

Immigration New Zealand’s fee to process a franchisee application is $1980.

Labour hire companies:

  • Must meet the standard accreditation requirements;
  • Must place migrants on AEWVs with “compliant businesses”. A “compliant business” is a business:
    • that has an NZBN;
    • that is not on the stand-down list; and
    • has declared that they do not have immigration-related issues;
  • Must have good systems to monitor employment and safety conditions;
  • Must have a 12 month labour contracting history; and
  • Must have at least 15% of the company’s labour workforce placed with third parties be New Zealanders in full-time employment (i.e. at least 30 hours a week).

Immigration New Zealand’s fee to process a labour hire company application is $3870.

For most employers, accreditation will be a simple and relatively low-touch assessment. However, Immigration New Zealand may request additional information to assess an application and may undertake monitoring during the accreditation period. If Immigration New Zealand is not satisfied an employer has continued to meet the requirements, the employer’s accreditation status may be revoked.

Therefore, we advise that you contact your lawyer to ensure you will meet the requirements and are compliant with immigration law and employment law.

Accreditation Period

When an accreditation application is approved by Immigration New Zealand, an employer will receive accreditation for 12 months.

At renewal, franchisees and employers that want to place migrants on AEWVs with third parties will be granted accreditation for a further 12 months, and all other employers will be granted accreditation for 24 months.

The Job Check

An employer can apply for a job check from 20 June 2022.

A labour market test is a genuine attempt to recruit New Zealand citizen or resident.

The labour market test must be met for all jobs, except where the remuneration for the proposed employment is $55.52 per hour or above, or the equivalent annual salary, or where the role is on the Green List.

A labour market test will be valid for six months from the date that it is approved or until the employer no longer holds accreditation, whichever is earlier.

The Worker Check

The worker must meet:

  • Character requirements, for example, not have been sentenced to a prison term of 5 years or more;
  • Health requirements, for example, be unlikely to impose significant costs or demands on New Zealand’s health services or special education services; and
  • Credential and experience requirements.

Remuneration

The remuneration for the proposed employment must be at or above the median wage, which will be $27.76 per hour, and must not be less than the New Zealand market rate of pay for that occupation.

Where other skills or specifications are needed to perform the job that are not described in the ANZSCO occupation, the remuneration offered must reflect those requirements by being above what would otherwise be the market rate for that job.

However, specific jobs in construction and infrastructure, tourism and hospitality, and care workforce sector are exempt from the median wage threshold

Currency of AEWVs

An AEWV may be granted for the period for which the employment is offered, up to a maximum of:

  • 3 years for employment paid at or above the median wage; or
  • 2 years for employment paid below the median wage, unless a 2 year visa would result in the holder exceeding the maximum period allowed under the stand-down settings (which is 2 years).

Where the grant of a 2 year visa for employment paid below the median wage would result in the holder exceeding the maximum period allowed under the stand-down settings (which is 2 years), the visa may only be granted for the remainder of the maximum period.

Processing Timeframes

The estimated application processing timeframes are:

  • standard and high-volume accreditation – 10 working days
  • job check – 10 working days
  • migrant check/AEWV – 20 working days

Please note that this is not a substitute for legal advice and you should contact your lawyer about your specific situation.

If you would like to start the application process for accreditation and job check process, please feel free to contact us on 03 348 8480 or by email to immigration@parryfield.com.

10 June 2022

When an employer is considering making an employee(s) redundant, there are three key steps they need to get right:

  1. Following the terms of the employee’s employment or collective agreement and, in particular, what it says about making employees redundant.
  2. Making sure that the reasons for the redundancy are “genuine”, rather than, for example, simply a cover to remove an underperforming employee. In other words, being able to demonstrate that any redundancy is genuinely justified on the basis of valid commercial grounds.
  3. Following a fair and reasonable process.

At the centre of this is being clear from the start about why a redundancy may be needed in the first place.

This may seem obvious but not infrequently we see employers coming unstuck at this point.  They are unclear and/or imprecise, sometimes in their own minds but, more frequently, when communicating with the employee, about why exactly they are proposing to remove a role and what evidence they are relying on to back up that proposal.

The law is clear that it is not enough for an employer to say or show that it genuinely believes a redundancy is required.  While an employer is entitled to make their business more efficient, whether or not the business is in financial dire straits or not, an employer must still:

  1. Be able to clearly advise the employee, and with sufficient detail, about what the relevant issues are, giving rise to a possible redundancy;
  2. Provide the employee with accurate evidence substantiating those issues; and
  3. Give employees a real opportunity to be able to comment on those issues and, in particular, put forward alternative proposals if they are able to.

This means that, in general, it is not enough to simply advise the employee in broad, imprecise terms, as to why a redundancy is proposed.  For example, to simply say that the employer has reviewed the business and redundancies are necessary to “streamline” the business, improve efficiencies or to save costs.

While those – making a business more efficient or saving costs – can be valid reasons for a restructure, the employee is entitled to know more on the how and why.  The courts have been clear that:

“there must be made available to the other party sufficient information to enable it to be adequately informed so as to be able to make intelligent and useful responses” or, put another way, there must be “the provision of sufficient information to fully appreciate the proposal being made and the consequences of it and, secondly, an opportunity to consider that information and, thirdly, a real opportunity to have input into the process before a final decision is made.”

Consequently, in the example given, this may include providing information on:

  • What the employer’s review of the business showed? What issues were revealed?  For example, “over the past 6 months, we have experienced an X% downturn in work in these areas.  This is as a result of the loss of the X and Y contracts, which, on re-application, were re-tendered to Z Group.  The effect of this on the company is that revenue has dropped over the same period by an average of by X% and productivity by X%.  We are anticipating that these figures will continue over the next Y months because ….” 
  • The evidence the employer has that demonstrate those issues, such as current and projected revenue or productivity figures?
  • What does the old and new employee structure look like under the restructuring proposal? For example, are other roles proposed to be removed? Who will undertake the employee’s existing role (if the duties under it are still required by the employer)?
  • How would removing the employee’s role help address the issues identified by the employer?
  • Have any options, other than removing the employee’s role, already been considered?
  • Could the employee be redeployed?

In our experience, where employers get this right, it reduces an employee’s disquiet and, consequently, the likelihood of an employment relationship issue arising.  It also helps employers make better decisions, more accurately identifying what changes are actually needed and how best to implement them.

Finally, there are some limits on the information employers are required to provide employees.  For example, information which would breach the Privacy Act 2020 or commercially sensitive material, the disclosure of which would unreasonably prejudice the employer’s commercial position.

In these cases, certain information may need to be redacted, before being provided to the employee or, in some circumstances, there may be grounds to withhold particular information altogether.  We recommend however that employer gets advice before doing so.  It is not enough for an employer to simply say they believe withholding information is necessary.  That decision can also be scrutinised and will need to “stack up”.

This article is not a substitute for legal advice and you should contact your lawyer about your specific situation. We would be happy to assist you with your employment matters.

Please feel free to contact Mike Henderson-Rauter at mikehenderson-rauter@parryfield.com or Hannah Carey at hannahcarey@parryfield.com.