New  Zealand’s Companies Act 1993 and common law impose duties and liabilities on the directors of a company.

Who is a director?
Many of the following duties are not limited to those actually on the board of directors. A director can also include “shadow directors” who instruct the directors how to act, and persons who exercise powers of the board by delegation.

Who are duties owed to?
In general, these duties are owed directly to the company, giving it (and not individual shareholders or creditors) the right to sue a director for breach of duty. However, there do exist a number of provisions by which shareholders and creditors may pursue directors – these will be examined at the end of this article.

  1. Duty to Act in Good Faith and in the Best Interests of the Company (s131)

Good Faith
Good faith implies acting with a proper motive – without any malice or dishonesty. It also means avoiding acts which promote a director’s own interests at the expense of the company’s (historically termed “conflicts of interest”).

Acting in the best interests of the company
This is a subjective test – that is, directors must only act in what they perceive to be the best interests of the company – not what an “ordinary” or “reasonable” director might do. This gives directors a certain amount of discretion to use their own business judgment, without fear of every decision being open to scrutiny. Although, the Courts may find section 131 has been breached when a director does not take into account the company’s interests before acting.

Exceptions to best interests rule
If the company is a joint venture company or a wholly (i.e. 100%) owned subsidiary of a parent company, a director may act in the best interests of his or her appointing shareholder or parent company – even if this is not in the company’s best interests. This recognises that these are unique entities – whose operation depends on directors having liberty to carry out the wishes of their (often conflicting) shareholders.

Strait-jacketed?
Given the duty to avoid conflicts of interest, can directors have any interest in a transaction or use any information gained by virtue of their position? The short answer is “yes” – provided they are willing to jump through the fairly arduous hoops of disclosure imposed by the 1993 Act – these will be discussed shortly.

Our advice:
Don’t get too comfortable with the notion that as long as you believe a decision is in the best interests of the company, you’ll be fine. If your decision is one which any director with any appreciation of fiduciary responsibilities would see as being inconceivable, it is likely a Court would view this as a breach of section 131 – despite its subjective appearance. There is also an independent duty on directors to exercise reasonable care and skill – read on ….

  1. Duty to Exercise Powers for a Proper Purpose (s133)

At its simplest, this duty could be said to cover the situation where a director strays beyond the limitations intended for their office and acts out of an ulterior motive. Unfortunately, it seems impossible to define in advance exactly what situations fall within this definition. It may be that it is not until a Court reviews the exercise of a power that it can be determined whether or not that power was exercised for a proper purpose. Often the Courts consider whether section 131 has been breached and then rely on that rationale to determine that the director has also breached section 133. Some examples from case law include where a director has acted for personal purposes, has withdrawn funds to the company and Inland Revenue’s detriment, or has engaged in a Ponzi scheme.

Our advice:
Be aware that this duty is not related to the duty to act in good faith – that is, a director could act in what he or she thought was the best interests of the company, but still be acting for an improper purpose. A clear example of this would be the directors issuing shares solely for the purpose of diluting a particular (and probably troublesome) shareholder’s shareholding. While this may be in the best interests of the company as a whole (and even applauded by the other shareholders), it will nevertheless be an improper motive for issuing shares.

  1. Duty to Comply with Companies Act 1993 and Company Constitution (s134)

It is obvious that by not complying with the Act or the Company Constitution, a director would be acting outside of his or her mandate.

But wait, there’s more …

However, this duty may be more onerous than it first appears. The Act imposes numerous responsibilities on directors, of which failure to discharge may result in criminal liability (discussed later). For example, under section 87(1), a share register must be maintained by the company. Failure to do this would mean that the Act is not being complied with and, for a director, would be a breach of the section 134 duty. This breach will be actionable by the company as against the director, which means that not only does so simple an omission as failure to maintain a share register constitute a criminal offence, it exposes directors to potential civil liability for breach of section 134.

And more …?
Our advice: Make sure you are also aware of obligations under other statutes, such as the Privacy Act, Health & Safety in Employment Act and Resource Management Act… – because if you cause the company to act in contravention of any statute, this would almost certainly amount to acting for an improper purpose or not acting in the best interests of the company.

  1. Reckless Trading (s135)

Don’t be so reckless …

A director must not agree to, cause or allow 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. This duty is aimed at preventing conduct by the directors which could jeopardise the company’s solvency. It is not designed to curtail the directors’ ability to take risks – as long as the company is able to bear the loss from complete failure.

Objective Test
Unlike the best interests duty, the directors’ personal opinion as to the company’s ability to continue trading is irrelevant. Instead, a Court is likely to ask: “Was there something in the financial position of the company which would have alerted an ordinary prudent director to the real possibility that continuing to carry on the business of the company would cause serious loss to the creditors?”

Arise from your slumber
The situation of a director who “allows” reckless trading may include the “sleeping director” who has little or no actual knowledge of the company business, but is content to abdicate his or her responsibilities to more active members of the board. This can be especially relevant where spouses are each directors of a company, but only one works in the business.

Our advice:
Make sure you have a sound knowledge of goings on no matter what your level of involvement in the company. If you miss a board meeting, make sure you find out what happened from another director – even obtain a copy of the minutes to ensure no major decision was made – which you might have “allowed” by your absence.

  1. Duty in relation to Obligations (s136)

A director must not agree to the company incurring an obligation unless he or she believes on reasonable grounds when the obligation is incurred that the company will be able to perform the obligation when required to do so.

This will apply to such transactions as the company giving a guarantee.

Cramping their style?

It has been suggested that this duty will prevent directors taking commercial risks. However, as long as the directors’ decision is based on reasonable inquiries, research or information, it is less likely to be scrutinised later.

Our advice: When making a decision of this kind, the board should leave a “paper trail” – detailing not only their decision, but also their reasons. Better still, obtain professional advice. This will go toward showing that you acted on “reasonable grounds”. Also, do your homework early on – note the test is applied “at the time the obligation is incurred” – that is, when the transaction is entered into.

  1. Director’s Duty of Care & Skill (s137)

The Test

Directors are required, when exercising powers or performing duties, to exercise the care, diligence and skill that a reasonable director would exercise in the same circumstances, taking into account:

  • the nature of the company;
  • the nature of the decision;
  • the position of the director; and
  • the nature of responsibilities undertaken by him/her.

Therefore, it seems each director is judged on his or her role in each decision made. If a director is appointed to a specific task, he or she may be liable if they do not bring the required skills to that task. However, it appears that a director is not ordinarily supposed to have special skills – so there may be differing levels of skill and care expected from executive and non-executive directors (but note that any difference between these directors applies to this duty only).

Don’t go down these roads …

Examples of the Courts finding directors to have breached this duty include:

  • where they acted before becoming fully acquainted with the company’s affairs.
  • where loans were made to a company connected to a director with no possible benefit to the company.
  • where cheques were signed in blank and the conduct of the business left entirely to another director.
  • where directors unquestionably trusted (subsequently dishonest) employees with the management of the company.

A Higher Standard?

Many people believe that this duty places a greater burden and more stringent standard of care on directors than was previously the case. At the very least, it would seem that shareholders’ greater awareness of a statutory duty of care on directors will lead to higher expectations and increased vigilance of directors’ actions.

Our advice: It is vital to understand that it is no longer acceptable to sit back and let others run the show. It is clearly established that even directors who are scarcely involved in management of the company can still be held liable when financial difficulties arise. Evaluate your position as a director – are you familiar with the ins and outs of the business? Do you read (and understand) the financial accounts? Do you attend board meetings? Do you have a hand in business decision-making? If the answer to these is generally “No”, it may well be that you shouldn’t be a director at all!

  1. Use of Information and Advice (s138)

Relief from Omniscience?

In today’s commercial environment, directors cannot be expected to know everything about their company, or possess all the skills necessary for business decision making (although based on the foregoing, you could be forgiven for thinking otherwise!) Section 138 provides a (limited) form of relief for directors. It entitles directors, in the course of decision making, to rely upon reports, statements and financial data, as well as professional/expert advice given to them by:

  • an employee of the company who is believed by the director (reasonably) to be reliable and competent in the matters concerned – this could be another director.
  • a professional adviser/expert on matters within their competence.
  • another director or committee of directors regarding a specific area of designated authority.

There is a catch: In doing so, directors must act in good faith, make proper inquiry where the circumstances indicate a need for this, and have no knowledge that their reliance on the information is unreasonable.

Our advice: Again, documentation of decisions is the key – whenever you rely on someone else’s advice, record that fact. And don’t just blindly rely on others – as a director, you should be capable of reaching a reasonably informed opinion of the company’s financial capacity. If there are grounds for suspicion arising from another’s advice – act appropriately.

  1. Director’s Interests (ss139-144)

Traditionally, if a director had an interest in a contract made with the company, he or she had to account to the company for any profits they might make (unless the company’s Articles or shareholders permitted otherwise). This was seen as a unduly harsh rule, and has now given way to a more permissive – but also more controlled – regime under the disclosure provisions of the Companies Act 1993.

Cards on the Table
Where a director has (or may obtain) a direct or indirect financial benefit in a transaction, he or she must disclose their interest in the transaction as soon as they become aware of it.

Disclosure is made by way of entry in the “interests register”, which must be kept by the Company. Disclosure is also required to be made to the board.

Avoidance by the Company
A transaction in which a director is interested may be avoided by the company any time within three months after the transaction is disclosed to the shareholders (whether by annual report or otherwise) – unless it is proved that the transaction is for fair value.

Our advice: Err on the side of excess when it comes to disclosure. While failure to disclose an interest in the register doesn’t affect the transaction’s validity, it could open you up to a $10,000 fine or an action from shareholders for breach of duty.

Also, disclose interests to the shareholders early – don’t leave it until the annual report – this could be months away and extend the timeframe in which the transaction can be overturned by the company.

  1. Use of Company Information (s.145)

Pssst! …… (Don’t) Pass it on!
As with director’s interests, directors have traditionally been prohibited from using company property (including confidential information and trade secrets) for their own purposes. However, once again this blanket prohibition seems to have been abandoned in favour of regulating the use of information by directors.

Section 145 of the Act provides that a director who possesses confidential information must not disclose that information to any person, nor make use of it or act on it, subject to the following exceptions:

  • If disclosure is made solely for company purposes.
  • If disclosure is required by law.
  • If:

(a)           The director has entered particulars of the disclosure in the interests register; and

(b)          the board has authorised the director to make disclosure; and

(c)           the disclosure will not prejudice the company.

·         If disclosure is made by a nominee director to his or her appointer, provided this is not prohibited by the Board.

What is confidential information?  It could be anything, but definitely includes trade secrets, technical know-how, lists of customers, internal financial reports, feasibility studies, and specific information concerning ongoing transactions between the company and its clients.

It is important to note that the section does not directly cover the use of company information by a former director. Here, the company would probably need to rely on the common law relating to breach of confidence.

Our advice: While section 145 would seem to provide reasonable protection, if your company’s operation is such that directors are often privy to large amounts of confidential information and/or have outside interests in similar spheres, it may be prudent to have the directors sign a confidentiality/restraint of trade agreement which expressly binds them during and beyond their term of office.

  1. Further Liability

While the above synopsis sets out the primary duties a director must uphold (which, in essence, place the quality and integrity of their decisions under the spotlight), liability for breach of these duties is by no means the only way a director can be called to account. What follows is a whistle-stop tour (or steeple-chase) of further provisions contained in the Companies Act 1993 which could cause a director to stumble:

  • A director owes duties directly to shareholders to supervise the share register, disclose interests in contracts with the company (as discussed above), and disclose any interest they have in share dealings. A breach of these duties entitles a shareholder to bring a personal action against a director (s169).
  • A shareholder could also bring an action to either restrain a director from acting in a manner which breaches the Act or the company constitution (s164), or to force them to act in accordance with these (s170).
  • Directors may be personally liable if a distribution is made to shareholders when the company is insolvent – to the extent that the distribution is not able to be recovered from the shareholders (s56).
  • Directors may be personally liable to liquidators or creditors for the debts of the company if they participate in the management of a company when they have been disqualified (by the Court or the Registrar) from doing so (ss384,386).
  • Directors may be liable to the company if they receive an unauthorised payment or have unauthorised insurance effected – to the extent they are unable to prove these are fair to the company (ss161,162).
  • If, on the liquidation of the company, it appears to the Court that a director has misapplied company money or property, or has been guilty of negligence, default or breach of trust, he or she may be liable to repay or restore the money or property, or contribute an amount to the assets of the company by way of compensation (s301).
    Note that a creditor is entitled to apply for an order under this section and could allege breach of any duty as grounds for an order that money or property be paid directly to the creditor. If a company is in liquidation and the failure by the company to keep proper accounting records has contributed to its inability to pay its debts or impedes an orderly liquidation, a Court can order that any directors or former directors are personally responsible for all or any part of the debts of the company – unless they can show they took reasonable steps to ensure compliance (s300).
  • Criminal Liability: There are over 100 sections of the Act a breach of which can constitute a criminal offence. In almost all of these sections, criminal liability is imposed on the directors personally, in addition to the company (there do exist limited defences relating to reasonableness on the part of directors). Penalties can be up to $10,000 depending on the offence. Far more serious, dishonesty offences can carry up to 5 years imprisonment or a fine of $200,000 (ss373,374).
  • Liability in tort: A director can be liable for a tort (for example, negligence) committed primarily by the company, but through their agency – if they have assumed personal responsibility for their actions.
  • A directors who trades shares using inside information is liable to account to the buyer to the extent that the shares are sold for more or less than their fair value (s149).
  • Directors should also be aware of both the company’s and their own obligations under any other legislation – which also have the potential to fix personal liability on directors. These include, but are not limited to the Financial Reporting Act, Fair Trading Act, Health & Safety in Employment Act, Resource Management Act, Commerce Act, Privacy Act, Human Rights Act, and Building Act.

Conclusions

It will hopefully be apparent by now that the significance and potential consequences of these duties and liabilities are not to be sneezed at. Unfortunately, it seems that at present directors are either largely ignorant of these standards or do not take them sufficiently seriously. Perhaps more unfortunate is that it is usually not until a company fails that the extent of these duties becomes relevant – when a director’s decision is reviewed by the Court.

It is imperative to get things right at the time each decision is made. If you have any doubt as to the wisdom of any decision or act either of your own or your fellow directors, seek legal advice.

Because the implications of these duties are potentially severe, companies are increasingly availing themselves of the indemnity and insurance provisions of the 1993 Act as part of a risk management strategy designed to avoid personal liability on the part of directors.

 

This article is not a substitute for legal advice and you should talk to a lawyer about your specific situation. Should you need any assistance with this, or with any other Commercial matter, please contact Tim Rankin at Parry Field Lawyers (348-8480) timrankin@parryfield.com

To properly classify and protect your trade mark, IPONZ requires each trade mark to be registered within one or multiple goods or services specifications. You must also currently trade, or hold an honest intention to trade in each of the categories you specify. New Zealand uses the World Intellectual Property Office’s ‘Nice Classification’, which contains 45 classes of goods and services.

Of these 45 classes, classes 1 to 34 categorise goods, while classes 35 to 45 categorise services. For example, class 25 includes clothing, footwear and headgear, while class 37 includes construction and repair services. Within these 45 classes, goods and services specified range from abacuses to zip fasteners, art hire to zoological garden services.

With so many categorised types of goods and services, you may find it helpful to use this search database to see what class/classes your good or service falls within. Alternatively, you can find an alphabetically ordered list of all of the ‘Nice Classification’ classes here.

Properly classifying your trade mark is important both before and after you trade mark is registered. To process your application, the class/classes you have applied in will help determine whether the trade mark has distinctive character or is confusingly similar to any already existing trade marks.

Upon successful registration, the specification of the trade mark will also determine the trade mark owner’s rights where they might need to take legal action against an infringing mark by another company. Where the infringing mark is in the same class as specified by the existing trademark, the owner will have a greater claim against that infringement.

For example in a recent High Court case, the court rejected an application for the trade mark ‘Shacman’ in class 12 (commercial vehicles). The court reasoned that the infringing trade mark was likely to deceive or be confused with an already existing trade mark; ‘Man’. Highly influential in this decision was the fact that the already existing trade mark was also registered in class 12.

Therefore, while taking extra care to ensure you register your trade mark in the right class/classes might seem pedantic, it will better protect your intellectual property from infringing trade mark applications in the future.

Should you need any assistance with these, or with any other Commercial matters, please contact Kris Morrison or Steven Moe at Parry Field Lawyers (+64 3 348 8480).

For a more general overview of registering a trade mark, please see our original article here.

The Intellectual Property Office of New Zealand (IPONZ) encourages first time applicants to make an initial application for a ‘search and preliminary advice report’ (S&PA) before making an application to register their trade mark. This article seeks to give some clarification about what an S&PA report is and in which circumstances you may or may not want to make such an application.

An S&PA report consists of two parts and will give you an assessment within five working days as to whether your proposed trade mark complies with the requirements of the Trade Marks Act 2002. More specifically;

1. A search report will find whether anyone else currently holds a trade mark the same as or similar to your proposed trade mark.

2. A preliminary advice report will find whether your proposed trade mark renders your business clearly distinguishable within your industry.

Individually, each service costs $40 excluding GST, or $80 excluding GST for both services. While the services might be useful, applicants should be aware that applying for the reports is not compulsory. In fact, conducting your own search and ensuring your trade mark is distinguishable may not be as difficult as it sounds, and could save you money.

Conducting your own Search

There are four different searches you should complete to check the availability of your trade mark:

1. IPONZ Trade Mark Register

This register is the best place to begin your examination, offering a thorough search of already registered trade marks in New Zealand. You can access this database here.

2. ONE Check

As well as showing you already registered trademarks, ONE Check will also show you the availability of company names and domains. You can access this database here.

3. International Trade Mark Register

Searching this database will allow you to see if anyone has already applied for your trade mark in New Zealand, but it hasn’t yet been added to the New Zealand register. You can access this database here.

4. General Web Search

Lastly, we suggest you use a search engine, such as Google, to search for your proposed trade mark. This will show you any businesses that may already operate under your name. This search is not absolutely necessary, in that businesses with a name or logo that is not trademarked will not prohibit your application, but it may be worthwhile to assess who else could be considering registering a similar trade mark in the future.

If after conducting the above searches you are not able to find an existing trade mark at all similar to yours, it is unlikely you need to procced with the $40 search report. However, if any of the database searches return a similar existing trade mark, we suggest applying for a search report before proceeding. The $40 cost could save you the larger cost of a failed application.

As a general pointer, trade marks that attempt to register a compound word that includes an already trademarked word (registered in the same or similar specification category) are less likely to succeed. For example in a recent High Court case, the court held that the trade mark ‘Shacman’ was likely to deceive or be confused with the existing trade mark ‘Man’. Both trade marks were registered in class 12 (commercial vehicles).

Self-Assessing the Distinguishability of your Trade Mark

The Trade Marks Act requires each trade mark to have a distinctive character. For example, attempting to register the name ‘Budget Supermarket’ for a food and household goods retailer is unlikely to be seen as distinguishable as it could describe many traders in their nature of business. Similarly, the name ‘Blueberry’ as a trademark for fruit would not be seen as distinguishable, because marks that simply describe the good or service often cannot distinguish that good or service of one trader from another. Using the name ‘Blueberry’ as a trade mark for an architecture firm, however, would be distinctive.

If you are certain your trade mark is distinguishable, it is unlikely you need to proceed with the $40 preliminary advice report. However as with the search report, if you have any doubts regarding your trade mark’s distinctive character, it may be worth the $40 cost to save you the larger cost of a failed application.

Before registering, it also pays to ensure your trade mark is not on the list of protected words and is not likely to offend Māori or another significant section of the community. You can read our article on ensuring your trade mark does not breach this ‘offensiveness’ standard here.

Should you need any assistance with these, or with any other Commercial matters, please contact Kris Morrison or Steven Moe at Parry Field Lawyers (+64 3 348 8480).

For a more general overview of registering a trade mark, please see our original article here.

The Trade Marks Act 2002 outlines that trade marks must be rejected if they are likely to offend a significant section of the community. The first part of this article discusses trade marks that are likely to offend a significant section of the community more broadly, while the second part focuses specifically on trade marks that are likely to offend Māori.

Likely to offend a significant section of the community

Adopting the Macquarie Dictionary’s definition, the Intellectual Property Office of New Zealand (IPONZ) acknowledges the word ‘offend’ means to ‘irritate in mind or feeling’ and ‘to cause resentful displeasure in’. Under this definition, when assessing whether a trade mark is likely to offend a significant section of the community, IPONZ outlines that its examiners will take into account the following considerations:

– Each case must be decided on its own merits.

– The question must be considered as at the date of application.

– The question must be considered objectively, from the point of view of “right-thinking members of the public”.

– A mark should be considered likely to offend a significant section of the community where:

– The mark is likely to cause a significant section of the community to be outraged; and/or

– A significant section of the community is likely to feel that the use or registration of the mark should be the subject of censure.

– A significant section of the community is likely to feel that the mark should be the subject of censure where the mark is likely to undermine current religious, family or social values.

Influential on the New Zealand approach to assessing what suffices ‘a significant section of the community’ was the 1976 ‘Hallelujah Trade Mark’ case in the UK. When deciding whether to allow the trade mark ‘Hallelujah’ as the name of a women’s clothing brand, the Registrar’s Hearing Officer found the trade mark was “reasonably likely to offend the religious susceptibilities of a not insubstantial number of persons”.

Although this trade mark application might be decided differently today, the Hearing Officer stressed that rejection of an application is warranted even where the group of people offended are a minority, so long as they are substantial in number. Influenced by this UK decision, IPONZ also outlines that its examiners will also take into account the following considerations:

– The significant section of the community may be a minority that is nevertheless substantial in number.

– A higher degree of outrage or censure among a smaller section of the community, or a lesser degree of outrage or censure among a larger section of the community, may suffice.

Lastly, one interesting principle that the IPONZ examiner will consider is that the application should not be rejected merely because the mark is considered to be poor taste. In a more recent decision by the Office for Harmonisation in the Internal Market (the trade mark registry for the European Union) the previous examiner had rejected the trade mark ‘Dick & Fanny’ on the basis it could offend a significant portion of English speaking consumers. However upon appeal, the trade mark was accepted, on grounds that the trade mark “may, at most, raise a question of taste, but not one of public policy or morality”.

This decision has made it clear that a distinction should be drawn between trademarks that are offensive and trade marks that could be considered poor taste. While the former will be rejected, registration of the latter is not necessarily prohibited.

Likely to offend Māori

In the mid 1990’s, in response to claims that the Trade Marks Act 1953 insufficiently protected Māori intellectual property, the New Zealand Government established the Māori Trade Marks Focus Group. On the focus group’s recommendation, the commissioner now has access to the Māori Trade Marks Advisory Committee when making decisions on Māori trade marks. While not binding, the committee provides advice to the commissioner to minimise the risk of registering trade marks that are likely to cause offence to Māori.

All trade mark applications using Māori text or imagery will be referred to the advisory committee, who will then make a recommendation to the commissioner. One of their key considerations concerns the Māori words ‘Tapu’ and ‘Noa’. Tapu is the strongest force in Māori life, and can be used to describe people, objects or places that are ‘sacred’ or carry ‘spiritual restrictions’. Conversely, noa can be used to describe people, objects and places that are ‘common’, from which the tapu has been lifted. Therefore, trade marks that combine or associate tapu and noa can be considered offensive or inappropriate to a number of Māori.

For example, in 1927 the ‘Native Brand Co’ produced Worcester sauce under a logo that depicted a rangatira (Māori Chief, which is a position considered tapu). IPONZ considers that such a trade mark would not likely be registered today, because associating tapu (a Māori Chief) and noa (a household food items) signifies an attempt to lift the tapu of a Māori Chief, which could be considered offensive.

In some circumstances, it may be appropriate for a Māori name to be gifted to a business or organisation by tangata whenua – the Māori people of the land. Such a gifting or blessing is often done in accordance with mana whenua – the mana or power that comes from the land or rights to the land. A recent example was the gifting of the name ‘Tūranga’ to the new Christchurch City Central Library by Ngāi Tūāhuriri, a subtribe of Ngāi Tahu. Because the name honours a North Island settlement that was home to the Ngāi Tahu ancestor Paikea, use of the name without Māori consent could have likely been considered offensive.

If you are still unsure whether your trade mark might be considered as too offensive to be registered, you may like to consider getting a ‘Search and Preliminary Advice Report’ from IPONZ. This preliminary assessment will give an indication whether your Trade Mark will be allowed. You can read our article about getting a Search and Preliminary Advice Report here.

Should you need any assistance with these, or with any other Commercial matters, please contact Kris Morrison or Steven Moe at Parry Field Lawyers (+64 3 348 8480).
For a more general overview of registering a trade mark, please see our original article here.

Are you hosting an end of year work Christmas party for your employees where alcohol will be served? It is important that you are aware that you may be liable under Health and Safety legislation, even if the work party is held off-site.

What does the Health and Safety at Work Act 2015 say?

 

Under the Health and Safety at Work Act, employers are required to provide their employees with a safe workplace, protecting them against harm. The Act states the employers must, “so far as is reasonably practicable” ensure that the health and safety of employees is not put at risk. When defining what is meant by “reasonably practicable”, the Act states that employers should weigh up various factors including:

  1. The chance of the dangerous event or risk occuring;
  2. The level of harm that could reuslt;
  3. What the person knows or should know about the hazard of the risk and the ways of eliminating or minimising the risk;
  4. Ways to reduce the risk; and
  5. The cost associated with minimising the risk (and whether doing so is disproportionate to the risk itself).

“Hazard” as referred to in the Act includes where a person’s behaviour has the potential to cause death, injury or illness to a person, and includes whether their behaviour results from alcohol. Therefore, in the case of a work Christmas party where alcohol is being served, the potential for alcohol to affect someone’s behaviour, putting others at risk, is increased.

Employers must reasonably be aware of the hazard of risk occurring, and must take reasonable steps to eliminate or minimise the risk in a reasonably practicable manner. In the context of hosting a work Christmas event where alcohol is being served, reasonable steps to eliminate and minimise risk might include providing plenty of food, providing non-alcoholic drinks and setting limits on number of drinks.

Liability is not excluded just because you are off-site

 

It is important for employers to be aware that liability can arise at work events held off-site. As defined in section 20 of the Act, “workplace” means:

  1. A place where work is being carried out, or is customarily carried out, for a business or undertaking; and
  2. Includes any place where a worker goes, or is likely to be, while at work.

A venue that is used for work events will be considered part of the workplace. This means that even if the work party is held at a venue off-site, you cannot strike out the possibility of liability under the Health and Safety at Work Act 2015, and you must do everything that is reasonably practicable to provide a safe environment for your employees.

Conclusion: Be aware of the risk and put plans in place to eliminate that risk

 

In conclusion, it is important that you are aware of the hazard of risks that could occur, and that you do everything that is reasonably practicable to provide a safe environment for your employees.

Every situation is unique so please discuss your situation with a professional advisor who can provide tailored solutions to you. If you have any questions arising from the issues raised in this article or relating to any other employment law matters, please feel free to get in touch with us by calling 03-348-8480 or by emailing Mike Henderson-Rautermikehenderson-rauter@parryfield.com or Hannah Careyhannahcarey@parryfield.com

We just released our new free ebook “Start Ups Legal Toolkit 2018” with a super fun and interactive presentation at Ministry of Awesome‘s “Coffee & Jam” in Christchurch, New Zealand – had a busking theme with a bit of juggling thrown in from Steven Moe and Kris Morrison!

For more info on the book click here

(If you’d like a free copy of the startups ebook mentioned here just email stevenmoe@parryfield.com – also check out our other free resources for startups at Parry Field and our other recent book “Social Enterprises in New Zealand: A Legal Handbook” at Change for Good)

Also mentioned during the presentation: Seeds: Talking Purpose Podcast Greenhouse Christchurch & Canterbury NZ

We get many questions from start-ups, charities and social enterprises on what they need to consider when establishing themselves. This made us think – “why not put all our answers in one spot?!”

After the initial buzz of coming up with your great idea, the next practical stage can be quite overwhelming – particularly if this is your first time engaged in a start-up. This toolkit seeks to guide you through the process, informing you on different structures, key contracts, and highlighting the topics people often forget about.

 

The book covers a range of topics including:

  • how to set up a company;
  • specific guidance on social enterprise and not for profits;
  • fundraising;
  • liability and ongoing duties;
  • employment issues; and
  • includes a template of a non-disclosure agreement.

 

With the success last year of “Social Enterprises in New Zealand: A Legal Handbook,” we are excited to see the impact this book will have.

To get the ebook, click here.

The book launch, which includes a bit of a busking theme by Kris Morrison and Steven Moe can be viewed here

 

If you find this resource helpful then please consider joining us in spreading the word to others by sharing this page on social media or emailing the link to one or two other people.

Rolleston continues to grow and we have been excited to be meeting many of you out in the community the last few months.  Being Rolleston Lawyers is something we are enjoying!  We still have our main office based in Riccarton where we have around 35 staff so can easily support the full range of matters – from property to disputes, and from commercial leasing or contracts to sale and purchase agreements.  We also have a West Coast office in Hokitika.

One area that we have been focusing on more this year has been charities and not for profits – we will be holding an event at XCHC on 6 July and you can find out more about that here – spread the word for this free event where we will be answering questions those who attend may have.

Living in Rolleston gives a local flavour for Steven Moe as he can walk to work easily to the office at 68 Rolleston Drive.  We also maybe need to include the title Prebbleton Lawyers since Paul Owens lives just down the road in Prebbleton.  Maybe Selwyn Lawyers would be the best term…  At any rate, it is nice to keep things local and being lawyers in Rolleston is a good base to work from.

Feel free to drop us a line – we can be reached at:

paulowens@parryfield.com

stevenmoe@parryfield.com

Or drop in to visit your local Rolleston Lawyers at 68 Rolleston Drive – opposite Countdown by the Warehouse!