It will all come out in the wash: non-compliance with minimum employment standards
The Employment Relations Authority (ERA) has imposed a significant penalty of $145,000 on Manukau Auto Valet Limited for its failure to pay minimum wages and/or holiday pay to at least 115 of its employees (Labour Inspector of the Ministry of Business, Innovation and Employment v Manukau Auto Valet Ltd  NZERA Auckland 85). The penalty was imposed in addition to Manukau Auto Valet's reimbursement of $96,451 to its employees, which was owed as a result of its non-compliance.
In total there were 322 separate breaches of employment law, each being capable of being penalised with a fine of up to $20,000 that created a total potential liability of $6,440,000. However, as is usual in situations like this, the ERA applied a globalised approach in respect of the breaches and considered other relevant matters such as Manukau Auto Valet's co-operation. The penalty was reduced to $145,000, which is still a significant sum.
We remind employers to ensure that your payroll systems and record keeping meet all the relevant employment law requirements. Otherwise there could be an expensive lesson.
Further Takeovers Code relief on the way for small companies
The Takeovers Panel has recommended to the Minister of Commerce and Consumer Affairs that three substantive and numerous technical changes be made to the Takeovers Code.
The main change proposed is that the definition of 'Code Company' will only capture companies that, together with their subsidiaries, have a total annual revenue of at least $15 million, or assets of $30 million, at the end of the most recent accounting period. This will exclude small unlisted companies, and will remove the disproportionate cost of Code-compliance for them, while retaining appropriate restrictions for larger and listed companies.
Two other important changes are:
1. 'Days' in the Code: Amending the Code to state timing obligations in 'working days' in line with other legislation, such as the Companies Act 1993, rather than in 'days.' Amending the timing rules to refer to 'working days', which will exclude weekends, public holidays and the Christmas/New Year period, will address practical issues, including the potential for interested parties to be subject to tight timeframes where takeovers take place over holiday periods.
2. Electronic access for shareholders: Amending the Code to facilitate electronic communication and the public availability of Code documents by:
• Requiring target companies to provide offerors with the email addresses of shareholders who have provided them to the target for the purposes of receiving documents electronically
• Requiring that Code-regulated communications by a target or offeror are made electronically, subject to the target, the offeror or an affected shareholder having the right to request hard copy communications, and
• Allowing the Takeovers Panel to publish Code-regulated documents on the Panel's website.
Employee share schemes, your time is up
A great deal of Inland Revenue's recent work on employee share schemes has culminated in the recently-introduced Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Bill.
The Bill, which sets out the new rules for taxing employee share schemes, is very important – to both companies that have employee share schemes in place, and to those people who are currently participating in them.
Over the years, schemes have been put in place which ultimately provide non-taxable capital gains to employees. Usually they're structured by providing employees with the ability to buy company shares using a loan from the company. Essentially, under the Bill these types of schemes will be taxed on the same basis as employee option schemes, which is that employees are taxed on the difference between the strike price they pay to exercise their options and the value of the shares at the time of exercise.
If you're operating a business that currently has a share scheme that could be caught by the proposals, or you're a participant in such a scheme, you should talk with us for advice on the implications of the Bill.