Last month, Health and Safety Partner, Grant Nicholson and solicitor in the Employment Team, Lauren Dennehy, visited lovely Nelson to present seminars at the Annual Tourism Export Council New Zealand Conference.

Grant discussed the current health and safety issues impacting the tourism sector, WorkSafe’s new future focus and investigation trends. Lauren covered emerging trends in employment law, including Fair Pay Agreements, the proposed employee insurance scheme and an update on the ’employee vs contractor’ legal test.

Grant and Lauren summarise the key points from this years’ seminars below.

Health and Safety

The eruption of Whakaari/White Island and the subsequent prosecution of multiple tourist sector businesses as a result is a timely reminder of the importance of ensuring good health and safety practices are in place in tourism activities.

Current health and safety issues in the tourism sector

• The health and safety issues arising in the tourism sector are many and varied, and tourism operators are not immune from investigation and enforcement action by WorkSafe New Zealand when things go wrong.
• Examples of health and safety issues that have been the subject of tourism related health and safety investigations and prosecutions include inadequate training/instruction of workers and customers, unsafe facilities (the recent sinkhole incident at Whakarewarewa being a notable example WorkSafe will investigate – noting no conclusions have been reached), defective plant and equipment, and human and equipment interaction.

Investigation trends and WorkSafe’s future focus

• WorkSafe has publicly confirmed its intention to focus on four priority areas in health and safety. These are work with plant and structures, work with or involving airborne contaminants and carcinogens, ensuring appropriate worker engagement and participation in workplace health and safety, and addressing health and safety obligations within the product and service supply chain.
• We are seeing some consistent themes in WorkSafe’s approach to investigations and enforcement of health and safety issues. In terms of investigations, WorkSafe continues to have an ongoing interest in understanding how organisations are engaging with others to satisfy their obligations to consult, cooperate, and coordinate activities where shared health and safety duties exist. WorkSafe is also increasingly interested in the activities of officers, although this focus currently relates to directors and not members of management teams. In terms of enforcement, there is a clear increase in prosecutions for health-related harms and exposures (e.g. asbestos, fumigants, hazardous chemicals) and prosecutions focusing on the risk of harm rather than actual realised harm.

 Update on Whakaari prosecutions

• 13 defendants (10 entities and 3 individuals) were prosecuted by WorkSafe following its investigation into the eruption at Whakaari in December 2019. This included tour operators, travel intermediaries, Whakaari’s owner, and Government agencies. A defended trial is set to commence in July 2023 which will be followed by a Coronial inquest in 2024 or 2025.
• There are significant lessons for the tourism sector from the Whakaari prosecutions, including:
  • Health and safety is the responsibility of the entire supply chain (not just activity operators, or land owners).
  • Operators need to regularly test health and safety assumptions and systems.
  • Operators need to focus on critical risks and ensure they are well understood and managed.
  • Timing and content of health and safety information delivered to activity participants is important to ensure they can make informed decisions about whether to proceed.
  • Ongoing engagement and consultation is needed between operators and travel intermediaries.

Employment

Employers are potentially facing big changes on the horizon but will need to wait a little longer before these can be confirmed.

Fair Pay Agreements

• Currently with the Select Committee, the Fair Pay Agreements Bill sets out to provide a mechanism to unify the minimum employment entitlements provided across either an industry or occupation. The Bill sets out a framework for collective bargaining for industry or occupation wide fair pay agreements that will set minimum employment terms for that occupation or industry group. An example would be a fair pay agreement that covers all employees operating in the tourism sector or an agreement that covers all cleaners working in any industry.
• Employers are automatically joined to the bargaining and outcome of a fair pay agreement by virtue of operating in an industry sector that has been specified or employing people in an occupation that has been specified. Any fair pay agreements that come into force will set the minimum conditions for all covered employees whether they are already employed on collective or individual employment agreements. In essence, the fair pay agreement will form the minimum entitlements of the employees covered and any terms negotiated under a fair pay agreement will be afforded to employees in addition to their existing terms and conditions of employment.

Employee Insurance Scheme

• Although in its early stages of inception, the Government have announced an employee insurance scheme to cover individuals who are unable to work through no fault of their own due to redundancy or poor health or disability. Those who qualify for insurance under the scheme, will receive 80 per cent of their prior income (capped at $130,911 subject to annual adjustment) for up to 6 months.
• It is proposed that the scheme would be administered by ACC using a pool of funding obtained through levies. Both employers and employees will contribute to the pool equally. The proposed starting levy will be 2.77 percent of an employee’s salary and wages. Similar to KiwiSaver contributions, the amount would be split equally between employers and employees – so 1.39 percent each, but unlike KiwiSaver, joining the scheme would not be optional for either party. Further, employers would also be required to give their employees four weeks’ notice on termination before paying them for an additional four-week period at 80% of the employee’s ordinary remuneration. Please be aware that this would be in additional to any contractual redundancy compensation.

Employee vs contractor legal test

• The court’s approach to the legal test remains largely the same but has recently expanded on the ‘economic reality test’ or ‘fundamental test’. The focus of this test is on the way in which the individual engages himself or herself to perform the duties. The matters that will be considered include:
  1. Does the independent contractor invoice the company or does the company just pay the person automatically?
  2. Does the independent contractor have any risk of loss or any opportunity to make additional profit?
  3. Does the independent contractor have a business that can accrue intangible benefit such as goodwill which is generated by the independent contractor’s work?
• At its core, the test focuses on whether the independent contractor is operating a business for the purpose of conducting their own business rather than providing a service to another business. If, on balance, it is the latter then the courts will consider that as an influencing factor (along with the other tests of integration, control and intention) in determining if the true nature the relationship between the parties is one of employment rather than a contractor.