Impacts of new rules for Essential Skills Work Visas

If you’re a business that employs, or is planning to employ, staff from another country, you’ll need to make sure you keep up with the recent changes to immigration policy that were brought in by the Government last month. The Essential Skills Work Visa is designed to give employers access to temporary migrant workers when there are genuine shortages. The changes reinforce the temporary nature of the Essential Skills Work visa, as well as reduce the expectations of lower-skilled migrant workers that the Essential Skills Work Visa is a pathway to permanent residency.

1. The way the Government has achieved this is by using annual income as the new test for skill levels.

2. In the first proposals put forward, any job paying less than $48,859 per year would have been categorised as low-skilled. After complaints from several sectors – including dairy, hospitality, aged-cared and some regional employers – the Government revised the low-skilled threshold down to $41,000. The Government has also promised to look into the idea of tailoring work visas to address regional skills shortages.

3. As the new policy stands, there are now three categories of Essential Skills work visa holders. Highly skilled – to be assessed as a minimum annual income over $73,299, mid-skilled from $41,537 to $73,299 if the job is classified as New Zealand Standard Classification of Occupation (ANZSCO) level 1,2 or 3 and lower skilled – earning less than $41,537.

4. A low-skilled classification now means the employee can only obtain a 12-month work visa that will require annual renewal and only up to a maximum of three years. After three years, low-skilled work visa holders would need to leave New Zealand for a year and reapply after that year if they wished to return on another Essential Skills work visa. The low- skilled classification also means they are no longer entitled to have dependent family stay in New Zealand. Family members would need to apply in their own right.

5. A mid-skilled classification allows workers to have a three-year visa with the option to renew the visa without having to leave the country and access to visas to allow their partner and children to live with them.

6. High-skilled employees are able to get a five-year visa, regardless of the ANZSCO level of their job, and also the right to have their partner and children live with them.
Key points for employers:

• Clear information about pay and hours is required to support visa applications

• The three-year maximum for each migrant worker means you will still be able to access migrants for lower-skilled roles after 3 years but not the same migrant

• The three-year restriction doesn’t apply if a person moves into a more skilled role

• Remuneration becomes key to visa assessment. Employers need to provide proof of remuneration at or above the relevant visa threshold throughout the entire duration of their visa and can be audited by Immigration NZ.

• If pay drops below the level for a skill-band, the employer can be considered in breach of immigration law.

7. For regional and seasonal businesses, another route to employing overseas workers could be via the Post Study work visa and working holiday visa categories. So, if you’re considering employing anyone on a visa, it pays to talk to your lawyer for expert advice and the latest information right at the start of the process.

For more information please contact Elly Fleming, Solicitor
DDI: +6435456714

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Rural fires – the welcome end to strict liability

I note with some satisfaction the recent demise of a statutory provision which caused much grief to an unlucky few in the rural community. I refer to a section of the Forest and Rural Fires Act which made anyone who caused a rural or forest fire liable for any damage caused by the fire as well as the cost of putting out that fire, regardless of whether they had been negligent. So long as the root cause of the fire could be traced back to you, you could have been liable even if you had done everything right to contain the fire source, or thought you had completely extinguished the fire. The Fire Service’s costs for putting out rural fires can be huge, and could exceed the amount of any material loss. If helicopters with monsoon buckets were involved, costs mount very rapidly. Over the years, individuals caught out by this included farmers whose burn-offs had got out of control and hunters whose campfires got away on them. Unexpected wind changes can cause havoc. Often the cause was embers coming back to life under favourable weather conditions when people quite reasonably thought they had long ago gone out.
Previously, if you had the right insurance in place then you were okay, but that ‘right insurance’ was very specific and required that you had cover for liability under the Forest and Rural Fires Act for the type of activity you were carrying out when the fire started. Insurance cover was a bit of a lottery. Some small block owners, for example, did not have the right cover for all the commercial activities carried out on their land.
And of course, the financial consequences of not having cover could be catastrophic. This provision always seemed unfair to me because in other accident or emergency situations you are not expected to pay the full costs of the emergency response, even if you caused the accident.
The good news is the strict liability provision has been swept away with the repeal of the Forest and Rural Fires Act by the Fire and Emergency New Zealand Act 2017. The Rural Fire Service is now funded by levies. A new criminal regime has been put in place whereby anyone who behaves intentionally or recklessly with regard to fire can face large fines. I think we can all agree that this is reasonable.
While the ‘no fault’ statutory liability has gone, other potential legal liability does remain. If it can be shown that a person has allowed a fire to escape as a result of negligence then they may find themselves sued by any property owners who suffered damage as a result.

For more information please contact:
Marty Logan, Partner
DDI: 03 545 6719
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Employ Overseas Workers? Make Sure You’re up with Recent Law Changes

Migrant workers have been a topic of hot debate lately, as part of the political agenda around immigration.

In the lead up to the election, the Government has announced a raft of changes which on one hand tighten some requirements, while on the other, give some migrant workers new opportunities. Here is an overview of four of these changes.

New restrictions for non-compliant employers

Employers who breach minimum employment standards and immigration requirements for their migrant workers now face access restrictions to the foreign labour market including stand-down periods. This will affect employers supporting Work Visa and residence applications and Approvals in Principle, seeking Accredited Employer status and those who are part of the Recognised Seasonal Employer Scheme.

Pathway to residence for some South Island temporary migrants

From last month, a new pathway to residence for some South Island temporary migrants will open for a limited time only. This particular development may help employers in several sectors, (including the hospitality, horticulture/viticulture, and aged care sector) retain experienced and reliable workers who are committed to your industry and to the South Island.

Employees who have held an Essential Work Visa for the past five years or longer, on the basis of working in South Island, should discuss eligibility criteria with an immigration lawyer.

Proposed changes to temporary migration settings

From 14 August 2017, it has been proposed that remuneration of migrant workers is used to determine:

a) Their eligibility for an Essential Skills Work Visa
b) The length of the Essential Skills Work Visa
c) Whether migrant workers can bring their children and partner with them to New Zealand.

For instance, someone offered a job as a Chef (ANZSCO level 2) with an hourly rate of between $15.75 – $23.49 will only be granted an Essential Skills Work Visa for 1 year and would not have a right to bring their children and/or partner with them to New Zealand.

Another significant proposal is the introduction of a maximum duration of three years for migrant workers in lower-skilled occupations. After this time, a migrant worker would need to spend a year outside New Zealand before they could apply for another Essential Skills Work Visa in a lower-skilled occupation.

Skilled Migrant Category Changes

Skilled Migrant Category is the most common pathway to residence. From 14 August, for employment to be considered skilled, new additional requirements will also take into account the applicant’s salary. To be eligible, migrants will need to have a base salary of at least $48,859 a year. For jobs that are not currently considered skilled, they would qualify where the applicant’s base salary is at least $73,299 a year.

Changes will also put more focus on skilled work experience, more recognition of skill levels in the 30-39 year age group and high salary levels.

Immigration New Zealand are aiming to make more information on this available from June.

So to make sure you comply, check your current systems against the legal requirements, keep abreast with the developments in this area as they have the potential to have an impact on business operations as well as on compliance with employment and immigration requirements and if in doubt or if you have any questions, seek legal advice.

For more information please contact

Heather Collins, Solicitor at Pitt & Moore
E: heather.collins@pittandmoore.co.nz
T: +64 3 545 6702

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With the Best Will in the World

So you’ve prepared a will and feel satisfied your wishes for distribution of your assets are locked in stone and will be carried out when you die. How sure are you it won’t be contested? Every year in New Zealand there are over 300 contested wills that end up in court. That’s just the tip of the iceberg, as a significant number of disputed wills are settled out of court.

It could also become an increasing issue as property prices continue to rise in some areas, bumping up the value of assets in the estate. Generally, the larger the value of assets in the will, the more potential there is for a disgruntled party to contest a will, as contesting a will is not cheap. If you have a rural business the division and realisation of those assets can be complicated so it’s best to do the thinking well in advance.

The three main Acts under which a will can be challenged are:

  1. The Family Protection Act 1955 – certain family members can contest a will if they think the will-maker has breached their moral duty and have not adequately provided for them.
  2. The Property (Relationships) Act 1976 – allows a surviving spouse or defacto partner to choose to have the provisions of the Act apply rather than the will and apply for a division of relationship property. The Act gives this person’s claim precedence over any other person’s claim who has a beneficial interest under the will.
  3. The Law Reform (Testamentary Promises) Act 1949. This is where the deceased promised someone they would get something in the will as a reward for services rendered. For example, the will-maker promises the neighbour the tractor when he dies for assistance with managing the farm. The claimant has to show that they provided the services and the will-maker made an express or implied promise to reward the claimant when the will-maker dies.

To reduce the chance of contestability, its good practice to eliminate as many potential legal challenges as you can, which means complying with each Act.

Circumstances change. The relationships at the time of death may be significantly different from two years prior. For example, the daughter’s marriage may have ended and the son may have won lotto. If you do wish to allow for unequal division of your estate amongst your children, there are ways to write that into your will so that your intent is clear. If you record your reasons and store that with your will it also gives a court the ability to see the rationale behind your decisions and take that into account.

The bottom line is the law can supersede your wishes. So, think carefully about what you’d like to happen and consult your lawyer to prevent your will being challenged. Finally, revisit your will at least every five years or when your or your family’s personal or businesses circumstances change.

For more information contact Tessa North Solicitor at Pitt & Moore

E: tessa.north@pittandmoore.co.nz

DDI. 03 545 6716

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Gambling with a Building Consent

Nobody likes red tape. Having to obtain a building consent for that small shed you are building or that little bit of earth work you are doing on the farm can seem like a disproportionate pain in the proverbial. In days gone past, it would have been common practice to charge ahead with the work on a “she’ll be right” basis.

But will “she be right”? Legally, the position is very clear:

  1. For unconsented works completed prior to 1993, unless the works are either dangerous or insanitary your Council will not take further action.
  2. For unconsented works completed post 1993 (so anything you build now) your Council can, at their discretion, require such works be pulled down.

In practice, of course, you may well take the view that the likelihood of your local Council coming charging on to your property, clipboard in hand, and demanding that you tear down a small unconsented shed is relatively low (and you may well be right). But before you roll the dice on that risk, it is becoming increasingly important to take a couple of other things into account. Firstly, the absence of a consent may well put any insurance pay-out you might have otherwise received at risk. You should certainly read your insurance policy very carefully before assuming that unconsented improvements will be covered. Secondly, our experience is that purchasers of farm properties are increasingly demanding that a vendor has obtained building consents and Code Compliance Certificates for all improvements built since 1993. In worst-case scenarios, (for the vendor) we have seen purchasers look to discount the entire value of an unconsented improvement from the purchase price they would have otherwise been willing to pay. A short cut now, in avoiding obtaining consent, can therefore become a significantly more expensive headache when you come to sell.

While we’re talking about consents, there are also some changes coming to the Resource Management Act (RMA) which will most likely loosen some requirements. While any reduction in red tape in this area will be welcomed by many landowners and agri business people, it’s another reminder that you need to keep up with changes to legal requirements.

As lawyers, we will advise you to get a building consent when one is required. As pragmatists however, we understand that some of you are going to continue to build without consent, no matter what anybody says and we simply suggest that you make that decision with your eyes wide open as to the potential legal and practical consequences.

For more information contact:

Geoff Caradus, Partner at Pitt & Moore

DDI: 03 545 6717

E: geoff.caradus@pittandmoore.co.nz

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Changes Coming for Unit Title Property

Townhouse and apartment living has become more prevalent in New Zealand in recent years, particularly in the larger cities of Auckland and Wellington, with multi-unit developments comprising 40 per cent of new builds in 2016. Growth in this area has put the existing legislation, which governs the ownership and management of Unit Titles, to the test.

The outcome of this has been growing discontent with some aspects of the existing legislation. The rules relating to Unit Titles are now under review and look likely to change in the near future.

The owner of a Unit Title owns part of a building, such as an apartment or unit, a share in the common areas of that building, such as lifts, lobbies or driveways, and an interest in the underlying land. The Unit Titles Act 2010 currently governs the ownership and management of Unit Titles.

In December last year, following receipt of a report prepared by property professionals, the Government released a discussion document around possible reforms aimed at protecting the growing number of apartment and townhouse owners.

The discussion document focuses on how the existing disclosure regime could be improved, how Body Corporate governance could be strengthened, the issues around maintenance planning and how access to the disputes resolution process could be improved.

The Ministry asked for feedback on how issues such as how Government agencies might better provide service for Unit Title holders, including asking if a new separate body needs to be set up to administer this. Importantly, the Ministry is also considering whether smaller complexes should be exempt from, or should be able to opt out of, compliance obligations under the Act.

The Government’s consultation process closed in early March and the Ministry of Business, Innovation and Employment will now review the submissions and develop proposals for Government approval, with the Government aiming to produce a draft Bill by August this year.  The Government’s proposal to review the current Act has been welcomed by many and it is hoped that the reforms will bring the law up to date in an area of the property market where growth looks set to continue in the coming years.

For more information contact:

Clare North, Associate at Pitt & Moore

DDI: 03 5456708

E: clare.north@pittandmoore.co.nz

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Can You Trust a Trust to Protect Your Assets

If your assets are in a trust they might not be as safe from creditors or relationship break-ups as you might think. The Courts are prepared to set aside or go around trust structures if it is justified.

Trust structures can be overturned in a number of different ways. These include if the trust has not been run properly; if it is really the “alter ego” of an individual or if the trust was really never intended to operate as a trust. If the trust structure is overturned then any benefits will be lost. For example, if the trust was established with a view to protecting assets from creditors’ claims, once overturned, those assets would be exposed. If the trust was established to hold and protect your family home from any subsequent relationships, the home will no longer be classified as “trust property” but classified as “relationship property” and therefore subject to Property (Relationships) Act, which generally presumes that both partners should share equally in the family home if their relationship is three years or more.

In the relationship property context, the Court of Appeal has recently ruled that trustees of a trust held the increase in value of a property not for the beneficiaries of the trust but for the benefit of the couple who had worked on the property. That meant it was “relationship property” not trust property and was to be shared equally.   This is seen as a somewhat novel way to address efforts by a partner who was not a beneficiary of a trust and who otherwise would be unable to claim against any relationship property. The decision must be viewed against the legislative backdrop of the Property (Relationships) Act whereby all contributions, not just monetary, are considered.

When thinking about ways to protect your assets, consider a contracting out agreement instead of, or possibly as well as, a trust. Contracting out agreements allow partners to say what provisions of the Property (Relationships) Act won’t apply to their property interests in the event they separate or go into bankruptcy.   Provided each person gets independent legal advice as to the effects and implications of the agreement they are hard to overturn as a challenger generally has to prove it was void due to a technicality or that it would give rise to serious injustice. For a creditor to overturn a contracting out agreement, they would generally have to prove that the agreement was entered into in order to defeat creditors. These are very high thresholds to meet.

Before you sign up to a trust it’s important to seek professional legal and accounting advice to consider whether it’s the right option or whether a contracting out agreement could better serve your needs. Good advice should also include how the trust should be administered in order to avoid potential court action later.

 For more information please contact:

Andrea Halloran, Associate at Pitt & Moore

DDI: 03 545 6701

E: andrea.halloran@pittandmoore.co.nz

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Quick tips to protect your business with your Terms of Trade

As a consumer, when was the last time you read the Terms of Trade on the back of an order form or when you bought online? And turning that around, as a business owner, how familiar are you with your own Terms of Trade for the goods or services you sell? When was the last time you updated them?
Both buyers and sellers can often plead guilty to not taking much notice of the Terms of Trade, but when you’re the seller of goods or services, it’s important to protect your interests and eliminate the ambiguity that becomes the source of legal disputes down the line. The first step is a written Terms of Trade that protects your right to be paid in full for the goods or services you offer.
They should be written in clear, plain English and will normally be no longer than a single A4 page (such as on the other side of an order form). If you’re selling online, you should have the Terms of Trade published clearly on your website.
While there are many standard clauses that should be included in your Terms of Trade, here we focus on your right to ownership of goods until full payment and the enforcement of that right.
Think about your ownership rights
Retaining ownership in goods after the purchaser has taken possession will help secure payment. This type of clause is commonly referred to as a ‘reservation of title’ or a Romalpa clause. They need to be explained to the consumer to be enforceable under the Consumer Guarantees Act and this can be as simple as requiring a signature on your order forms. Customers should always be given a copy of the Terms of Trade they have agreed to.
The same applies for online sales. Electronic order forms on websites should contain a link to your Terms of Trade along with a notice stating that the purchaser agrees to be bound to them by completing the order online. A copy of the Terms of Trade should be emailed to the buyer as an attachment to the order confirmation email.
Personal Property Securities Register
If you need to reclaim goods from the purchaser’s premises, a retention of title clause, by itself, does not give you the right to take them back. Ideally, your Terms of Trade should outline rights to register a notice on the Personal Property Securities Register (PPSR), which is a good idea for large transactions. The PPSR is a simple public register which allows companies to publicly notify an interest over certain property and its best done prior to the buyer taking possession so that you secure your priority over other creditors. This is the key to securing additional rights to goods no longer in your possession, including the right to repossess them if the mark-mckitterick-hspurchaser defaults (with some exceptions). To register a notice on the PPSR you can go to http://www.ppsr.govt.nz/cms

So be prepared and make sure you have robust Terms of Trade before you need them. Speak to a solicitor if you’d like some guidance and be sure to put it on your short-term ‘to do’ list.

For more information contact Mark McKitterick, Solicitor at Pitt & Moore

E: mark.mckitterick@pittandmoore.co.nz

DDI: 03 545 6715

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Invest in Advice Before Investing in Property

With the increasingly warm temperature of our local housing market, you might be considering getting into property as an investment. At the other end of the spectrum, if you or someone you know is a hopeful first home buyer, you will be planning how to get up onto the ladder in the first place.

Here are few legal updates that could be helpful.

Let’s start with the investor.

In response to concerns about the unhealthy state of rental housing stock, the Government recently introduced new requirements around insulation and smoke alarms for landlords. The changes in the legislation mean as a private landlord, you need to:

a/ ensure you have a working, long-life smoke alarm installed within 3 metres from each bedroom door. If there is not already a smoke alarm fitted, you must install a long-life photo-electric smoke alarm. When old alarms are replaced they must be replaced with this type of smoke alarm.

b/ declare in the tenancy agreement the current state of insulation in the property for floors, walls and ceilings.

c/ ensure the insulation complies with the new Tenancy law requirements before 1 July 2019.

It’s estimated that there are over 180,000 rental properties nationwide that aren’t insulated. These will now need to fit ceiling insulation that is at least 70mm thick, underfloor insulation for timber floors (a concrete floor is already counted as its own insulation) except where the floor is on an upper level of a building, above a habitable living space. There are a few other exceptions where retrofitting isn’t possible but most houses will have to comply.

Unfortunately for most landlords, the cost of installing the required insulation will probably not be tax deductible as an expense if it is new insulation as IRD consider it to be a capital cost – it can only be claimed as an expense if it’s replacing old insulation.

If you or a family member or friend is considering buying a first home and are looking for ways to help pay the mortgage, you might want to consider getting a boarder either in a room in your house or in a sleep-out. You will still need to abide by the Residential Tenancies Act but from a tax point of view, IRD says you don’t have to declare the income as long as each renter (up to a maximum of five renters) each pays rent of less than $257 per week. Of course it also means you can’t claim any expenses their tenancy either, but it’s a good potential income source to help get started on the property ladder.

Whether you’re an investor or a buyer you will be looking to ensure you meet your legal obligations and maximise your income. For both reasons, it pays to talk to a lawyer before you sign any sale and purchase agreement.

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For more information please contact
Anissa Bain, Partner
Phone:
03 545 7894
Email:  anissa.bain@pittandmoore.co.nzAJB - office (2)

Leases – it’s all in the Wording

The importance of clear and explicit wording in your contractual arrangements has been confirmed by the recent quashing by the Supreme Court of the Court of Appeal’s judgment against Mobil Oil – Mobil Oil New Zealand Limited v Development Auckland Limited [2016] NZSC 89.

 

The Court of Appeal – disagreeing with the High Court – found that Mobil had to remediate the land that it had leased from the Auckland Harbour Board (and its successors) and that the natural and ordinary meaning of the words in the lease did mean that the remediation included the sub-soils which had been contaminated over many years prior by its use as a bulk storage of oil.

 

The lease agreements all contained a repair clause dealing with Mobil’s obligations to keep the land “in good order and clean and tidy” during the term and to deliver it in that condition on termination.  The leases permitted the storage, handling and blending of petroleum products but prohibited any noisy or offensive trade or business and required Mobil to comply with all relevant regulatory requirements.

 

The question for the Court was whether delivery of the land at termination meant remediation of the contamination.

 

Factually, the key findings were that Mobil’s predecessors had occupied the site since the 1920’s and that the parties knew the land was contaminated from the 1970’s.  The relevant leases were entered into between the parties in 1985.  At the time the tenancies came to an end in 2011, remediation work costing between $10-50 million (depending on who was doing the work) was required.

 

Development Auckland said Mobil was to foot the bill under the terms of the lease.  Mobil said that the terms of the lease did not require it to foot the bill.

 

The High Court found in Mobil’s favour and found that having regard to the land’s contamination in the 70’s one would have expected any remediation from contamination to be explicitly addressed in the lease rather than left for inference from the general wording of the clean and tidy clauses.

 

The Court of Appeal disagreed. It reviewed, at some length, the law of waste, and took the view that permission to use the site for oil storage did not amount to authorisation of incidental contamination.  It was of the view that there had been a breach of the covenant not to injure the lessor.  The Court saw the clean and tidy obligation as naturally extending to the subsurface and it saw Mobil as coming to the negotiating table in 1985 with an actual or potential liability for its prior contamination.  The Court traversed all the correspondence between the parties leading up to the execution of the 1985 leases in order to get to that point and the majority found that all the contamination – not just the contamination caused post-1985 should be remediated by Mobil.

 

Mobil appealed and were successful.  Amongst other things the Supreme Court considered it important that there were multiple causes of the contamination; that contamination was an incident of the permitted use of bulk oil storage; and that there was no claim by Auckland Harbour Board for Mobil to remediate the land when it was surrendered to it in 1985; as relevant.  The Supreme Court favoured the High Court’s assessment of the contractual terms and emphasised that the word “keep” in keep tidy, is future looking and not a word which is apt to signify an obligation to effect transformative change (such as extensive and expensive remediation).  The Supreme Court rejected that the clean and tidy clause meant that Mobil would be liable for any contamination and also rejected the suggestion that a term be implied into the contract which would require Mobil to prevent contamination – such a term was not necessary to give business efficacy and did not “go without saying”.

 

In short, be very clear from the outset what each party’s obligations and rights are to be – particularly having regard to the nature of the use of the premises – and ensure they are clearly spelt out in the agreement.  In this case, after years of legal flip-flops, Auckland now has to wear the costs of site remediation which would arguably take away any profit to it after all the years of leasing it plus pay costs to Mobil – the ratepayers will not be happy!

Andrea Halloran (03) 545 6701

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