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Can't hide behind a Trust

March 12, 2024

Recently the High Court has defined its position on individuals or companies potentially hiding behind trusts and avoiding accountability in the context of Health & Safety. In the case of WorkSafe New Zealand Mhi Haumaru Aotearoa v RH & Jury Trust [2023] NZHC 3871, the High Court rendered a significant decision regarding the liability of trusts and trustees under the Health and Safety at Work Act 2015 (the Act) following a tragic incident on a dairy farm owned by the RH & JY Trust, where a young child visiting his grandfather suffered a fatal accident due to unprotected machinery. Following the child's death WorkSafe filed charges against both the Trust and its trustees.


Initially, the District Court dismissed charges against the trust, citing that a trust did not fit the definition of "person" under the Act. However, WorkSafe appealled and the High Court took a broader perspective, emphasising the Act's intent to hold entities accountable with higher penalties compared to that against individuals. Justice Harvey highlighted the Act's silence on whether a trust falls under the definition of "person" advocating for a wide interpretation of "person conducting a business or undertaking" (PCBU). Consequently, the court ruled that trustees collectively constitute a PCBU, thereby subjecting them to potential charges under the Act.


Despite this, the court acknowledged complexities within trust law, such as trustees' limited liability for co-trustees' actions, suggesting potential limitations on prosecuting trusts directly under the Act. Additionally, the court clarified that prosecuting either the trust or the trustees collectively would result in similar maximum penalties, thus eliminating any practical advantage to prosecuting the trust separately.


Moreover, the ruling recognised the possibility of trusts indemnifying trustees based on specific circumstances and applicable trustee indemnity laws. In summary, the decision underscores the expansive interpretation of a PCBU to include trustee bodies collectively and provides insights into the complexities of holding trusts accountable under health and safety laws.


This case underscores the significant health and safety obligations trustees bear, particularly when trust assets encompass businesses or commercial undertakings. It emphasises that trustees must diligently ensure workplace and operational safety for any operations under their governance. This latest High Court decision firmly establishes that trusts cannot serve as a means to evade health and safety responsibilities. It reiterates the paramount importance of maintaining a safe workplace, irrespective of the organisational structure of a business.


Employer Takeaway: This case demonstrates the wide application of health & safety obligations in terms of “PCBUs” and their duty to eliminate and minimise risk. In particular, the case shows how the courts will apply a wide interpretation to how legal entities are structured, and them being considered “PCBUs” for the purposes of the Health and Safety at Work Act 2015. Specifically, in appropriate cases the courts will uphold liability against trusts where harm, injury or loss of life has occurred and there are corresponding health and safety failures. Trusts throughout New Zealand will need to consider the impact of this court decision against their individual circumstances and where appropriate ensure compliance with health and safety obligations.


Source: Rainey Collins

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By Stuarts Accountants • December 2, 2024

How can I try to prevent a personal grievance being raised against me?

By Stuarts Accountants • September 11, 2024
An employee can raise a personal grievance if they feel they have been treated unfairly or unreasonably. For example, if an employee thinks they have been unfairly dismissed or unjustifiably disadvantaged by their employer. Personal grievances handled incorrectly can result in significant costs for an employer. It is therefore important to know your obligations and to take steps to prevent such grievances. Employers have an obligation to act fairly and reasonably. This obligation is really important when an employer undertakes a disciplinary and/or dismissal process, as the employee will feel under real threat at those times, and potentially likely to challenge what has happened and how processes were conducted. When undertaking these processes, it is vital to first look at the employee’s employment agreement. It is likely that the agreement will provide specific steps to take during a disciplinary procedure. If that is so, an employer is required to follow those steps otherwise they will have breached the employment agreement. You should also be sure to communicate with the employee. This is important in all contexts. For example, you should communicate with the employee even if their misconduct was minor. Though this can be informal, it ensures the employee is aware of your expectations. Having a discussion with the employee may also get ahead of the problem and resolve it short of a personal grievance. Make sure that you have a relevant person with you in the discussion who can confirm what took place if needed, and ask them to record a note of what happened that can be referred to later. The employee must also be fully informed if any disciplinary process is being undertaken and they should be aware of its potential outcomes. This includes being informed of any complaints or investigations against them. Employees must also be allowed to have their say throughout any process and be given a chance to explain their side of the story. An employee must also be informed they are allowed a support representative at any formal meetings with the employer. During any of these processes a decision must not be made until all factors are considered. This requires a genuine investigation into any alleged behaviour by the employee, as well as any evidence from the employee themselves. A few extra tips include remaining calm and polite, even when a personal grievance is being raised by an employee. Escalating the situation risks making matters worse. It is absolutely vital not to take short-cuts throughout this process. Personal grievances can result in large costs for an employer who gets the process wrong, even if the employee’s behaviour was serious. The employment landscape is literally littered with employers who reasonably had problems with an employee but got key elements of the processes wrong. It is recommended to implement clear and effective procedures before those processes are required. This ensures that there is a step-by-step process to follow and there are likely to be less issues during the process. It is also recommended to keep a record of any serious interactions or conversations with employees, and that all paperwork is accurate and well organised. These documents will likely be required if a personal grievance is eventually raised against you. Being able to refer the employee to them might show them that the correct processes have been followed, and avoid a personal grievance being raised at all.  If you are confused about your obligations or wish to clarify how you can prevent a personal grievance, it is best to seek legal advice from a professional with experience in the area.

When can I dismiss an employee without notice?

By Stuarts Accountants • September 11, 2024
The process of dismissing an employee usually includes several steps such as:  investigating behaviour,  raising concerns with an employee and,  giving notice. However, there are some limited circumstances in which not all of these requirements are needed. An example of such a case is when an employee’s behaviour is so serious that their employer is not required to give the employee notice. This is known as “summary dismissal” and may be appropriate when an employee has behaved in a way that amounts to serious misconduct. Serious misconduct is conduct which has destroyed the trust and confidence in an employment relationship. Examples of serious misconduct may include (but are not limited to):  theft,  violence,  use of illegal substances,  dishonesty,  bullying and,  workplace harassment. A dismissal without notice is contrasted with a dismissal with notice. For example compare an employee who is to be dismissed without notice for serious misconduct for fraud with an employee who is to be dismissed after another finding of misconduct following a final warning for a breach of timekeeping. Dismissing an employee “without notice” merely means that an employee can be forced to leave the workplace instead of being given their notice period, and the employer is able to cease paying the employee from the date of dismissal as there is no notice period that has to be paid. Not having to give notice does not mean that an employer can dismiss an employee immediately when an issue arises. It is important not to be misled by the term “without notice”. Employment agreements generally include a notice period. This includes the notice period if an employee chooses to leave their job, and/or if they are dismissed from the job. Employers are always required to follow a fair process. Whether there has been serious misconduct or not an employer is required to undertake a number of steps before dismissing an employee. These steps include: 1. Raising any concerns with the employee along with the possibility of dismissal if the concerns are correct; 2. Investigating claims against the employee before making a decision on the facts; 3. Providing the employee with relevant material so they can prepare their response; 4. Advising the employee of their right to have a support person attend meetings and assist with their response; 5. Allowing the employee a reasonable opportunity to respond to the allegations; 6. Considering all the facts, including the response from the employee; 7. Advising the employee of the decision on the allegations, the level of misconduct found, and any preliminary view as to the penalty outcome; 8. Allowing the employee to provide feedback on the preliminary proposed penalty and genuinely considering that feedback; and 9. Advising the employee of the penalty outcome. Failing to undertake these steps is a breach of an employer’s good faith obligations. This can lead to serious and expensive consequences for the employer. Dismissing an employee without notice can be used when the behaviour amounts to serious misconduct that justifies a dismissal without having to give the notice period. However, it is important that employers remain aware of their overall obligations during the dismissal process. If you are confused about your obligations, it pays to seek advice from a professional. Source: Rainey Collins Employment Issues 21.8.24
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