Changing Immigration Policies - The Result
New Zealand's immigration landscape has
been changing over the last year. New policies were implemented by the former
National Government, and now the Labour-led Government ("Labour") is set to
implement its campaign policies in the coming months.
The Former National Government
In April 2017, the National Government announced proposed changes to the
Skilled Migrant Category ("SMC") and the Essential Skill Work Visa ("ESWV")
for migrant visas. This was implemented on 28 August 2017.
With a record number of migrants migrating to New Zealand, the SMC's criteria
seeks to ensure that New Zealand ("NZ") facilitates and recognizes migrants
who provide greater economic benefit to NZ and migrants who have skills for
which there is a demand.
The changes to the SMC criteria mean that it will be harder for migrants with
little to no recognized skills to gain resident or temporary visas, in
contrast to migrants with recognized qualification or skills under Australian
and New Zealand Standard Classification of Occupations ("ANZSCO").
The SMC Changes
To be eligible under the SMC, applicants must submit an Expression of Interest
("EOI") to Immigration NZ. Immigration NZ is now only considering EOIs that
total 160 points or above rather than the 140-point threshold in 2016. Points
may be awarded for qualifications (Bachelor's, Master's degrees and
Doctorates) recognized under ANZSCO and employment offers.
Further changes are:
An applicant must have at least a skill
level that can be calculated to be levels 1- 3 under the ANZSCO. As a
requirement of levels 1-3, migrants must be earning at or above a salary of
$48,859 per year based on a 40-hour week.
Migrants with skills above levels 1-3
must be paid at or above a salary of $73,299 per year based on a 40-hour week.
Migrants who meet the point requirements
but do not have skilled employment can apply for a Silver Fern Job Search Visa
("SFV"). The SFV gives highly skilled young people nine months to secure
employment for 12 months or longer. However, the number of visas are limited
and are not open for application until 28 November 2018.
The ESWV is a temporary work visa category designed to allow employers to
recruit overseas workers where no suitable local employees are available or
trainable. However, employers are required to first look locally before
venturing into the foreign employment market.
Inside this edition
Changing Immigration Policies - The
The new Anti-Money Laundering and Countering Financing of Terrorism laws
Alternative Dispute Resolution Series: Arbitration - How can it assist you?
An introduction to shareholders' agreement - Why are they important?
Proposed changes to the Employment Relations Act 2000 - What you need to be
Who Pays the Rates? - Selling a Property
Inheritance - Is it separate property?
The ESWV Changes
Changes to the ESWV include:
The introduction of a skill band being
used to determine the visa length and whether a partner and/or dependent child
can apply for a visa on the basis of the relationship. There are three bands,
lower-skilled, mid-skilled and highly-skilled;
The duration of visas for lower-skilled
ESWV holders will be three years maximum (holders must be outside NZ for at
least 12 months before they may re-apply for another ESWV); and
Family members cannot be granted visas
based on their relationship to an ESWV holder who is undertaking lower-skilled
work. In this scenario, they will have to meet the requirements for a visa in
their own right.
Labour's implementation of campaign
The incoming Labour government has confirmed that they will be implementing
policies that will "reduce net migration by 20,000-30,000". These policies
No student visas will be granted for
courses below a bachelor's degree, or a qualification not independently
assessed by the Tertiary Education Commission and NZQA as high quality;
Limiting the Post Study Work Visa to
students that have studied a degree at a Bachelor-level or higher; and
Removing the SMC bonus points currently
gained by studying or working in New Zealand and standardising the age points
to 30 for everyone under 45.
Labour's proposed changes appear to suggest a tightening of the criteria for
the admission of migrants into NZ. The intention appears to be that Labour
wants to reduce the number of migrants gaining entry to NZ and ensure that the
migrants admitted have a skill level that is higher and that they are more
capable of meeting national job demands.
laundering has recently been in the spotlight in New Zealand with the Ministry
of Justice estimating that almost NZ$ 1.35 billion from fraud and illegal
drugs is laundered through ordinary New Zealand businesses each year.
To combat this kind of criminal activity, New Zealand's anti-money laundering
laws have been amended through the Anti-Money Laundering and Countering
Financing of Terrorism ("AML/CFT") Amendment Act 2017 ("Amendment Act").
It is intended that this Amendment Act will put practical measures in place
that will protect businesses and make it harder for criminals to profit from
and fund illegal activity. The amendments appear to have been designed to
closely align with international best practice.
Phase 1 of the Anti-Money Laundering and Countering Financing of Terrorism Act
2009 ("Act") has been in force since 2013. This applies to banks, casinos and
a range of financial service providers. All other businesses are currently
exempt from the set of compliance obligations for "reporting entities"
The Amendment Act essentially puts in place "Phase 2" of New Zealand's AML/CFT
Phase 2 brings more businesses into the AML/CFT regime. The regime now extends
to require compliance by lawyers, conveyancers, accountants, real estate
agents, sports and race betting, businesses that provide trust and company
services, and businesses that deal in certain high-value goods ("high-value
The new laws will be implemented over a two-year period to give businesses
time to implement the changes. Lawyers and conveyancers will be the first
sectors that will have to comply, starting on 1 July 2018, closely followed by
accountants on 1 October 2018, while real estate agents have until 1 January
2019 to comply. For high-value dealers and the New Zealand Racing Board, the
effective date is 1 August 2019. Because these are relatively short
implementation timeframes, affected businesses need to start preparing to meet
their compliance obligations as early as possible.
As a business owner, the first thing you need to do to determine whether you
have obligations under the Act is to understand the term "reporting entity".
Once you have established that your business is a reporting entity, you can
start undertaking the necessary steps to ensure your compliance with the Act.
An entity is a reporting entity, if it is a bank, casino, financial
institution, high-value dealers, the New Zealand Racing Board, or if, in the
ordinary course of business, it carries out one or more activities described
in the definition of 'designated non-financial business or profession' in
section 5(1) of the Act.
These activities are basically of two kinds:
1. Gatekeeper functions (i.e. managing customer funds); and
2. Trust and company service provider functions (i.e. setting up companies for
The Act imposes a number of obligations on reporting entities and these
obligations cannot simply be contracted out of. The obligations include:
* The appointment of an AML/CFT Compliance Officer;
* Carrying out an assessment of the money laundering and terrorism financing
risk your business may reasonably expect to face;
* Designing a written compliance programme (AML/CFT programme) that sets out
procedures, policies, and internal controls to address identified risks among
* Registration on GoAML which is an internet platform that businesses are
required to use to report all suspicious matters to the New Zealand Police's
Financial Intelligence Unit; and
* Implementation and maintenance of your AML/CFT
Programme, which includes:
o Submitting suspicious transaction reports.
o Submitting prescribed transaction reports (a domestic physical cash
transaction that is NZ$10,000 or more; or an international wire transfer that
is NZ$1,000 or more); and
o Filing an annual report with the relevant AML/CFT supervisor every year by
Penalties for non-compliance are severe and can be as high as NZ$ 5 million
for businesses and up to $300,000 and two years in prison for an individual.
In light of this, it is best to walk on the side of caution and report any
suspicious transactions. Not only does this take the matter off your hands,
but also ensures that you are generally protected from civil, criminal and
disciplinary proceedings and should avoid fines, injunctions and imprisonment.
If you have any questions surrounding your compliance with the upcoming AML
requirements we suggest you contact a Solicitor.
Alternative Dispute Resolution ("ADR")
methods are an alternative option to going directly to court. Using ADR
methods instead of pursuing the matter in court is commonly more cost
effective for the parties involved, ADR may also take less time to resolve the
dispute. ADR relieves the court of cases which they believe can be resolved
without court assistance. This article is the second article in our ADR
article series and will focus on arbitration. The arbitration process is
governed by the Arbitration Act 1996 and the Arbitration Amendment Act 2007.
Arbitration is a formal dispute resolution process whereby two or more parties
agree to submit all or selected disputes between them to an independent party
called an arbitrator who can provide a binding decision. The arbitrator is
selected by the parties, or by an agreed nominating body, because of their
experience, skill and expertise as an arbitrator in matters closely related to
the subject matter of the dispute.
During the arbitration the parties will present their evidence and provide
their arguments to the arbitrator who makes a decision, called an award, that
is binding on the parties and is enforceable as a judgment of the Court. The
primary objective of arbitration is to provide a flexible and efficient means
of resolving disputes quickly, cost effectively and confidentially without
necessarily adhering to the formalised and technical procedures of court
Advantages and disadvantages of Arbitration
The advantages of arbitration are:
1. The parties have control over the selection of the arbitrator;
2. If a voluntary resolution between the parties is unlikely, arbitration will
resolve the dispute without the need of using the court system, although the
parties may not agree with the outcome;
3. The process of arbitration is usually less costly than litigation and is
commonly more time effective; and
4. Arbitration hearings are private and the results are not a matter of public
The disadvantages of arbitration are:
1. In some circumstances, arbitration can be a formal and lengthy process
depending on the complexity of the matter and quantity of information to
2. Although you present your evidence to the arbitrator, you are relying on
the arbitrator to interpret the evidence rather than a judge or jury;
3. The parties have no control over the outcome of the arbitration; and
4. Arbitration can be adversarial and does not aim to preserve important
Differences between Mediation and
Mediation and arbitration are commonly used ADR methods. However, although
each method is voluntary, they can produce significantly different results.
Mediation is a process where an independent party called a mediator assists
the parties to reach an agreement through the course of the negotiations.
Mediation allows the parties to control the terms of the agreement; these
terms are not required to reflect the parties' legal rights and entitlements.
The mediation process may not result in an agreement, and the mediator has no
power to recommend an agreement unless authorised to by the parties. If you
would like to find out more about mediation in the context of employment
disputes, see our article "Mediation in an Employment Context" in our previous
Arbitration can be used after mediation has failed or as an alternative to
mediation. The arbitration process takes the control away from the parties and
gives the decision-making power to the arbitrator who will determine, in light
of the evidence, an outcome. In contrast to mediation, the arbitrator's
decision will be guided by the parties' legal rights and entitlements.
There are clear advantages and disadvantages of engaging in arbitration.
Despite this, the primary objective of arbitration is to be a fair, prompt and
cost-effective process that addresses and resolves disputes in a manner that
is proportionate to the amounts in dispute and the complexity of the issues
involved. If you are currently involved in a dispute, we recommend that you
seek legal advice about what ADR method would suit you.
See the next newsletter to find out more about formal and informal
A shareholders' agreement ("Agreement")
records the arrangements between the shareholders and directors of a company
regarding the ownership, government and management of the company. Companies
are not required to implement an Agreement by law. However, implementing an
Agreement is recommended as it is designed to address areas regarding
governance and control of business activities, whether external or internal,
which a company constitution or the Companies Act 1993 may not specifically
For example, the Companies Act 1993 may not provide specific guidance
regarding the process for shareholders exiting a company. This is where an
Agreement can be used by shareholders to outline the process and minimise any
potential disputes and associated costs between exiting and continuing
Generally, an Agreement sets out matters including, but not limited to:
* How initial and continued shareholder funding is made and minimising
shareholders exposure to capital risk;
* The procedure for board meetings;
* How the profits are distributed to shareholders;
* The appointment and removal of directors and shareholders;
* The transfer or sale of shares, i.e. offering shares to existing
shareholders, how shares are valued and the number of shares permitted to be
transferred in order to safeguard tax benefits;
* Shares which are issued to employees of the company, i.e. employee shares,
and how these are transferred when employment ends;
* Shareholder voting rights and the number of shares in the company;
* What decisions may be made by directors, what decisions require shareholder
approval, and if shareholder approval is required, whether this is by
majority, special resolution or unanimity; and
* How disputes are resolved.
An Agreement provides a number of benefits for different types of companies.
Companies with more than one shareholder are encouraged to at least consider
the advantages of an Agreement. Companies with only one shareholder may
consider that while there is only one shareholder it is not necessary to have
An Agreement seeks to remove the ambiguity amongst the shareholders and
directors, and provides direction to manage unforeseen circumstances as well
as providing guidance for the day-to-day operation of a company.
Agreements are especially useful when there is no majority shareholding,
commonly seen in smaller companies, as there is an increased risk of
shareholder disagreements. Therefore, to ensure the maintenance of functional
shareholder relationships, it is equally important for smaller as well as
larger companies to have an Agreement.
The Agreement can include
specific and sensitive details (unlike a company constitution which is
available to the public) regarding the rights and obligations of the parties
involved in the company and/or the rights attached to shares. This protects
the interests of the shareholders and directors. Furthermore, under section 32
of the Companies Act 1993, amending a company constitution only requires a
special resolution of the shareholders (which is generally 75% of the
shareholders entitled to vote). An Agreement may provide that it can only be
varied by unanimous agreement amongst the shareholders and accordingly,
minority shareholders are further protected.
A constitution can only be
implemented once a company is incorporated; however, an Agreement may be
executed beforehand. This can be very beneficial where a company must meet
specific deadlines for a transaction from the outset of the formation of a
An Agreement can provide stability to not only the existing parties involved
but also to other external parties such as potential shareholders and
An Agreement can provide customised administration and protection for
shareholders and directors which a constitution may not have the capacity to
provide. It can be easy to delay the execution of an Agreement when a new
business relationship is formed; however, it is during this initial stage of
forming a company, that an Agreement should be put in place. This ensures that
all parties involved understand the governance and ownership of the company
from the outset. An Agreement aims to reduce additional costs, time and stress
resulting from potential shareholder disputes and accordingly, it is an
invaluable document which all companies should consider, if not implement.
Whether you are looking at starting a company or wish to provide more clarity
among directors and shareholders within an existing company, it is best to
seek legal advice to discuss an Agreement suitable for your needs
During Labour's election campaign, the
Party released a plan which detailed their intentions for their first 100 days
in office ("100 Day Plan"). Since the campaign, the Labour-led Government has
released the proposed changes to the Employment Relations Act 2000 ("ERA")
which are predicted to affect New Zealand's employment landscape
In this regard, it is important to be aware of what changes Labour are
proposing and how the changes may affect you.
The proposed changes are recorded as:
1. The amendment of the existing 90-day trial period as implemented by the
former National Government ("trial period");
2. The doubling of Labour Inspectors ("Inspectors");
3. Minimum wage increase from $15.75 to $20.00 by 2021;
4. Introduction of Fair Pay Agreements;
5. Extend paid parental leave
6. Changes to redundancy provisions; and
7. The abolition of youth rates.
Removal of the 90-day trial period
Section 67 of the ERA addresses Probationary Agreements and outlines the
particulars of the existing 90-day trial period. Labour is set to change the
ERA to allow employees to bring a claim against employers where they feel they
have been unfairly dismissed during their trial period. These claims will be
heard through short hearings without lawyers. The remedies available to
workers may be reinstatement or damages of up to a capped amount.
Labour will release more information regarding the trial period reform in the
coming months. In the meantime, it is recommended that employers become
acquainted with what constitutes unfair dismissal under the current employment
Doubling of Labour Inspectors
Inspectors monitor and enforce compliance with employment standards. They use
investigations and audit programmes to find and investigate potential breaches
of employment standards and to enforce compliance.
Currently, only 60 Inspectors are inspecting the entire country. Labour has
proposed to increase the number of inspectors to 110. The increase implies
that New Zealand has transitioned out of the education and compliance phase of
the implementation of the ERA and into the enforcement phase.
For any businesses that are not fully aware of their obligations under the
ERA, or are not fully compliant, it is recommended to seek the advice of an
Minimum wage increase
The minimum wage is set to increase from $15.75 to $16.50 per hour by 1 April
2018 with the goal to raise gradually to a minimum wage of $20.00 per hour by
Fair Pay Agreements
A key and controversial piece of Labour's workplace relations package has been
to develop and introduce a system of collective bargaining for each industry.
This system is intended to allow unions and employers, with the assistance of
the Employment Relations Authority, to create Fair Pay Agreements that set
minimum conditions, such as wages, allowances, weekend and night rates, hours
of work and leave arrangements for workers across an industry, based on the
employment standards that apply in that industry.
Paid Parental Leave
A commitment was made during the campaign to increase paid parental leave from
18 weeks as it currently stands, to 26 weeks by 2020.
Changes to redundancy provisions
Consultation is to start on changing the minimum redundancy provision
protection for workers. Recommendations such as the development of initiatives
that smooth the transition of people made redundant into alternative jobs,
made back in 2008, have been identified as the basis on which to change the
provision. However, no further details have been offered by the Labour-led
Abolish youth rates
Labour has also proposed to remove youth pay rates. Youth pay rates are 80% of
the adult minimum rates. The proposal has been endorsed by Labour's coalition
partner, NZ First.
A majority of these proposed changes are expected to be passed in Parliament
in the coming months. If you are a business owner or an employee, make sure
you watch this space.
Who Pays the Rates? - Selling a Property
Property Rates are due throughout each respective council's prescribed
rating periods. Payment may be made six monthly, four monthly, three monthly
When selling your property, you are required, at settlement, to pay the rates
up to and including the settlement date. In practice, the Vendor will pay the
rates to the end of the current rating period and the Purchaser's share of the
rates will be apportioned in the settlement statement and paid to the Vendor
by the Purchaser.
If the second instalment is from 1 October 2017 - 31 December 2017 and
settlement is on 10 November 2017, the Vendor will commonly pay the rates up
until 31 December 2017 prior to or on settlement.
As the Purchaser will have possession of the property from the settlement date
onwards, they are required to reimburse the Vendor for the rates from 11
November 2017 - 31 December 2017. This will be reflected in the Vendor's
settlement statement which is given to the Purchaser prior to settlement.
Inheritance - Is it separate property?
Separate property is all property of a spouse/partner that is not required
to be equally shared under the Property (Relationships) Act 1976 ("Act") when
a relationship comes to an end. Generally, inheritance is separate property.
However, if separate property is intermingled with relationship property
(property that must be divided between spouses/partners when the relationship
ends) and it is impracticable to treat it as separate property, it is no
longer separate property. An example is where inheritance money is used to pay
the mortgage on a family home. Accordingly, the inheritance enters the
relationship property pool and is divided equally.
A contracting out agreement ("Agreement") allows couples to determine for
themselves the relationship and separate property, rather than relying on the
principles of the Act to determine the relationship property and separate
Although inheritance may appear to be separate property, to be safe, we
recommend entering into an Agreement which defines inheritance as separate
property. The Agreement will arguably protect the inheritance from a
relationship property claim.
If you have any questions about the newsletter items,
please contact me, I am here to help.
Scannell & Co - 122
Queen Street East, Hastings
(06) 876 6699 or (021) 439 567 Fax: (06) 876 4114 Email:
information in this newsletter is to the best of the authors' knowledge true
and accurate. No
liability is assumed by the authors, or publishers, for any losses suffered
by any person relying directly or indirectly upon this newsletter. It
is recommended that clients should consult S J Scannell & Co before
acting upon this information.
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