July has kept us busy with all sectors of the property market extremely active. ANZ, BNZ and Westpac have all increased their one to three-year fixed mortgage rates in anticipation of an OCR increase, which economists have picked next month as a reaction to the annual inflation rate reaching a ten-year high. It remains to be seen if the changes to the mortgage rates will dampen the market.

The corollary to this has been a slight lift in fixed-term deposit rates. That may be the beginning of good news for investors.

We have another team member to welcome this month. Savannah Carter has joined us as a Senior Litigation Lawyer and will complement and strengthen our team in the areas of civil litigation, employment law and resource management.

We still continue our focus helping clients with EPAs, prenuptial agreements and relationship property agreements. Next month we have something for our small and medium-sized enterprise clients. Look out for what we plan to do assisting businesses with employment agreements.

Older kiwis starting up businesses



New Zealanders seem to be following a worldwide trend in which people over 50 are setting up their own businesses. The highest rate of new businesses in the US, UK and Japan are within older age brackets, and according to Judith Davey writing for The Conversation, it may be the same here.

So, what’s behind the trend? Massey University is seeking to find out with its Maximising Workforce Participation for Older New Zealanders programme. According to the research so far, it’s not about being pushed out of existing work. Instead, older people starting businesses fall into five broad categories.

• Opportunity Takers: The opportunity to start a new business presented itself.
• Difference Makers: They want to make a positive difference in the world, and the business is a means to that end.
• Direction Changers: Wanting to use their skills and experience in areas that are new to them.
• Needs Must: Their work conditions were unsatisfactory, and a new business seemed the best way to generate reliable income.
• Investors: They want to use their business experience and skills to improve their financial situation.

Do any of those categories sound like you? Or are you just wanting to start your own business? Our team is here to assist, advise and help you get under way. Contact us for advice as to your business structure, asset protection, employment law considerations and tax requirements.

Uber drivers are contractors… for now



And while plenty of people are starting up their own business, plenty more are getting involved in contract work and the gig economy. And as we’ve discussed recently, the law in that area is still in question.

The latest question mark pops up in relation to the thousands of Uber drivers in New Zealand: are they self-employed contractors, or employees?

In a New Zealand Employment Court decision this year, an Uber driver was held to be a contractor, not an employee.

But according to Newsroom, the E tū and FIRST unions think it’s not the end of the story. They’re seeking a declaration from the Employment Court that Uber drivers are indeed employees, and entitled to rights such as the minimum wage, sick leave and KiwiSaver contributions.

It’s likely they’ll draw on a decision from the UK Supreme Court, which found that Uber drivers belong to a category that sits between employee and contractor: “worker”, with eligibility to employee benefits such as annual paid leave and the minimum wage.

That “worker” category doesn’t exist in New Zealand, which mean that UK decision isn’t of complete relevance. But given the ever-increasing number of people working in roles such as Uber drivers, it wouldn’t be surprising to see the law evolve here. A Working Group is currently looking at whether there need to be more protections for “vulnerable contractors,” and is likely to share its recommendations with the Government later this year.

As it stands, key piece of law to look to is S6 of the Employment Relations Act. It’s the actual relationship that determines whether someone is a contractor or employee, not the contract. So whether employer or contractor—make sure you know where you stand. We're here for advice if you need it.

Trustee or beneficiary? Know the rules around disclosing legal advice



Trustees often need to call on legal advice for how to carry out their work. If they use trust funds to pay for that, then beneficiaries of the trust are entitled to see the advice. But at least until now, those beneficiaries might not have been entitled to see legal advice the trustees paid for themselves.

A recent Supreme Court decision, Alderman, now casts doubt on that. The Court held that it might count as “trustee information,” which creates an obligation for trustees to share it with beneficiaries.

There may be situations where trustees would prefer not to disclose that advice. Is that still an option? In a recent webinar, Auckland barrister Anthony Grant suggested some key points trustees should keep in mind:

• Trustees should not use trust funds to pay for advice about criticisms beneficiaries have made of them.
• Seek oral advice about such criticisms and how to respond.
• Add a rider to your instructions to the effect that “the advice is meant for me alone and is not intended to be made available to beneficiaries.”
• Use a corporate trustee with different shareholders than the Directors and have the shareholder seek the advice.
• Have a third party seek the advice.
• Use a trustee liability insurer and seek advice through the insurer.
• Incorporate a clause in the trust deed to nullify the implications of Alderman decision.

The Supreme Court didn’t indicate where a trustee paying for advice themselves might not need to disclose it to the beneficiaries. No doubt it’s a situation that will be revisited.
 

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That's everything from us for July. Until next month, we’re just an email or phone call away for any questions, help or advice.