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Options Available to Red Zone Property Owners

24 August 2011

This week, many red zone property owners will have received an offer from CERA for the purchase of their property. It is important that people in this situation carefully consider all the options that are available to them from CERA and their private insurer. SB Law can help you through this sale process, and can also assist with any future purchase.

Under CERA’s offer of purchase, two options are available:

  • The property owner may accept an offer for their property outright, based on the rateable value of the property. In Christchurch these rateable values were last set in 2007, and there are limited circumstances available to appeal this value. If this option is chosen, the amount of money received by the homeowner through EQC and/or private insurance for repairs will be deducted from the amount offered by CERA if it has not yet been used for the repairs. Damaged chattels remain the responsibility of the homeowner, thus any contents claims must be continued by the homeowner.
  • The second option available is to accept an offer from CERA solely for the purchase of the land. Any claim relating to any house or other improvements on the land will need to be lodged directly with the property owner’s private insurer and EQC. This option is best suited to people who have considerable damage to their homes and hold full replacement insurance, which may allow them to claim more than they would receive under the first option.

If you are faced with making a decision on CERA’s settlement offers, timely advice is critical. We offer a friendly relaxed and professional service and welcome any queries you may have regarding this process. Please feel free to call us on (03)374-6257.

Employment Law and the Quake

Current as at 28 March 2011

SB Law is fortunately still operating after the quake and able to give employment law advice to both employers and employees. The following may assist but we also recommend you consult the excellent Labour Department website that also has comprehensive information on Government assistance packages.

Is the employer obliged to continue paying an employee if he/she can not get to work?

Generally, if an employee is available and willing to return to work the employer must continue paying salary and wages according to an employment agreement’s minimum hours’ clause unless a specific provision of the agreement covers a shutdown due to a natural disaster. This advice even if the workplace is inaccessible due to quake damage or open but business is severely curtailed. If the employer is struggling financially options, apart from the government wage subsidy, include:

  • An agreement that the employee takes annual leave or leave without pay. However, in the absence of a mutual agreement holidays can only be imposed by giving 14 days notice as per the Holidays Act – a failure to give notice may however, be viewed by the ERA as excusable in extraordinary circumstances but no case law exists on this point.
  • Reaching an agreement on reduced working hours or alternative duties at another site.
  • If there is no prospect of a return to business either short or long term initiating redundancy proceedings on economic grounds may be the only option but a reasonably fair process must take place. This must involve some good faith consultation in the form of notifying employees of a proposal to end their employment and allowing for discussion of options (see below).
  • In circumstances where the workplace is simply inaccessible on health & safety grounds for a significant period of time but business may resume the employer may initiate a temporary lockout. If legitimately locked out employees are not entitled to be paid (the employment agreement is effectively suspended). However, this is an extreme option, requiring careful consideration and strict compliance with the Employment Relations Act and good faith provisions (we recommend only do this with legal advice).
  • In an extreme situation where it is decided the business is no longer sustainable, allowing the business to go into liquidation may be the only option and employees become creditors (with preference to claim outstanding holiday pay).

Redundancy Process

The following minimum checklist will assist if you are contemplating a redundancy or restructuring of your workforce:
  • Step 1 : Consider if you have a genuine commercial reason for the decision and check the employment agreement for process guidance.

  • Step 2 : Collect information for presentation to employees affected and adopt a minimum three meeting consultation process: (A) Convene an initial meeting to discuss your proposal (advice staff of right to be represented throughout the whole process) follow up with a letter confirming your proposal. B) Call second meeting to listen to employee feedback and take time to consider this. (C) Convene final third meeting to outline decision and give formal notice of redundancy. If you have to select between people for redundancy use a fair criteria and consult employees on it before imposing such.
  • Step 3 : Check the notice provisions of employment agreement (if none give reasonable notice with minimum being based on pay period). Check if redundancy payments have to be paid (if not in agreement there is no legal obligation to pay compensation beyond reasonable notice).
  • Step 4 : Give each individual a written notice of their entitlement and notice that they are redundant (do this at a meeting if possible and offer employee support with job hunting).

Note: most redundancies attract a grievance if no fair process is followed and even though compensation for loss of the job is not claimable, compensation for lack of fair process may be awarded.

What if the employee is unavailable or unwilling to work?

It is likely that some employees including: those being injured or sick, those facing a bereavement, having to care for children or dependants are simply not available for work. In such situations normal sick leave/special leave/bereavement leave employment agreement/policies apply. If such leave is exhausted the option of annual leave by agreement arises and the same rules apply as to employees available for work. The key is to carefully monitor the situation and maintain communication with each employee as natural disasters have a differing impact upon individuals. Support mechanisms such as EAP counselling should be offered. Clearly employers will exercise positive compassion but if an employee unreasonably refuses to return to work or is unfit to return, disciplinary action including ultimately dismissal may be at issue. Again, get careful legal advice as the law requires fair process and the standard of what is “reasonable” employer behaviour may be scrutinised more carefully in disaster situations.

Health & Safety

Please be aware that employee sensitivity to re-entering the workplace will be at an all time high. The Labour Department website has excellent guidelines and check lists of factors to consider. Remember Health and Safety should be a primary consideration but is a potential minefield for disputation – get advice when in doubt, step back and think and, try and first negotiate with employees.

The Future

We have been given a big jolt from on high to think about future emergencies – when you get time do an strategic audit of emergency planning and procedures should you be faced with a similar situation. This could include developing new policies or including provision for disasters in all new employment agreements (existing agreements can only be amended by agreement).

SB Law is available to assist please contact David Beck or Dennis Standring. Kia Kaha – keep safe.

Current Alert

Dennis Ernest Standring M.A., LL.B, Dip. Ed. Pysch, Partner
David George Beck LL.B, Dip Industrial Relations, Partner
Phillipa Frances Shaw LL.B (Hons 1st class) Associate
Ann Fass BA LLB. Associate

A current legal issue of concern is your rights and obligations when making employees redundant or for employees challenging redundancies where no provision for redundancy compensation exists. We specialize in giving timely advice in this area.
Contact David Beck for assistance.

Standring Beck Lawyers
PO Box 4369
Phone 03 374 6257
Facsimile 03 374 6258

Please contact us if you require assistance.