The State of the Nation on Compliance

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Complying with NZ law’s minimum standards makes good business sense. Anything less could cost a business owner enormous penalties, their reputation and ultimately their business.

The increased need to keep abreast of ever-changing compliance in New Zealand is becoming a greater challenge for small-business owners. This need is driving the development of online tools like RA Complyhub, to assist business owners through the vast array of legal and regulatory requirements they face.

Recent trends in business news shows employers paying huge fines for not meeting their compliance obligations, and in some cases, being put on the stand down list. Introduced in 2017, the stand down list is a publicly available list that details employers who have been banned from employing staff.

Frequently, employers are fined for things that are avoidable

The Labour Inspectorate’s investigation into 2 Cheap Cars resulted in the second-hand car dealer paying upward of $320,000 for not complying with employment law in September 2017. The investigation uncovered serious breaches of minimum wage, holiday pay and record keeping. Nearly all 83 employees were affected, resulting in a $70,000 penalty issued by the Employment Relations Authority (ERA) and $250,000 to be paid in arrears to those staff.

In another case, a Labour Inspectorate investigation revealed serious employment law breaches across a group of connected Asian restaurants in Auckland. Penalties ordered by the ERA in November 2017 amounted to $99,000, and arrears of $97,000 were sought to pay 132 employees. Breaches of employment law included failure to provide minimum wage and correct holiday pay.

Why compliance is so important

Inspectorate Regional Manager, Stu Lumsden, says that all employees in New Zealand are entitled to their minimum employment rights, and that includes being remunerated fairly for their work, receiving the correct leave entitlements and employment agreements. “Where employers are not complying with New Zealand employment law, and are taking advantage of staff, they are seeking a competitive advantage over other law-abiding businesses.”

The Labour Inspectorate has made cases involving non-compliant business models and systemic employment law breaches a priority.

Ignorance of the law has huge financial impact

Avoiding compliance of employment law to save time or money is a costly exercise, and the evidence is in the increased penalties applied to such businesses over recent years.


“Where we are made aware of non-compliance, either through complaints to our service centre made by employees, customers and members of the public, or through our proactive work, we will investigate accordingly, and seek penalties through the ERA where necessary,” said Mr Lumsden.


Anyone concerned about their employment situation, or the situation of someone they know, should call 0800 20 90 20 where they can report their concerns in a safe environment.

Can technology make compliance easier?

Stu Lumsden says that businesses often assume that their technology systems are managing 100% of their compliance requirements, for example payroll systems and record keeping. “This assumption can leave businesses exposed to compliance breaches. In some cases, the system may not be configured to meet achievable compliance obligations. In other cases, the system may be configured to meet achievable compliance obligations but isn’t being used to its full potential.”

Our own study revealed that while each government department has its own advisory pages and online forms to assist employers – and in some cases employees (e.g. website), the many and varied issues to be researched can be overwhelming and extremely time-consuming for a small-business owner.

Stu Lumsden suggests that businesses can make the most of their technology investment by working with their system providers to drive innovation. This can help their technology products provide more compliance features. Businesses can also use technology to provide real-time information to customers to enable them to make informed choices about a business’s sustainability across all perspectives – people, environment and profit.

An online search of compliance packages revealed a handful of tools that NZ business owners could subscribe to, that assist with identifying and managing their legal risk. RA ComplyHub is an online legal compliance tool that allows for the creation of a customised business profile that uncovers a business’s unique obligations and potential blind spots. It also keeps owners up to date with any law changes applicable to them.

It’s clear that non-compliance is unsustainable. New Zealand businesses that strive to meet all of their compliance obligations make better employers, and help make New Zealand a fairer and more equitable place to work and do business.

RA ComplyHub
RA ComplyHub is a subscription website to help with your legal questions, complemented by the Restaurant Association 24/7 Helpline. RA ComplyHub covers Health & Safety, Employment, Marketing, council content and more. CLICK HERE to find out more about Restaurant Association members’ discount to RA ComplyHub and to sign up.

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