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The changing immigration landscape that could cripple a business

It’s certainly been hard to escape the topic of immigration with the amount of press coverage it has received this year.  Over recent years the rate of Immigration has been blamed for a number of economic issues, from the housing crises to putting additional strain on infrastructure and transport.   The government’s response has been to review our immigration policy and start to tighten up on the rate of immigration.  While this may not affect all employers, there are a number of sectors out there who are more reliant on migrant workers than others and will no doubt experience some pain as a result of the pending changes.

So why hire immigrants in the first place?

 The industries that will feel the immigration changes the most include the Hospitality, Horticulture and Retail industries.  Countless times we have seen and heard stories from all over the country where these industries cannot find kiwis willing to take up farming, retail or hospitality based roles and therefore find themselves with no option but to hire migrants.  Recruitment searches in these industries will often turn up hundreds of applicants for the roles, however inevitably most of the candidates are visa holders.

There is nothing wrong with this in theory, but for one fact, most of the time migrants are on visa’s which have expiration dates.  This means that visa employees either obtain another visa and continue to work for the same or another employer, or are denied a visa and leave the country.  This creates a cyclic effect for the employer, where they either decide to invest in training new staff regularly, or support their migrant workers (who they have already invested time to train) through the visa application process, and hope that they don’t lose another trained employee.

In previous years the visas were usually provided for a period of 2 to 3 years, however over the last couple of years employers have seen this timeframe contract and in many cases visas are given for a much shorter duration.  During my experience of working in the hospitality industry, we saw visa expiration dates change from 2 years down to 1 year within a very short timeframe.  The hoops employers have to jump through in order to support visa applications is administratively cumbersome, not to mention time consuming and requires careful planning to ensure that the process is started early enough before the original visa lapses. 

I guess what I’m getting at is that employers don’t generally put themselves through this unless they have to.  One finds themselves feeling somewhat sympathetic towards employers who are so heavily reliant on the migrant workforce, particularly where genuine effort is made to search for kiwis to do the roles on offer. 

With immigration numbers which last year were proportionately triple that of the UK, we will be watching with interest to see how these industries and businesses respond and adapt to the changing immigration front.

Migrant worker exploitation

 Immigration gets the blame for so many things, often making it hard to reconcile that Migrant workers can find themselves the victims of exploitation.  We have seen numerous examples of migrant worker exploitation bandied about in the media in the last few years. 

A quick google search on ‘migrant worker exploitation NZ’ brings up an embarrassingly sizeable number of examples.  Examples of worker exploitation include; not being paid leave entitlements, being forced to work long hours, living in overcrowded substandard accommodation, not receiving breaks, and being paid below the National Minimum Wage.

As a result of these types of cases, The Ministry of Business, Innovation and Employment have started to crack down harder on employers who breach minimum employment standards and are turning their attention to small businesses and franchise businesses.  April 1 of this year saw some changes to legislation come into effect, giving Labour Inspectors greater powers to impose penalties on businesses who are found to be in breach of employment minimums.  Labour inspectors are checking businesses compliance through conducting audits and they are more than happy to name and shame employers publicly who do not stack up.

Even a minor breach of minimum employment standards such as an employment agreement missing one of the minimum employment clauses, will result in that business incurring a penalty.  Additionally, if the breach affects migrant employees the employer will also receive a mandatory stand down on recruiting migrant labour for a set period (minimum 6 months).  Multiple breaches will result in greater penalties and longer stand down periods of up to 2 years depending on the severity of the breach.  As you can well imagine it could very well cripple a business that is heavily reliant on a migrant workforce.

Since the new law was brought in a few short months ago, we have seen 10 employers receive stand downs for breaches of minimum employment standards. The Labour Inspectorate has stood true to his word about naming and shaming employers and publishes a list of employers who have received penalties for breaching New Zealand employment standards.  I  This report is also shared with Immigration NZ.  Click here to see if your business or franchisee is on the list

So what? It’s just a list, right?  Wrong! 

Imagine what it could look like if your business was on this list:

  • The damage to your employment brand could make it even harder to recruit in an already tight labour market. 
  • You will be competing for talent against companies who are regarded as good employers, so they will have first pick of quality candidates.
  • Your business will be on the Labour Inspectors radar, and they will be checking to see if you have remedied any compliance issues and can expect to be subjected to further scrutiny from the labour inspectors.
  • If part of a franchise system, the Labour Inspectors will also focus on the other businesses within the franchise.
  •  If your business relies on migrant workers, it could shut down your business.

Essentially, it means your business will suffer.  So, ask yourself this ‘what does your workforce look like and could you continue to operate if you can’t hire migrant workers for 6, 12 or even 24 months?’.  Also, consider what would happen if none of your migrant workers visas were renewed.  Would either of these scenarios mean that your business would struggle to operate?  Could it lead to having to close the doors of your business?  Employers should be doing everything they can to avoid being on this list at all costs.

We are only half way through 2017 and already the Labour Inspectors focus is becoming more evident.  Two thirds of employers who have been audited were found to be in breach of the minimum employment standards.  The most common breach found so far in 2017 is due to non-compliant employment agreements.  This has seen the total dollar value of fines imposed for the first half of 2017 to be more than double for the full 12 months of 2016. 

 How do you protect your business?

Labour inspectors won’t be slowing down on auditing businesses anytime soon, and small businesses and franchise businesses are definitely high on their radar.  Businesses shouldn’t wait for the labour inspectors to find fault in their employment standards, but be taking proactive steps to ensure that they are compliant with minimum employment standards. 

Remember even one missing clause from an employment agreement can wreak havoc on a business’s ability to operate, so it’s more critical than ever that business owners and franchisees take note of the warnings coming from the Labour Inspectorate. 

Safeguarding your business and protecting your brand can be as simple as having an independent audit conducted on your employment standards.  This will provide you with a better understanding of what your businesses risk is, and have an opportunity to rectify any issues identified before a Labour Inspector finds it.

At in2HR we have a number of employment auditing solutions to suit your business needs; from compliance on minimum employment standards [employee entitlements, record keeping, employment agreements], to a review of your businesses HR Framework, coupled with the bigger picture stuff which includes employee insights.  Phone one of our friendly consultants today to find out more about how we can help your business stay on the right side of the law.