Legal Regulations In Business

Thinking of starting a business? Or perhaps you’ve already got one up and running? Either way, when it comes to doing business, there’s a lot more to it than just selling and profiting. 

Every business needs to comply with all the relevant laws and regulations before it can truly achieve its goals. Understanding the regulatory compliance requirements for your industry is also crucial. 

The legal and business world are very much connected. If you want to run a good business and avoid penalties, it’s important to understand your legal obligations and stay compliant. 

What Laws Apply To My Business?

Businesses need to comply with a huge range of laws, some of which will differ based on the type of business you have, the industry you are in and the regions you operate in. 

This includes regulations regarding taxes, registration, employee relationships and much more. There’s a lot of ground to cover, so let’s get started. 

Registration Requirements

All businesses start the same way – by getting it registered! When you register your business with the New Zealand Companies Office, your registration requirements will differ based on your business structure and the taxes you need to apply for. 

Let’s go through this in more detail. 

Inland Revenue Department (IRD) Number

Every business will need an Inland Revenue Department (IRD) number. It’s relatively easy to get an IRD number – the application process can be done entirely online. There is no fee, and once your application has been approved, you will receive your IRD number via email. 

A lot of the formal processes your business will be subject to require using an IRD number, so it’s important to get this sorted early on. This is because it identifies your business. 

Goods and Services Tax (GST)

Goods and Services Tax (GST) is charged when a business has an annual turnover rate of more than $60,000. If you feel your business is close to hitting that goal or will definitely cross that mark, then register for GST in order to remain legally compliant.   

Register Your Business Name

When you’re getting your IRD number, you will also be able to register your business name at the same time. In order to make sure the name you want isn’t taken, you can look at the Companies Register before you get started. 

Here at Sprintlaw, we often get questioned about whether a name that is registered belongs to the business. The answer to that is no! Registering a business name does not grant you ownership of that name. 

If you want exclusive ownership of your business name, we suggest you get it trademarked  (we’ll cover this in more detail later). 

Privacy Obligations For Businesses

You will need to meet privacy obligations if your business is going to be functioning online in any way. Both New Zealand and overseas regions have their own privacy laws requirements, so it’s important to be aware of them for each country your business is to operate in. 

Privacy Act 2020

New Zealand privacy laws are dictated by the Privacy Act 2020 and the Information Privacy Principles (IPP). These regulations require all businesses that collect the personal information of individuals to have a Privacy Policy in place. 

A Privacy Policy lets consumers know the information that is being collected and what is being done with it. 

The Act also sets out certain rules around how to destroy certain records and what to disclose to consumers when you use their personal information. Our expert privacy lawyers are more than happy to chat you through your obligations under this legislation. 

General Data Protection Regulation (GDPR)

The General Data Protection Regulation (GDPR) is the European Union governing privacy legislation. The GDPR also requires a Privacy Policy, although their requirements differ a bit to the New Zealand one. 

For example, the GDPR provides a right to be forgotten in the EU, whereas New Zealand privacy law provides no such right (although we do have similar ones, which we’ve written about here). 

If your business is going to expand overseas, make sure your privacy policies reflect the internal regulations of those regions. 

Privacy can be a complicated subject – feel free to talk to a legal expert for reliable Privacy Advice. 

Fair Trading Laws

Fair trading laws are there to protect consumers. The relationship between businesses and consumers is often not an equal one, where consumers can have less power than businesses. 

Fair trading laws have been established so that businesses do not engage in unfair trading practices which then cause harm or loss to consumers. 

Consumer Guarantees Act

The Consumer Guarantees Act (CGA) covers a number of things. It essentially holds businesses to a certain standard of practice, ensuring they don’t engage in the following: 

• Setting unfair contract terms
• Misleading or deceptive behaviour
• Dismissing consumer guarantees
• Never providing a warranty

These matters are all considered the right of every consumer and businesses that fail to comply are in breach of the CGA. 

Fair Trading Act

The Fair Trading Act 1986 regulates the conduct of businesses when they are engaging with consumers. It covers other important matters regarding consumers, such as advertising and marketing practices. 

For example, not displaying prices correctly would be a breach of the Act.  

Labelling Requirements

Fair trading laws also have strict labelling requirements. The rules around labelling you must comply with depend on the type of products you sell. The specifics are bound to differ, however, all labels need to be transparent, open and honest in order to be legally compliant. 

Not doing so can amount to misleading or deceptive conduct, which is a breach of the Fair Trading Act. 

Employment Laws 

When running your own business, you may choose to employ staff in order to help out with operations. This is a great step in expanding your business, however, it’s also vital that your practices with employees are meeting regulatory standards. 

Employment Relations Act 2000

The Employment Relations Act 2000 (ERA) covers the minimum rights and entitlements that employees are allowed to have. The standards will vary based on the industry and the specific job. As an employer, it’s your duty to make sure your employees are receiving the correct entitlements. 

The ERA covers the following: 

• Converting from casual to full time employment
• Parental leave
• Maximum hours
• Public holidays
• Personal or carer’s leave
• Long service leave
• Domestic violence leave
• Community service leave
• Termination
• Flexible work requests

All employers need to give new employees a copy of the Employment Agreement before they commence, and this should include the ERA rights. 

These entitlements and details around employment conditions should also be covered in detail in Employment Contracts you have with your employees. 

Health and Safety at Work Act 2015

Work health and safety is all about making sure your employees have the best possible environment to work in. This means their workspace should not harm them mentally or physically. 

If your employees work from home, then you still have a duty to make sure you’ve done everything in your power to ensure they have a safe work space. All of this is covered by the WorkSafe New Zealand, so it’s important to read into your obligations under the Health and Safety at Work Act 2015. 

Employee Or Contractor?

Businesses often choose to hire contractors to complete certain projects or stay on for a limited amount of time. Contractors are external employees of the business, and therefore, they often don’t have the same entitlements and even requirements as internal employees. 

Contractors can begin to look like internal employees, though. So, it’s extremely important to distinguish them as contractors right from the beginning of the relationship. 

A Contractors Agreement can aid with this. If a contractor makes a valid claim in arguing they are actually an employee, you may end up owing them employee entitlements.  

Do I Need Workers’ Compensation Insurance?

Sometimes things go wrong and workers can get injured at work. When this happens, workers compensation insurance can aid in ensuring your business doesn’t go bankrupt from a claim. 

In New Zealand, it’s compulsory for most employers to have ACC cover. The rules regarding this are managed by the Accident Compensation Corporation – click here to know more. 

Unfair Dismissal

If an employee feels their employment was terminated in a manner that was not fair, they may bring forward a claim of unfair dismissal with the Employment Relations Authority. Once an employee submits a complaint, the matter is usually investigated before a conclusion is reached. 

90-Day Trial Period

Small businesses (a business with less than 20 employees) have some protection when it comes to unfair dismissal claims. The 90-day trial period allows employers to dismiss an employee within the first 90 days of employment without a claim of unfair dismissal, provided it is included in the employment agreement and both parties have agreed to it. 

Intellectual Property Laws

Securing your intellectual property can save your business from unwanted disputes in the future. This ensures that you retain legal ownership of your business’ intangible assets, such as logos and slogans. 

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