Business Update: Film Industry & Lunchtime Sex
BUSINESS UPDATE
FILM INDUSTRY SIGH OF RELIEF A recent Appeal Court decision has saved NZ's reputation for flexible film-making. Three
Foot Six Ltd v Bryson involved a dispute over whether Mr Bryson was an independent contractor or an employee of Three
Foot Six, a film production company. The parties had signed a contract that said Mr Bryson was an independent
contractor, and Mr Bryson had conducted his tax affairs accordingly. After his unit was downsized, and his work
terminated, he claimed to have been an employee, unjustifiably dismissed. The Employment Court found in Mr Bryson's
favour, saying the way his work was conducted was more like an employee's than contractor's. However, Three Foot Six
appealed the decision, and in a split decision, the Appeal Court upheld the appeal. If the Appeal Court had not done so,
the consequences for the NZ film industry could have been dire, since most people working in the NZ film industry are on
contracts similar to Mr Bryson’s – deeming them to be employees not contractors would have exposed all NZ film projects
to large and open-ended liability, possibly scaring away future film projects. The Appeal Court said if Mr Bryson had
been found to be an employee, then “ film producers could have no confidence that the contractual arrangements they enter into will be upheld and will have
to build into the decisions they make (including decisions whether to carry on business in New Zealand) associated
uncertainties, disruptions and costs."
LUNCHTIME SEX NOT EMPLOYER'S FAULT Lunchtime sex between consenting employees cannot later be blamed on the employer,
the Human Rights Review Tribunal has ruled, after considering a claim of sexual harassment brought by a former staffer
at the Christchurch Press against another former employee. The Tribunal dismissed the claim, saying sexual activity
between the two employees "could not possibly be said to have been authorised" by the employer. It noted that the
complainant had gone willingly to the defendant's house and bedroom and could have "simply got up and left" if she found
the events unwelcome and offensive. "The fact that she chose to stay in the situation that was developing supports a
finding that she did so voluntarily," the Tribunal said. "That is difficult to reconcile with her assertion that the
defendant's behaviour was unwelcome or offensive."
BUSINESS NZ REGIONAL STRENGTH The Business NZ Council has announced the re-election of Terry Arnold (Auckland) as
President, and Rodger Kerr-Newell (Taranaki) and Stephen Collins (Canterbury) as Vice Presidents. Business NZ Chief
Executive Phil O'Reilly welcomed the regional strength in the Council.
INTEREST RATES, STRENGTH OF DOLLAR INFLUENCE FORECAST The latest Business NZ Business Planning Forecast indicates a
higher short-term growth forecast (GDP growth of 4.8% likely for the year ended Dec 2004) but lower medium-term
forecasts (GDP growth around 2.4 - 2.5% for the years ending Dec 2005 and 2006). Key factors over the next two years
include increasing interest rates (although not before 2005), an easing of the strength of the NZ$, higher tourism but
lower net migration, and a likely global economic recovery despite higher oil prices. The full report is on: Business
planning forecast Dec 2004 quarter
CALCULATING PAY OVER CHRISTMAS AND NEW YEAR The new Holidays Act makes it harder to work out holiday pay, and pay
calculations for the coming Christmas and New Year period may be particularly complex for some firms. Employers are
advised to organise their holiday pay calculations well in advance of the onset of the holidays, and to seek the help of
their regional business association if in doubt (EMA Northern, EMA Central, Canterbury Employers' Chamber of Commerce,
Otago-Southland Employers Association). A general guide is on: Calculating pay for Christmas and New Year
APPLES & ORANGES IN COMPLIANCE SURVEYS Media reports this week say some business owners have overstated their compliance burden,
because an Otago University survey shows lower compliance costs than reported in a Business NZ-KPMG survey. But the two
surveys are not comparable - see apples & oranges
MANUFACTURING LEVELS OK The latest PMI (ANZ-Business NZ Performance of Manufacturing Index) showed steady expansion in
manufacturing activity in October. The PMI value was lower than in Oct 2002 and 2003, but at 56.7, still indicated
expansion (a reading above 50 indicates expansion; below 50 indicates decline). Fewer manufacturers mentioned the
Christmas build-up as a key determinant of activity levels, compared with Oct 2002 and 2003, but, encouragingly, new
orders was the highest sub-index, on 60.1. The PMI is on www.businessnz.org.nz
CLEAN SLATE EMPLOYER PENALTIES The Clean Slate Act comes into force next week. It means people who've committed minor
offences more than 7 years ago can apply to the Ministry of Justice to ensure the details have been wiped from their
record. Employer requests for information on past offending will have to be authorised by the employee or prospective
employee. The Act establishes two offences that relate to employers. A maximum $20,000 fine applies to anyone with
access to a criminal record who discloses concealed information. And a maximum $10,000 fine applies to anyone asking an
employee or prospective employee to disregard the Act. More information is on www.justice.govt.nz
GROWTH STATS
DOMESTIC DEMAND SLOWS
* The Producers Price Index has signalled a slowdown in domestic demand: for the first time since the Sept 2001
quarter, annual inputs inflation was higher than outputs inflation.
* The output index rose 0.8% during the Sept 2004 quarter; over the year, it rose 2.4%.
* The inputs index rose 1.5% over the Sept 2004 quarter (twice as high as expected), lifting the annual rate to
2.5% over the Sept year - the highest since the March 2002 year. The inputs index was inflated by increased oil, sheep
and cattle prices and construction costs, partly offset by falls in electricity and dairy prices.
LABOUR COSTS RISING
* The Labour Cost Index for the Sept 2004 quarter showed overall pay rates up by 0.7%. On an annual basis, they
were 2.2% up on the Sept 2003 quarter.
* Public sector pay rose 0.8% over the Sept quarter and 2.4% over the Sept year; private sector pay rose 0.6% over
the quarter and 2.2% over the year.
* The construction industry, plagued by skill shortages, had a 1.3% increase in pay rates over the Sept quarter,
and 3.4% over the Sept 2004 year - the largest increase since the survey began in 1992.
UNEMPLOYMENT PLUMMETING
* The Sept unemployment rate for the Household Labour Force Survey continued to fall, dropping 0.2 percentage
points from the June quarter to stand at 3.8%. This is the lowest unemployment since the survey began in 1985. NZ's
unemployment rate is now the second lowest of OECD countries, behind South Korea at 3.7%.
* Numbers employed rose by 19,000 (driven by female employment and full-time employment). Those unemployed fell by
a further 5,000 (again largely driven by females). The number not in the labour force fell by 1,000, causing the labour
force participation rate to reach 67% for the first time.
* Numbers in full-time work continued to increase (+21,000 or 1.4% over the quarter), while those in part-time
work were the same as the previous quarter.
* The sector with the largest increase in numbers employed was again business & financial services (+29,700). The manufacturing sector had a further quarterly increase in numbers employed (+1,000).
Over the Sept year, manufacturing employment increased by 16,300 to 292,600. Manufacturing now makes up 14.6% of all
employed, compared with 14.2% in Sept 2003.
NET MIGRATION STILL FALLING
* Permanent and long-term arrivals exceeded departures by 2,200 during Oct 2004, compared with net gains of 3,000
(Oct 2003) and 4,100 (Oct 2002).
* There was a net migration gain of 17,000 for the Oct 2004 year, down 57% from the year before.
* Compared with Oct 2003, migration was down from China (-9,040), Australia (-4,286) and India (-2,616).
* The continued fall in net migration is a double blow for businesses wanting to increase staff numbers as more
NZers are leaving and fewer non-NZers are arriving. More info on www.stats.govt.nz
WHAT'S NEW on www.businessnz.org.nz
* Apples & oranges in compliance surveys
* Calculating pay over Christmas and New Year holidays
* Regional strength in Business NZ Council
* Nimbleness the key
* Business planning forecast Dec 2004 quarter
* Spending debate needed