Tools of the Trade Allowances in New Zealand Employment Law
"Tools of the trade allowances" refer to payments made by an employer to an employee to cover the costs associated with purchasing, maintaining, or using tools and equipment necessary for their job. While there is no universal statutory right to a general tool allowance, specific legal provisions and contractual agreements govern how these allowances are handled in New Zealand employment law.
The Role of the Employment Agreement
The primary source for an employee's entitlement to tools of the trade allowances is their employment agreement. This agreement, which must be in writing, sets out the terms and conditions of employment, including any specific allowances, reimbursements, or provisions for tools [Source: Employment Relations Act 2000, s 63]. Both individual employment agreements and collective employment agreements can stipulate whether an employer will provide tools directly, reimburse costs, or pay a regular allowance.
Minimum Wage Protection
Even if an employment agreement requires an employee to provide their own tools, the cost of those tools cannot reduce their effective hourly wage below the minimum wage. The Minimum Wage Act 1983 specifies that costs incurred by the worker in the course of their employment cannot cause their earnings to fall below the minimum wage rate [Source: Minimum Wage Act 1983, s 4(c)]. This means employers must consider the financial burden of tool provision on employees when calculating remuneration to ensure compliance with minimum wage obligations.
Health and Safety Requirements
Employers, referred to as Persons Conducting a Business or Undertaking (PCBUs), have a primary duty to ensure, so far as is reasonably practicable, the health and safety of workers [Source: Health and Safety at Work Act 2015, s 36(1)]. This duty often includes providing the necessary equipment, including personal protective equipment (PPE) or other safety-critical tools. A PCBU must not charge a worker for anything done or provided to comply with the Health and Safety at Work Act 2015 [Source: Health and Safety at Work Act 2015, s 21]. Therefore, if tools are required for health and safety purposes, the employer must provide them without cost to the employee.
Allowances and Gross Earnings
Regular tools of the trade allowances typically form part of an employee's "gross earnings" for the purpose of calculating holiday pay and other leave entitlements under the Holidays Act 2003. Gross earnings include all payments the employer makes to the employee in relation to their employment, with some exceptions for reimbursements of expenses that cannot be expected to recur [Source: Holidays Act 2003, s 13]. If a tool allowance is a regular payment, it will generally be included in the calculation of an employee's ordinary weekly pay or average weekly earnings for holiday pay.
Dispute Resolution
If a dispute arises concerning tools of the trade allowances, such as an employer failing to pay an agreed allowance or an employee believing they have been disadvantaged, the employee may raise a personal grievance [Source: Employment Relations Act 2000, s 103(1)(a)]. The Employment Relations Act 2000 outlines processes for resolving employment relationship problems, typically starting with informal discussions, then mediation, and if necessary, proceeding to the Employment Relations Authority or the Employment Court.
When to Seek Independent Legal Advice
Individuals seeking to understand their specific rights and obligations regarding tools of the trade allowances should consult an employment lawyer or contact relevant government agencies. Further assistance can be obtained from organisations such as Ministry of Business, Innovation and Employment (MBIE) - Employment New Zealand or Community Law Centres for free legal information and assistance. Community Law Centres
Key Resources
- Employment New Zealand: https://www.employment.govt.nz
- Legislation New Zealand (for Acts of Parliament): https://www.legislation.govt.nz
- Community Law Centres Aotearoa: https://communitylaw.org.nz/