COSTS FOR EMPLOYERS CONTINUE TO RISE
Although news that the government’s planned employer insurance scheme is being shelved is likely to come as a relief to employers, any celebration of cost saving will be short-lived, as at 1 April, the minimum wage will go up to $22.40.
Putting aside record inflation and diminished productivity born of natural disasters, an unforeseen pandemic and international conflicts, the last few years have seen significant cost increases for employers, as the government has pursued ideological inspired legislation.
The employment related costs of doing business have increased significantly over recent years and putting aside the increase in the minimum hourly wage employers now need to accommodate a potpourri of new costs including:
- Sick leave increasing from 5 days to 10 days
- The introduction of 10 days’ domestic violence leave
- Increased coverage of bereavement leave and when it can be taken
- An additional public holiday in Matariki, and
- An increase in parental leave from 18 to 26 weeks.
While these are all good things for individuals and promoting wellbeing, they still bring with them significant costs that employers must meet somehow.
But wait, we are not finished there. Currently working its way through parliament, the law change that will enlarge the timeframe for raising a personal grievance in relation to sexual harassment from 90 days to 12 months is coming. This will also put more pressure on employers to run expensive and lengthy investigations so that they can better understand allegations that are made many months after the event.
The pressure on employers comes not just from the law itself. There is social pressure too. The influence of central government flows on to larger employers, and in turn to smaller businesses who sometimes, simply cannot keep up. For example, the Reserve Bank offers five weeks’ paid annual leave each year, above and beyond the four weeks required by law, plus an additional three weeks of flexi leave that employees can ‘purchase’ for the cost of 2% of their total pay. Not to be outdone, ANZ Bank has recently introduced six weeks of paid gender affirmation leave, and up to 12 months’ unpaid leave, to its employees in New Zealand and Australia. The availability of these kind of extra benefits in the high profit banking sector still impacts upon the thoughts and minds of workers in other sectors and creates expectations which many small to medium enterprises cannot countenance.
While there is a race for the populist vote ahead of this year’s general election the social insurance scheme will not see the light of day but in the fullness of time it is likely to be dusted off and reintroduced. In its current form the social insurance scheme proposes that workers retain 80 percent of their wages after losing their jobs, due to redundancy, layoffs, health conditions, and disabilities. It is proposed that the scheme is paid for by a range of things including a 1.39 percent levy on workers and employers. In a modern day society we strive for balance in all things and harmony between the needs of employers and employees is no different. It’s a matter for the individual to decide where the pendulum has swung in achieving that balance but for every action there is an equal reaction and it’s hard to see how the extra costs recently imposed upon employers can be absorbed without passing costs on to consumers. But, that is an issue for another column.
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WRMK Lawyers has Northland’s largest team of employment law specialists. If you need some help or guidance, please give one of us a call or contact your usual WRMK lawyer for advice. You can view our Employment Law team here.
Our thanks to David Grindle for writing this article, which was first published in the Northern Advocate on 14 March 2023.
Every effort has been made to ensure accuracy in this article. However, the items are necessarily generalised and readers are urged to seek specific advice on particular matters and not rely solely on this text.
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