Employment law: change is the new constant

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The current coalition Government has made significant changes to the employment law landscape and it has intimated that more change is on the horizon.

We are in a period of significant uncertainty for both employers and employees, and keeping up to date is essential. This article takes stock of what has changed, and looks ahead at what is likely to come.

The law as at May 2019

The Employment Relations Amendment Act 2018 became law on 11 December 2018 with implementation dates staged throughout the first half of 2019. The majority of changes are rollbacks of amendments made by the previous National Government.

The Act provides greater rights for unions and employees, specifically:

  • The minimum wage increased to $17.70 an hour. The Starting-out and Training Minimum Wage rates increased to $14.16 per hour; remaining at 80% of the Adult Minimum Wage.
  • Rest and meal breaks rules were introduced. There is a return to more regulation about the timing, frequency and duration of breaks. For example, an eight-hour work day must include two 10-minute rest breaks (paid) and one 30-minute meal break (unpaid), and a four-hour day must include one 10-minute rest break. Breaks cannot be exchanged for extra pay or time in lieu.
  • 90-day trial periods can now only be used for organisations with 19 employees or fewer. Any 90-day trial periods existing under current contracts will still be valid. If you want to use a 90-day trial period for a new employee, it remains crucial that, before starting work for you, the employee has signed (not just sighted) an employment agreement containing such a clause.
  • Collective agreements – for the first 30 days, new employees must be employed under terms consistent with the collective agreement (if there is one in place). The employer and employee may however agree more favourable terms than the collective. Union representatives now have the right to enter workplaces without consent provided the employees are covered under, or are working towards a collective agreement. However, they can only enter your workplace for certain purposes, must be respectful of normal operating hours and follow health, safety and security procedures.

The Domestic Violence Protection Act 2018 has been passed into law and provides 10 days extra leave to be taken by a person affected by Domestic Violence.

What’s ahead: bills, working parties and future events

There are currently a number of bills that have been introduced into the house but have not yet passed into law:

  • Employment Relations (Triangular Relationships) Bill
  • Equal Pay Amendment Bill
  • Parental Leave and Employment Protection Amendment Bill, and
  • Privacy Bill.

The Government has also set up working parties to analyse a range of employment-related matters including:

  • Fair Pay Agreements
  • The Holidays Act, and
  • the Future of Work.

While a change to the Holidays Act and a simplification of its terms would be most welcome, it is unlikely that we will see any changes this year.

Fair Pay Agreements

The Fair Pay Agreement Working Group was tasked with making recommendations on the design of a sector level bargaining system. The Working Group was set up in June 2018 and the Government is now considering its report. We think it is likely that a Bill introducing Fair Pay Agreements (FPAs) will be before the House this year.

Unlike a a MECA (Multi-Employer Collective Agreement), which binds only the employer parties and their employees, an FPA will bind a whole occupation or industry nationally (e.g. service staff in all restaurants and cafes). The FPA would be bargained between a union(s) and industry representatives such as the Hospitality Association.

The Working Group recommended that a FPA bargaining process be initiated only if one of two circumstances are met:

  • Representativeness trigger: a minimum of 1000 workers or 10% of workers in a sector (whichever is lower) seek to initiate the process.
  • Public interest trigger: where the representativeness threshold is not met, a Fair Pay Agreement bargaining process could still be initiated where there were “harmful market conditions” in a specific sector. Conditions for this trigger would be set out in legislation.

The Working Group acknowledged that an independent body would be needed to determine whether the initiation conditions were met prior to the bargaining process commencing. If an employer did not believe they were within the coverage of a particular FPA, they would be able to apply to the independent body for a determination.

The Working Group’s recommendations are a skeleton only. There is considerable detail to be filled in before matters can be progressed. This detail will be critical to understanding the extent to which FPAs are likely to alter the employment law landscape in New Zealand.

Statutory minimum redundancy payments

Although the issue of a minimum redundancy payment has not been canvassed in a current Act or Bill it is part of Labour’s manifesto and is likely to be considered by the working party dealing with the Future Of Work. New Zealand has never had a statutory minimum redundancy payment but the 2008 ministerial advisory group report recommended four weeks’ pay for the first year of service + two weeks’ pay for subsequent years’ service up to a maximum of 20 years.

Triangular contracts

The Employment Relations (Triangular Relationships) Bill, introduced on 1 February 2008, aims to give labour hire workers and those in similar situations a number of the same workplace rights as full time employees. It is proposed that this Bill will provide employees in triangular employment with the same benefits and conditions as contained in any collective agreement in the workplace of their secondary employer and further, those employees will be able to raise a personal grievance against their secondary employer.

The Bill proposes a new personal grievance process which would allow an employee working for a secondary employer to raise a personal grievance against that secondary employer as though it was the primary employer.

One of the main purposes of the Bill is to prevent migrant exploitation through third-party labour hire. While that objective is appropriate, the automatic transfer of labour hire employees to collective agreements removes the flexibility obtained through those agreements. The Bill will cause great difficulty for labour hire companies and mean that employment contracts for the likes of short-term cover and project related employment are put in jeopardy. We also see a conflict arising between the notions of employee and contractor and that distinction will be further blurred.

The Government has considered the select committee’s report on the Bill, and it is now going through its third reading. The Bill is expected to pass into law later this year.

Pay equity

Pay equity means that gender doesn’t affect what people are paid; women receive the same pay as men for doing the same work. It is based on the principle that the value of work is assessed in terms of skills, knowledge and responsibility effort and working conditions, not gender.

The Equal Pay Amendment Bill has been through select committee and is currently scheduled for its second reading. The Bill is designed to enable an employee, or a group of employees who perform the same, or substantially similar, work for an employer to raise a pay equity claim if that employee or group of employees considers that they have an arguable claim regarding a payment differentiation on the basis of sex.

This is a volatile time in terms of employment law. New Zealand is experiencing a significant increase in industrial action and employment related litigation across all industries. All employers and those involved in employment relationships, people management and human resources need to stay across these issues. Immediate access to relevant, accurate and impartial advice is crucial.

We will keep you updated regarding developments in this area. To discuss how these changes may impact your business, or any other employment related matters, please contact David Grindle and our experienced Employment Law team.