Employment law under our new government – what can we expect?

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With New Zealand First’s decision to form a coalition government with Labour and the Greens, it is difficult to predict which policies will be implemented in the employment space. In all the election hoopla focusing on tax, water and “the economy” you may have missed some of the key employment policies.

This blog post is some crystal ball gazing about what we might see happening in New Zealand’s employment laws (without the political spin).

Work conditions and minimum wage

The Labour Party’s policy at the election was to raise the minimum wage to $16.50 per hour. This will almost certainly happen by April 2018. They also plan to legislate for the “Living Wage” (currently $20.20 per hour) to apply to all public services and, eventually, to contractors as well. If implemented, this will likely increase competition for staff and contract services with the private sector.

Labour also proposed to introduce the concept of “Fair Pay Agreements”. These will be binding directions from the Employment Relations Authority which set rates of pay and conditions across entire industries (people may recall National Awards in the 1970’s performing a similar role). The detail of how these will work is yet to be released. It is unclear whether there will be any allowance for, say, provincial vs large cities or other variances within industries.

Labour also campaigned to significantly increase the number of Labour Inspectors to ensure that employers are complying with their employment obligations. For employers who are generally compliant, this can be a helpful service as the inspectors have an education role as well as their enforcement powers.

90-day trial periods

Hiring additional staff can be a big risk/cost to a small business. 90-day trial periods were brought in by the last government with the goal of getting employers to take a chance on brand new employees who they otherwise might not have hired. It was described as encouraging a “foot in the door” but with the ability to terminate the employment without repercussions if the employer thought it didn’t work out within 90 days. Surveys of small and medium employers suggest that a majority have used 90-day trials to hire staff when they otherwise wouldn’t have taken the risk.

The new government parties have consistently opposed such trial periods because the trials do reduce an employee’s job security. Termination is always upsetting for an employee – particularly if there isn’t a justifiable reason. Also, some employers routinely use trials for all staff just so they have the option to terminate if anything happens (no matter how minor) within the first 90 days. The strict compliance requirements have also led to plenty of confusion and cost to employers by getting the process wrong. I expect to see this section of the Employment Relations Act repealed fairly swiftly. While its removal will provide protection for new employees, it could also lead to a chilling effect on employers hiring younger/inexperienced employees, or an increase in casual work.

90-day trial periods were brought in by the last government with the goal of getting employers to take a chance on brand new employees who they otherwise might not have hired. It was described as encouraging a “foot in the door” but with the ability to terminate the employment without repercussions if the employer thought it didn’t work out within 90 days.

Immigration and construction

Early indicators suggest that Labour’s “Kiwibuild” policy will go ahead with the ambitious goal of building 100,000 houses in 10 years. However, both Labour and NZ First have policies to significantly curb immigration. If your industry depends on employees on work visas then I recommend watching this space closely and you may want to actively hire/train locally to prevent a labour shortage when/if such restrictions are brought in.

With the construction industry already desperately short of skilled workers, I expect to see either:

  • an exclusion from immigration restrictions for anyone with construction experience, or
  • significant government investment in local training / apprentice programmes.

Health and safety

The Health and Safety at Work Act 2015 was brought in with cross-party support (on most aspects) to help keep people safe at work. One of the main bones of contention was that the legislation doesn’t require small employers in safe industries to have a health and safety representative. I expect this exemption to be repealed.

Practically, this means that these small employers may have a health and safety representative elected who can carry out a range of inspection and consultation duties (on pay) and attend up to two days’ paid training per year.

The tragic Pike River disaster was one of the main reasons for the new health and safety regime. The directors of Solid Energy have decided that under the new Act, a manned re-entry would be too risky. Those directors face heavy fines and jail time if they breach their duties under the Act. The difficulty is that Winston Peters has indicated that he is committed to a manned re-entry. If this goes ahead it will either require:

  • expert consensus that a manned re-entry is safe, or
  • the removal/resignation of the current Solid Energy directors and replacement with new directors who are prepared to go against the company’s expert advice on the risk, or
  • passing specific legislation exempting a re-entry of the mine from our health and safety laws.

None of the above options seem particularly likely. It will be interesting to see if there is any resolution of the inherent tension between a politician’s promise and laws designed to keep us safe.

How can we help?

Changes in employment law occur all the time – not least of which when governments change. WRMK’s employment team keeps updated with all current legislation and requirements so our clients don’t get caught out with obsolete documents or advice. We will provide updates on the policies as they are introduced – watch this space!

If you have a question about new employment requirements, or an employment matter in general, please give our employment team a call or contact your usual trusted WRMK advisor.

Our thanks to Simon Davies-Colley for writing this article.