Employment Law Changes

Flurry of Employment Law Changes Ahead

The 2017 general election has given the Labour-led government an opportunity to re-shape the direction of employment law in New Zealand.

We outline the upcoming changes, announced on 25 January, which include modifications to the 90-day trial period, the restoration of rest periods and collective bargaining. These changes will be incorporated into an amendment to the Employment Relations Act 2000. We also touch on the proposed compulsory redundancy provisions.

The 90-day trial period

After early indications that this change was to affect all businesses, the government will abolish the current 90-day trial periods for businesses with more than 20 employees.

The 90-day trial periods remain in place for businesses with 19 or fewer employees.

New employees of businesses with 20+ employees now have recourse against any perceived unfair treatment and unjustified dismissal by allowing them to bring personal grievance proceedings during the first 90 days of employment.

If this proposal goes ahead and your business has 20+ employees, your employment agreements will need to be amended to remove reference to the 90-day trial period.

Changes to compulsory breaks

Statutory rest and meal breaks will be restored, with limited exceptions for workers such as air traffic controllers where it is not practical for workers to take breaks at the same time. This will introduce new practical and logistical challenges to businesses in addition to introducing new compliance obligations.

Union access to a workplace

The government proposes that unions will have free access to workplaces. Union representatives will be able to enter a workplace without consent – as long as it’s at a reasonable time and doesn’t interrupt business operations.

Collective bargaining scope maybe extended

The government has introduced the first of a range of law changes designed to extend the scope of collective bargaining and make union membership more attractive. This includes imposing a duty once collective bargaining is initiated to reach an agreement unless there is a genuine reason not to, requirements to include pay rates in collective agreements and to pass on the same conditions to new workers, protections against discrimination on the basis of union membership and the ability to engage in low-level industrial action without the threat of pay deductions.

The government has proposed a number of other changes to collective bargaining not contained in this Bill including the development of ‘fair pay agreements’ that set minimum employment conditions based on industry standards across entire industries without the ability for employers to opt out. There are also proposals to restore the right of film and television workers to collectively bargain, and rules preventing non-union members receiving the same terms without joining that union have been put on an extended timeframe to allow thorough consideration and input by all stakeholders.

Proposed compulsory redundancy provisions

Within its first 12 months of office, the government will consult with all relevant stakeholders on increasing minimum redundancy protection for employees affected by restructuring.

The process will need to address an anticipated strong reaction from small businesses which may result in an increase in business insolvency as redundancy entitlements may make business restructuring less desirable than insolvency. For employees, this may increase the chance of unemployment without redundancy compensation from an insolvent employer.

Upcoming changes to the minimum wage and paid parental leave

We remind you that on 1 April the minimum wage will increase to $16.50/hour and that on 1 July the paid parental leave entitlement will increase from 18 to 22 weeks.

The objective of these law changes signalled by the government’s 25 January announcement is to improve conditions for employees. The government has indicated its focus will be on the advancement of small businesses. To meet this goal more consideration will need to be given to the proposed changes as, on the face of it, these proposals are wide-reaching and will place more responsibilities on small business owners.

The government will introduce the new legislation on Thursday, 1 February. We will keep you up-to-date on the employment law front as the year progresses.