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Last week, the Hon Michael Woodhouse, Minister for Workplace Relations and Safety, introduced the Employment Standards Legislation Bill to Parliament.

The Bill, which will amend several key employment-related statutes, aims to promote fairer and more productive workplaces by providing enhanced protections and benefits for both employers and employees. If passed, the Bill will come into force on 1 April 2016.

Parental leave entitlements

The Bill proposes several amendments to the Parental Leave and Employment Protection 1987.  The Minister has explained that the rationale behind these amendments is to better support families by recognising the diversity of modern work and family arrangements and by making it easier for parents to stay connected to the workforce. Key changes include:

  • Extending paid parental leave entitlements to more workers by amending the definition of an “eligible employee” to include non-standard workers (for example, casual and seasonal workers) and to include employees who have recently changed jobs.
  • Extending existing maternity leave entitlements of biological and adoptive mothers to a wider range of carers by introducing the concept of a ‘primary carer’. Where the requirements in the Bill are made out, a ‘primary carer’ may include the spouse or partner of the biological mother, or another person who assumes primary responsibility for the day-to-day care of a child under five. Foster carers and temporary carers are expressly excluded. 
  • Amending the thresholds for parental leave entitlements by introducing 6-month and 12-month tests. Primary carers or the spouse/partner of the primary carer (if they have responsibility for the care of the child) will qualify for extended leave of 26 weeks if they meet the 6-month test, and 52 weeks if they meet the 12 month test.
  • Providing for greater flexibility as to how extended leave is taken by introducing a wider range of circumstances where that leave may be taken, and by allowing employees and their spouse or partner (if they are also entitled to extended leave) to share that leave with them.
  • Introducing the concept of ‘keeping-in-touch’ days, which will allow an employee on paid parental leave to perform paid work during that period (up to a maximum of 40 hours), without being treated as having returned to work.

Stopping unfair employment practices

The Bill also aims to address unfair employment practices by prohibiting specific practices that undermine the ‘mutuality of obligations’ in the employment relationship. The explanatory note accompanying the Bill referred to “zero hours” contracts (in which employees are required to be available for work, but the employer is not required to offer guaranteed hours). These contracts are common in the fast food industry.
 In particular it will amend the Employment Relations Act 2000 so as to:

  • Require an employer to ensure that an employee’s agreed hours of work are included in the employee’s employment agreement.
  • Prohibit employers requiring employees to be available for work over and above their contracted hours unless the employee is able to refuse any work offered (without being treated adversely), or the employee’s employment agreement provides for compensation for that availability.
  • In the case of employees who undertake shift work, require employers to specify in the employment agreement the notice period required if they propose to cancel a shift, and the compensation payable to the employee if the employer does not comply with that notice requirement. There is no apparent formula in the Bill for calculating this compensation.
  • Make any provision in an employment agreement that prohibits an employee from performing work for another employer unenforceable unless there is a genuine reason based on reasonable grounds for that prohibition and that reason is set out in in the employee’s employment agreement.

The Bill will also amend the Wages Protection Act 1983 in order to prohibit employers from making ‘unreasonable’ deductions from employees’ wages. The explanatory note gives the example of where deductions are made from an employee’s wages to compensate the employer for loss or damage caused by a third party over which the employee could not reasonably be expected to have control. This issue received significant media coverage in the context of deductions for petrol station ‘drive-offs’, where employees were docked when customers drove off without paying.

Enforcement of minimum employment standards

The Bill also strengthens the enforcement of minimum entitlements provided for in the Holidays Act 2003, Minimum Wage Act 1983 and the Wages Protection Act 1983. Key changes to enforcement provisions include:

  • The introduction of a requirement for employers to keep records in sufficient detail to demonstrate that they are complying with the minimum entitlement provisions in the aforementioned Acts.
  • Increasing the tools and powers available to labour inspectors. This includes expanding the types of documents they can require an employer to provide, as well widening the range of orders that they can apply for (which will include a declaration by the Employment Court that there has been a breach of minimum entitlement provisions).
  • Introducing tougher sanctions for employers who breach employment standards. This includes the introduction of pecuniary penalties for breaches of the minimum entitlement provisions, which cannot be insured against (the Bill provides that any insurance policy that indemnifies a person for liability to pay a pecuniary penalty is of no effect). The penalties are up to $50,000 for an individual, and, for a body corporate, the greater of $100,000 or three times the amount of the financial gain made from the breach. 
  • The Bill also introduces Banning Orders and Compensation Orders. A Banning Order can prohibit a person from entering into an employment agreement, or from being an ‘officer’ of an employer, or being involved in hiring an employee (the test for ‘officer’ is very similar to that set out in the Health and Safety Reform Bill). A Compensation Order can require a person to make a payment to an aggrieved employee for the loss or damage suffered by the breach of their minimum entitlements. 

Where to next?

The Bill was introduced to Parliament on 13 August 2015. As it makes its way through the normal parliamentary process we will monitor any developments and keep you up to date with the changes.

Please contact one of our experts, Greg Cain in Wellington and Anthony Drake and Micheal O'Brien in Auckland, if you or your business would like help in understanding the likely impact of the proposed Bill. 



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