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In its pre-election 100-day plan, Labour promised to make a number of changes to New Zealand’s employment laws. The new Government has indicated that it largely intends to stick with that 100-day plan. Below, we look at the changes proposed in Labour’s 100-day plan and assess the significance of those for employers.

Replacement of law relating to trial periods

The current law relating to trial periods allows an employer to terminate the employment of an employee who has agreed to a 90 day trial period, without needing to justify that termination or follow the usual procedural requirements (save for giving the requisite notice). The employee cannot pursue a personal grievance in relation to their dismissal.

The Government has proposed to change the current law and require employers to provide justifiable reasons for dismissing an employee, and to follow a fair process in doing so. The new law is likely to allow an employee to challenge an employer’s decision to dismiss them within a trial period using a new ‘Referee Service’.

The proposed Referee Service will be similar to what was intended when the Employment Relations Authority was first established – a referee will hold short hearings and make decisions within three weeks of a claim being lodged. The referee will have the ability to reinstate dismissed employees or award damages up to a capped amount (current indications suggest the cap will be $5,000). The Minister has indicated that the Referee Service will operate out of MBIE’s Employment Mediation Services, and that there will be no rights of appeal; the intent is to reduce the time and expense associated with resolving employment disputes.

The benefit for employers is that claims will be limited to $5,000. However, issues will undoubtedly arise in relation to the validity of trial periods, which is a significant issue under the current law. It will be interesting to see whether the Referee Service will have jurisdiction to decide whether the trial period in question is valid (in which case the parties would not be able to appeal that decision), or whether such matters will be referred to the Employment Relations Authority.

Further, in its Workplace Relations Policy, Labour said that lawyers would be excluded but both parties would still be allowed representation at the hearings. Presumably that means employment advocates will be permitted. Given the rationale for not allowing lawyers to be involved is to keep the process low level and reduce costs, there is an argument for employment advocates being excluded as well.

If the referee can award compensation and order reinstatement of an employee, the parties (especially employers) will often seek legal advice so they can present the best case – and, therefore, incur legal fees regardless.

Collective bargaining

The Government intends to restore several rights and duties relating to collective bargaining that were changed or removed by the previous Government. The changes proposed are largely what would be expected of a Labour-led government and will likely mean that employers will have to change their approach to bargaining. The changes include revoking ‘the Hobbit Law’, which made television and film workers contractors by default. We understand that details are still being worked through.

In addition, the Government has proposed to restore unions’ rights to initiate collective bargaining in advance of employers, to restore the duty on parties who are in collective bargaining to reach an agreement (unless there is a genuine reason not to), and to restore the right for new workers to be employed on the same terms and conditions as provided by an existing collective employment agreement (if the employees work falls within the coverage clause of the collective). We are yet to see the detail of these proposals, and whether the Government will simply replace the current law with the original position in respect of these changes.

Further, the Government has proposed to strengthen unions’ bargaining position by changing laws that relate to unions’ access to workplaces, removing the ability for employers to deduct pay from workers taking low-level protest action during an industrial dispute, and tightening the rules on employers automatically passing on terms and conditions to non-union workers. This will heighten the need for employers to have a clear front-end strategy around bargaining as the pendulum swings back in favour of unions.

Other changes

  • Increase to minimum wage:

The new Government will be increasing the minimum wage to $20 per hour by 2021. The increase will happen in stages, starting from 1 April 2018, when the minimum wage will rise to $16.50 per hour. This is a cost that employers will need to absorb – likely by passing it onto customers.

  • Reinstatement as the primary remedy: 

The Government has promised to restore reinstatement as the primary remedy when a worker has been unjustifiably dismissed. This is likely to result in reinstatement becoming more common.

  • Vulnerable workers:

In 2013, businesses with fewer than 20 employers were made exempt from the provisions granting protections to vulnerable workers where the sale or transfer of a business is contemplated, or where the outsourcing of jobs is proposed. It is likely that the new Government will scrap this exemption so these protections apply to all vulnerable employees.

  • Restore the right to rest and meal breaks:

In addition, the Government will restore the right to rest and meal breaks. Currently, employees have a right to rest and meal breaks but if the nature of an employer’s business means it is unable to provide its employees with regular breaks, it can reach an agreement with its employees and provide them with compensation instead. Presumably, any changes will remove the ability of employers to provide compensation instead of rest and meal breaks.

  • Increase paid parental leave: 

The Government has said it will increase the duration of paid parental leave to 22 weeks from 1 July 2018, and 26 weeks from 1 July 2020.

  • Foreign workers: 

The Government has said that it will take steps to ensure that New Zealand employment law applies to everyone working in New Zealand, including foreign workers working for foreign companies. We assume that this will involve amending the Employment Relations Act to prevent employers from contracting out of the Act by stating that foreign law applies.

There are other parts of the Labour, New Zealand First and Green Party policies that are not scheduled to be implemented within the first 100 days of Government. For example, Labour has said that within the first 12 months in Government, it will develop and introduce a legislative system of industry and sector collective bargaining that allows unions and employers to create Fair Pay Agreements that set minimum conditions. These wider changes are likely to be introduced over the next 12 months.

See the Labour Workplace Relations Policy for more details. 



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