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Yesterday the Government announced a new Bill to amend the Employment Relations Act 2000. While the changes are largely a restoration of the position pre-2009, the amendments are more wide ranging and significant than anticipated.

Trial periods

In its pre-election 100-day Plan, Labour proposed to change the current law relating to trial periods so that all employers would be required to provide justifiable reasons for dismissing an employee within a 90 day trial period and to follow a fair process in doing so. It also proposed to create a new ‘Referee Service’ to allow employees to challenge an employer’s decision to dismiss them within a trial period.

As a result of coalition negotiations, the Government has reached a compromise – the law relating to 90-day trial periods will remain in force, but will be restricted to employers with fewer than 20 employees. The Government has signalled that larger employers will continue to be able to use probationary periods, but greater protections will apply to employees than is currently the case for trial periods (likely this will include employees being able to challenge their dismissals). The Government’s rationale behind this change (restricting trial periods to small employers) is that larger employers have the resources to recruit suitable people and so can be more confident about taking new employees on.

The Referee Service is not included in the Government’s summary of amendments. The Government has indicated that it will continue to do further research about the impact of 90 day trial periods on job growth, which may well result in further changes, potentially extending to trial periods being removed altogether.

It will be important for employers with more than 20 employees to consider how to best utilise probationary periods for new employees once the changes come into effect.

Employees’ rights at work

Consistent with what was signaled in Labour’s 100 Day Plan, the Bill restores the recently-repealed rest and meal break entitlements (there will be a carve-out for specific industries where the provision of breaks is not practicable (for example, air traffic controllers)), and reinstatement will be restored as the primary remedy. As was also signaled, changes will be made to the protections that apply to employees in ‘vulnerable industries’, which will repeal the SME exemption from the coverage of these protections, provide more time for employees to decide whether to transfer to a new employer, and provide additional safeguards on the transfer of inaccurate information.

Collective bargaining and union rights

The legislation will roll back most of the changes made to collective bargaining and union rights by the previous National-led Government. These include restoring the duty to conclude bargaining, restoring the earlier initiation timeframes for unions in collective bargaining, removing the MECA opt out, restoring the 30 day rule (where for the first 30 days of employment new employees must be employed under terms consistent with the collective agreement), repealing the law allowing partial pay deductions for partial strikes, and restoring union access without prior employer consent. This heightens the need for a robust front-end bargaining strategy for employers given the playing field is shifting in unions’/employees’ favour.

New proposals

The Government has also proposed a number of new changes, which were not included in Labour’s pre-election 100-day plan. Specifically, employers will be required to include pay rates in collective agreements, provide reasonable paid time for union delegates to represent other workers, and to pass on information about unions in the workplace to prospective employees (along with a form for the employee to indicate whether they want to be a member).

In addition, the Government has proposed changes that will provide greater protections against discrimination for union members.

The Bill is expected to have its first reading in early February and then will go through the select committee process. The changes proposed are substantial and will require employers to amend their template employment agreements, and review their policies and procedures relating to recruitment, rest and meal breaks, performance management and termination, as well as their approach to bargaining.

If you have any questions regarding the incoming changes and how this might affect your business, please do not hesitate to contact us.



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