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Upcoming Changes to Employment Legislation
Published: 18th May 2018
Author: Knowhow LTD
Published in: Published in: TrialBalance | #62
CHANGES EXPECTED WITHIN THE FIRST 100 DAYS
Increase in Minimum Wage
On 1 April 2018 the minimum wage will increase to $16.50 an hour, rising to $20 by April 2021. This represents a 27% increase over the next 4 years and by 2020, a fulltime employee on minimum wage will receive an annual salary of $41,600.
Increase to Paid Parental Leave
Currently, eligible employees receive 18 weeks paid parental leave. Paid parental leave will increase to 26 weeks by 2020.
Paid parental leave will increase to 22 weeks on 1 July 2018, and 26 weeks on 1 July 2020. Parental Leave payments will continue to be made by the Government, not the employer. An employers’ obligations to hold positions open for the duration of parental leave remain unchanged.
The Labour – New Zealand First – Greens coalition government has been vocal about changes to workplace relations and overall employment law and continue to take a regulatory approach. The changes have been separated into two categories: changes which the Labour Party has promised will come into effect within their first 100 days in Government, and the changes we can expect to come into force in the longer term. While the Government has not confirmed exact dates for many of the changes, their first 100 days’ will conclude in February 2018.
90 Day Trial Period
Where an employer wishes to terminate an employee under the 90 day trial period, the employer will have to provide reasoning behind the decision to terminate.
Employees will be entitled to challenge this decision, and a new referee service will be established to deal solely with these claims.
The Government has advised that disputes will be heard within 3 weeks of being raised, how workable this is, is not yet known. Referees will make a binding decision as to outcomes and/or penalties which cannot be appealed.
While employers and employees will be entitled to representation throughout the process, lawyers will be excluded.
Rest and Meal Breaks
Since 2015 there has been no prescription around timing and duration for employee rest and meal breaks.
It has been confirmed that a regulated rest and meal break schedule will be restored. This legislation will dictate the minimum number of, and timing for breaks depending on how many hours an employee works.
We expect that the rest and meal break schedule will be similar, if not the same, as those introduced in 2008:
•One 10 minute rest break if the employee has worked between two and four hours
•One 10 minute rest break and one 30 minute meal break if the employee has worked between
four and six hours.
Foreign Workers
It is proposed that New Zealand employment law will apply to all foreign workers undertaking work in New Zealand for foreign employers.
From the information available so far, it appears as though foreign workers will require New Zealand employment agreements and must receive New Zealand minimum entitlements.
It is not clear how this will work, as from the information available it would appear that even someone working in New Zealand for a month (or even 1 week), out of an Australian office, would be subject to New Zealand employment law and would require a New Zealand Employment agreement.
Collective Bargaining
Changes to collective bargaining processes include:
•Restoring a unions’ ability to initiate collective bargaining in advance of employers
•Re-introduction of the duty to conclude a collective agreement
•Allowing contractors to bargain collectively and join unions
•Restoring the requirement for new workers to be employed on the same terms and conditions as provided by any existing collective agreement for the first 30 days
•Removing the ability for employers to deduct pay from workers taking partial strike action
LONG TERM CHANGES
Fair pay agreements
Labour has proposed to introduce Fair Pay Agreements (FPA) which will dictate remuneration and minimum employment
standards within an industry. FPAs will be negotiated by businesses within an industry and the Unions representing workers
within that industry. The agreement reached will apply to all employees within the industry.
Redundancy Compensation
The Government has proposed to introduce minimum redundancy protection for employees
affected by restructuring. It has been indicated that compensation could be four weeks for the first year of service and an additional 2 weeks for each subsequent year, capped at 20 years of service.
For example:
•5 years of service = 12 weeks redundancy pay
•20 years of service = 42 weeks of redundancy pay For someone earning $65,000 gross per annum, this would amount to:
•5 years of service = $15,000 in redundancy pay
•20 years of service = $52,500 in redundancy pay
It is important to note that redundancy pay is an addition to final payment of wages and any outstanding holiday pay.
The details around exact figures have not been released and this information is based on previous Labour Party policy and commentary from industry sources.
•Two 10 minute rest breaks and one 30 minute meal break if the employee has worked between six and eight hours.
“Dependent contractors”
The Labour Government has been vocal about Independent Contractors who currently work under the control of an employer but do not receive the same minimum entitlement as employees. While specific detail is still unknown, it is likely that the current UK model will be adopted and a middle ground between ‘Employee’ and ‘Independent Contractor’ will be created. Those who fall into this middle category of ‘Dependent Contractors’ will receive some of the same rights and entitlements as employees which may
include annual leave and sick leave.
Summary
From the information that is available, it is clear that significant change to employment law is on the horizon. While we know that these changes will be costly for all employers, these changes will be particularly difficult for small and
medium sized businesses. It is predicted that employment levels will decrease during 2018 and by 2020 there will be approximately 15,000 fewer jobs and a significantly higher cost of living. Furthermore, it would appear that the equal pay and pro-union bargaining laws have the potential to create an ‘earning-envy’ culture as it will not be only the minimum wage earners who expect a significant wage increase. This has the potential to greatly affect workplace productivity, given output over cost would decrease. We expect there to be significant pressure on current dispute resolution bodies (Employment Relations Authority and the Employment Court)
- Auckland
- Bay of Plenty
- Canterbury
- East Coast
- Hawke's Bay
- Manawatu/Wanganui
- Nelson/Marlborough
- Northland
- Otago
- Southland
- Taranaki
- Waikato
- Wairarapa
- Wellington
- West Coast
