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The Five Most Important Employment Law Changes Proposed by The Labour Coalition Government

1.     Wages will be higher

In addition to the 2018 increase to the minimum wage, which will then be $16.50 before tax, the Government will continue to incrementally push up the minimum wage to $20 before tax by April 2021. The philosophy driving these calculations is that Labour wants to see the minimum wage sitting at two-thirds of the average wage. While this is positive news for employees, particularly those in low income roles who struggle to meet their living costs, it might be the push for some employers to review their processes and explore the possibility of investing in automation rather than personnel, which will negatively impact the job opportunities in the NZ market. It may also blow out relativities from wages paid to other-than minimum wage employees.

Other key changes in this area include the more aggressive pay equity policy requiring employers to publish pay equity data and prove the absence of any discrimination. This is undoubtedly a noble and vital goal, as there is no place for discriminatory pay practices in New Zealand in 2017. There will be a burden on some smaller businesses to step up and ensure that accurate and up-to-date pay records are being kept.

The Government is also proposing removal of the starting-out wage, a lower minimum wage for 16 to 19-year olds or anybody undertaking a high level of industry training while continuing to work. While this might discourage businesses from taking on young people and training them up, it will also bring these employees closer to a living wage.

2.     90-day trial periods will be gone

Under the current law, employers can subject employees to a 90-day trial period, where an employer can fire an employee without the need for notice and without the right to challenge the dismissal. 90-day trial periods are particularly common in the hospitality industry, but are also used across the board, so the effects of removing this law will be widely felt by employers.

In its place, the government is proposing an arbitration process where an employer could opt to hold a meeting after a trial period has lapsed to propose dismissal. An independent referee would hear both sides of the case and make a final, binding decision. Without the allowance for lawyers to be present, there is a serious concern that there will be a power imbalance favouring employers in this process. Also, the restriction on the right to appeal will be attractive to employers as any disputes will remain confidential and be kept out of the public eye.

3.     Employee rights will be enhanced

In addition to increasing parental leave to 22 weeks in 2018 and to 26 weeks by July 2020, the Labour Government has more in store to strengthen the rights of New Zealand employees. There will be greater protections to ensure that rest breaks and meal breaks are provided, minimum pay-outs for redundancies, and requirements to adequately compensate employees for working over 40 hours per week.

These strategies are designed to recalibrate the balance of power in employment relationships and provide more stability for employees. However, these approaches come at a cost for employers, who may look to alternative ways to structure their business, such as an increasing reliance on automated technologies.

4.     Unions will be stronger

True to its roots, the Labour Government is looking to expand the powers of unions in collective bargaining. Industry-wide collective agreements will be rolled out and all employees will be on collective agreements for the first 30 days of their employment. Further, unions will have greater access to workplaces and union delegates will need to be paid for any reasonable time incurred in their role.

These policies might encourage more employees to sign up with their unions and work under collective agreements, which in turn will give unions a stronger voice and should give struggling employees better work conditions. Many employers will be restrained by industry-wide terms and conditions, narrowing the scope of their power to make major business decisions. In particular, some small businesses will suffer without the resources to collectively bargain.

5.     Contractor rights will be closer to employee rights

Job security will be improved for contractors and casual/seasonal workers, while those contractors who are more dependent on their workplaces (such as in terms of providing indemnification, for example) will be granted a range of employment rights.

These policies reflect a gradual shift away from the legally distinct concept of contractors and a blurring of the employee-contractor lines. While businesses benefit from the flexibility afforded by the existing contractor laws, there is a real risk that businesses are taking advantage of the power imbalance to strike unfair bargains with workers, particularly in industries where young people work as contractors, such as in the performing arts. These policies represent a step towards remedying these situations.

Whether you are a business or a worker, it is important that you understand how these law changes might affect you. Whether you are a business or an employee , the issues contained within this article may affect you. Get in touch with BuckettLaw right away to ensure your business or employer is complying with the law.

Phone: 04 472 8600
Email: toby@buckettlaw.co.nz

Toby Cooper
Employment Lawyer
BuckettLaw, Wellington

This article, and any information contained on our website is necessarily brief and general in nature, and should not be substituted for specific professional advice on any matter and should not be relied upon for that purpose. You should always seek professional advice before taking any action in relation to the matters addressed.

 

Labour Rolling Out Employment Law Changes

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