Changes are Coming! Are You Ready?

The Employment Relations Act is changing (yes, again!).  What does this mean for you?

Now that the Christmas tree has been packed away for another year and the New Year celebrations have been successfully navigated, it’s time to turn to an important fact: it’s an election year!  This can only mean one thing: changes to employment laws!

The Government introduced the Employment Relations Amendment Bill in June 2013.  The Bill passed its first reading and was referred to Select Committee.  The Select Committee has now released its report, and has recommended (by majority) that the Bill be passed, albeit with some amendments.  We highlight below some of the key points.

Good Faith

Where an employer is proposing to make a decision that may affect an employee’s continued employment, section 4(1A) of the Employment Relations Act 2000 (“Act”) requires the employer to provide the employee with all relevant information. This includes disclosing subjective evaluative material.

The Bill originally sought to limit an employer’s disclosure obligations, particularly regarding evaluative material.  However, the Select Committee has recommended the Bill be amended so that:

• An employee retains a right to have access to evaluative material about themselves where their continued employment is at risk.
• An employer will not be required to provide access to confidential information about an identifiable third party if that would involve an unwarranted disclosure of the affairs of that third party.
• To decide whether something is confidential (and therefore does not need to be provided) there is a new definition of “confidential information” to clarify that the term means information provided in circumstances where there is a mutual understanding of secrecy.

Flexible Working Arrangements

Under Part 6AA of the Act, only those with care responsibilities (i.e. the care of a child, parent, or other person) can request flexible working arrangements after being employed for six months.  Further, if the employer refuses the request, the employee cannot make another request for 12 months.

The Bill would extend the right to request flexible working arrangements to all employees at any time during the employment relationship.  The timeframe for an employer to respond to a request has been shortened to one month, and that response must be given in writing.  Further, the Select Committee recommends that if a request is refused, then the employer must state and explain the reasons for that refusal.

Continuity of Employment

Part 6A of the Act provides protection to certain categories of “vulnerable” employees where their employer changes as a result of a restructuring/sale of a business.  In those circumstances, the employee has a right to elect to transfer to the new employer on the same terms and conditions of employment.

Under the Bill that has come out of Select Committee, several changes have been proposed to Part 6A:

• Certain employers will be considered an “exempt employer”, provided that they give a written warranty confirming they have 19 or fewer employees.  An “exempt employer” will not be required to take on employees who performed work for the old/outgoing employer prior to the restructuring.
• The outgoing employer will implicitly be giving a warranty that they have not (without good reason) changed (a) the employees performing the work affected by the restructuring and/or (b) employees’ terms and conditions of employment, prior to the sale/restructure.
• The parties to a restructure will be required to act promptly in requesting and providing information.  If they fail to comply without a reasonable excuse, then they will be liable to a penalty imposed by the Employment Relations Authority.
• Although not changed from the original wording of the Bill, there is a new definition of “associated person” to prevent related entities (such as holding companies, subsidiaries, and franchisees under the control of the franchisor) from avoiding the obligations under Part 6A.

Collective Bargaining

A number of proposals relating to collective bargaining were in the original Bill.  The Select Committee’s key recommendations are:

• Amending the proposal removing the requirement to conclude a collective agreement so that it is clear that an employer does not comply with the duty of good faith if it refuses to conclude a collective agreement because it objects in principle to collective agreements or bargaining.
• Extending the proposal allowing employers to opt out of multi-employer bargaining so that it also applies to bargaining initiated for the purpose of obtaining an employer’s consent to become party to an already-concluded collective agreement.
• Extending the timeframe (from 10 days to 15 days) for employers involved in multi-employer bargaining to notify employees that bargaining has been initiated.
• Specifying that, when the Employment Relations Authority determines that bargaining has concluded (following an application by a party), it must make a declaration to that effect.

Strikes and Lockouts

The original Bill proposed two key changes to strikes and lockouts: requiring written notice for all strikes and lockouts, and giving employers the option of making pay deductions in response to partial strike action.  The Select Committee has recommended tweaking these proposals so that:

• All notices for a strike or lockout must include both a start and end date and time, or specify an event which would mark their end.  After that time/event has passed, a new strike or lockout notice will need to be issued to continue the action.
• A strike notice will be able to specify workers engaged in the action by reference to a particular worksite (mirroring the provisions for strikes in essential services).
• Employers will be entitled to make deductions from the pay of employees engaging in partial strikes.  However, the definition of “partial strike” has been clarified to cover certain actions by employees that the Select Committee believes form part of the distinguishing characteristic of a partial strike.  These include an employee refusing particular tasks that normally form part of their duties; reducing their normal performance, output, or rate of work; or breaking some aspect of their employment agreement (such as refusing to wear a company uniform).

The Employment Relations Authority

The Select Committee has reiterated the desirability of the Authority delivering its determinations as soon as practicable, and not later than three months after the investigation meeting – except in exceptional circumstances.

To further assist in the speedy resolution of straightforward matters, the Select Committee has also proposed that, if the Authority provides an oral determination at the end of the investigation meeting (which it will be required to do wherever practicable), it will be required to record that oral determination in writing within one month.

What Next?

The Bill will shortly have its second reading in Parliament.  If a majority of MPs continue to support the Bill, it will be considered clause by clause by the House (which may result in further changes), before being read for the third and final time.

As the Bill forms part of the Government’s agenda and would fulfil one of National’s pre-election promises from 2011, it is highly likely that it will pass into law.