Our German Desk
The United Kingdom (UK) has a new Labour Government following 14 years under the Conservative Party. Like we have seen recently, a new government usually spells major change for employment law, and it seems that the UK is no exception.
Last month, King Charles delivered a speech to parliament on the Government’s proposed new laws. Among other things, the King has said the new Government is committed to ban exploitative practices and enhance employment rights.
What does this mean exactly, and how do any potential changes compare with the current New Zealand position? We summarise some of the key proposals below.
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UK Labour Party’s election campaign proposals |
What does this mean? |
New Zealand position |
| Deliver a genuine living wage | The living wage is the estimated minimum hourly rate that is needed to afford basic necessities and some other costs. |
New Zealand has a minimum wage rather than a living wage. Currently, the adult minimum wage is NZ$23.15 per hour. The living wage in New Zealand is estimated to be NZ$27.80. The National and New Zealand First parties agreed to moderate increases in the minimum wage every year, and we have seen one 2% increase since their agreement in November 2023. |
| Address the gender, ethnicity and disability pay gaps | The UK Labour Party wants to require large firms to develop, publish and implement action plans to close gender pay gaps. It would also require publication of ethnicity and disability pay gaps for employers with over 250 workers. | New Zealand does not currently have any similar requirements. While legislative reform to address gender, ethnicity and disability pay gaps looked possible following a select committee report and recommendations in 2022, no further progress has been made following New Zealand’s recent election. Read our article on this topic to find out more. |
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Introduce a Fair Pay Agreement in the adult social care sector Update trade union legislation |
Unions and employers would be able to negotiate minimum standards of pay and terms for the sector. The UK Labour Party also wants to strengthen workers’ ability to organise collectively through trade unions. For example, it wants to remove unnecessary legislative restrictions on trade union activity and introduce electronic ballot voting. |
As you may have heard, the Fair Pay Agreements Act 2022 was repealed at the start of this year, which removed the ability for eligible groups to bargain for industry or occupation-wide minimum employment terms. Employees and unions are still able to bargain with employers under the Employment Relations Act 2000. Some of the planned changes in the UK are already in place in New Zealand, such as a requirement for employers to pass information to prospective employees upon request from the union. |
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Ban zero hour contracts |
A ‘zero hour’ contract is where an employee has no guarantee of work or minimum hours but is required to remain available to work should they be required. |
New Zealand amended its key piece of employment legislation in 2016 to address the issue of zero hour contracts. Currently, employment agreements can require employees to remain available, but only in certain circumstances. Read our article on this topic to find out more. |
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End fire and rehire |
This means a situation where an employee is made redundant and is subsequently rehired on less favourable terms and conditions of employment. |
In New Zealand, any employer action (including termination of employment for redundancy) must be substantively and procedurally justified. Redundancies must be about the role and not the person, so it would not be substantively justified if a restructure was designed to target a specific employee. This is somewhat a protection against ‘fire and rehire’, as is the general legislative duty of good faith. |
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Two-part framework of employment status |
There are currently three types of employment status in the UK – employees, ‘workers’ and self-employed contractors. Employment status is important because it determines legislative employment rights. The UK Labour Party is concerned that the process is too complex, and in extreme cases ambiguity is deliberately used to avoid legal responsibilities – i.e., that working relationships more like employment in practice are deliberately being wrongly categorised. |
Like in the UK, there has been some tension about employment status in New Zealand. Currently, a worker may be found to be an employee even where they have a contractor agreement. That is because the legal test looks at the real nature of the relationship and is not limited by how the parties have described their relationship. The Minister for Workplace Relations and Safety has indicated that she would like reform in this space, but in a different way from the UK – she wants the contract to inform employment status, rather than other factors, which would mean contractors could not challenge their employment status in the employment institutions (or at least only in limited circumstances). We will have to wait and see whether reform does happen and what that may look like. |
While there are, of course, differences between New Zealand’s and the UK’s approach to employment law, there are a number of similarities. It is worth watching this space to see how the employment landscape in the UK (and New Zealand!) develops over the coming years post-election, and whether New Zealand is at all influenced by some of these changes.
If you have any questions about employment law in New Zealand, please get in touch with our Employment Law Team or your usual contact at Hesketh Henry.
Disclaimer: The information contained in this article is current at the date of publishing and is of a general nature. It should be used as a guide only and not as a substitute for obtaining legal advice. Specific legal advice should be sought where required.
