Employment Law Changes Ahead

The Employment Standards Legislation Bill (Bill), recently introduced to Parliament by the Government, proposes a raft of changes across employment legislation.

The Bill is in five parts and these will eventually be split into 5 separate bills: the Parental Leave and Employment Protection Bill; Employment Relations Bill; Holidays Amendment Bill; Minimum Wage Amendment Bill; and Wages Protection Amendment Bill.

In its present form, the Bill would make the following key changes, effective from 1 April 2016.

1. Increase the availability and flexibility of the parental leave scheme

Parental leave would be available not just for biological/adoptive parents, but also for “primary carers”, namely people who assume primary responsibility for day-to-day care of a child not more than 5 years old, other than as a foster carer or on any other temporary basis.  Parental leave would also extend to non-standard workers (such as casual and seasonal) and those who have recently changed job.

The threshold for “extended leave” is also widened to primary carers (or their spouses/partners) who have only worked 6 months (as opposed to the present 12).  Primary carers could also apply for “negotiated carer leave”.  The framework for such application mirrors the flexible working arrangement provisions in the Employment Relations Act 2000 (ERA) requiring an employer to consider such application in a timely manner (although not necessarily to agree to it).

The flexibility of the scheme would increase with the use of “keeping-in-touch” days.  These allow a person on parental leave to work (for example attend the odd project or team meeting) a maximum of 40 hours without being treated as having returned to work, so long as the work is done at least 28 days after the child is born.

2. Prohibit certain practices considered to “undermine the mutuality of obligations in the employment relationship”

First, “zero hour” contracts (for which employees must be available for work, without any guarantee of hours) are unenforceable under the Bill, unless the employee is paid compensation for making themselves available.  A salaried employee might agree that their salary includes any such compensation.

Secondly, in relation to cancelling shifts, the Bill requires employers to ensure employment agreements specify both reasonable notice of any cancellation and what compensation is payable to the employee if such notice is not given.  Employees will be entitled to payment for a cancelled shift if these provisions are not in their employment agreement, or if the employee has not been notified of the cancellation (either of the whole shift, or its latter part) until the commencement of the shift (or after).

Thirdly, unreasonable restrictions on an employee having secondary employment would be unenforceable.  Restrictions would be permissible if there is a genuine reason (for example avoiding a conflict of interest), the reason is based on reasonable grounds and the reason is stated in the employment agreement.

An employee would be entitled to bring a personal grievance against their employer for a failure to comply in respect of any of the above.

Lastly, “unreasonable” wage deductions would be prohibited (despite anything contrary in the employment agreement).What is “unreasonable” is unclear.An example in the Bill’s explanatory note is a deduction to compensate the employer for loss/damage caused by a third party over which the employee could not reasonably be expected to have control. This is likely to be a reaction to the furore that erupted over the issue of petrol station attendants allegedly having their wages ‘docked’ when customers drove off without paying for their petrol.

3. Extend the enforcement regime

The enforcement regime relates to “employment standards”, more commonly described as the “minimum code” comprising the minimum statutory requirements across a range of employment legislation.

One change for consistency across legislation would be that employers would need to record both hours worked per day, and the pay for those hours.  A breach of the record keeping requirements could result in an infringement notice, and $1,000 infringement fee.

Further, Labour Inspectors are empowered to apply for the following court orders in the event of a serious breach of employment standards:

  • A declaration that there has been a serious breach of an employment standard.
  • A pecuniary penalty (up to $50,000 for an individual, and for a body corporate, the greater of $100,000 or 3x the amount of financial gain made from the breach).   Any insurance policy purporting to protect an employer against pecuniary penalties will be of no effect.
  • A compensation order (for the employee concerned).
  • A banning order, which would prohibit the person from being an employer, an officer of an employer (for example a company director), or being involved in the hiring or employment of employees.  Without leave of the court, it will be an offence to breach a banning order, attracting a fine of up to $200,000 or imprisonment of up to 3 years.

These orders may be against not only an employer, but against any person who has been indirectly “involved” in the breach (for example by aiding and abetting, inducing, or being directly or indirectly knowingly concerned in, or party to, the breach).

As to enforcing employment standards generally, mediation will no longer be the primary problem-solving mechanism.  This is the opposite to that which applies for employment relationship problems such as personal grievances.  The Authority will need to be satisfied that certain criteria are met before it would direct the parties to mediation.

Lastly, employees could seek penalties against their employers for breaches of the Holidays Act 2003, Minimum Wage Act 1983 (MWA) and Wages Protection Act 1983 (WPA), and pursue those “being involved” (i.e. not necessarily their employer) in any non-compliance to recover unpaid holiday or leave pay, unpaid wages (to which he/she is entitled under the MWA) and, with the leave of the court, arrears of wages (which entitlement arises under the WPA).  Separately, Labour Inspectors could seek penalties against the latter group, i.e. those “being involved” in the non-compliance.

If you would like any further information or have any questions, please get in touch.  We will keep you posted on future developments. As a Government Bill most of these changes are expected to become law.

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