Significant Employment Law Changes

Employment law can be a bit of a "political football", and with each new government one may expect changes to the Employment Relations Act 2000 ("Act"). Honouring that tradition, the new Labour and NZ First Government passed the Employment Relations Amendment Act 2018 on 5 December 2018. The Amendment Act strengthens union and employee rights at the expense of employer rights, including abolishing use of the 90-day trial period by employers with 20 or more employees.

The changes come into play in staggered form, with the first round taking effect on 10 December 2018 and the second on 6 May 2019. Further minor changes take effect on 6 June 2019.    

Changes in Effect from 10 December 2018

The first round of changes were largely driven by unions and have understandably drawn the ire of employers. There are also minor changes to remedies for unjustified dismissal claims.

Reinstatement

   
• The primary remedy for unjustified dismissal is now (once again) reinstatement.  Reinstatement will be ordered (if requested) "wherever practical and reasonable".  Will there be any real change of outcome as a result?  A study of cases from the Employment Relations Authority in 2008, when reinstatement was a primary remedy, found reinstatement was ordered in about 0.02% of cases.        
  

Bargaining and Union Access

   
• Collective bargaining can now be initiated by unions 60 days prior to an existing collective agreement expiring (20 days earlier than an employer can initiate bargaining).  This gives unions a jump-start to put together the terms of a proposed new collective agreement and set the agenda for the negotiations.  However, the practical effect is unclear.  An employer will still be able, subject to good faith requirements, to reject as much of the union's proposed agreement as it wishes and re-draft terms to its own benefit.

   
• Union representatives no longer need to seek an employer's consent before accessing the workplace, as long as a collective agreement is in place or negotiations for one are initiated.  This is a problematic change for employers.  To minimise the effect, employers may rely on the requirement for union representatives to provide the purpose of entry along with their ID upon entry to the workplace.  At that point, the employer can impose reasonable limits on the visit to ensure compliance with the health and safety policies and to minimise interruption to normal business operations.

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Changes in Effect from 6 May 2019    

Some of the more controversial changes take effect on 6 May 2019, including:

No Trial Period for Over 20's

   
• The most attention-grabbing change is the new prohibition on employers with 20 or more employees using 90-day trial periods.  Affected employers will need to revert back to using 'probationary periods' if including in an agreement.  From an employer's perspective, probationary periods are a poor substitute for a 90-day trial period, as the employer cannot dismiss with impunity during, or at the end of, a probationary period and the employee can still bring a personal grievance claim for unjustified dismissal.  It may be a disincentive to hiring, and an employer should do a reference check as well as clearly set out the specific performance measures and expectations the apply during the probationary period.

   
• The timing and number of rest and meal breaks will (once again) be prescribed in the Act. Employers can, however, agree different times with employees.  A simple option for employers is to include specific rest and meal break times in an agreement.

   
• Employees in 'vulnerable industries' will now be able to transfer to a new employer on the existing terms and conditions in their employment agreement if their work is restructured, regardless of the size of their employer.

Unions

   
• Where an employer is a party to a collective agreement, a new employee will automatically be employed on the terms and conditions of the collective agreement (along with any additional agreed terms and conditions no less favourable than the collective terms) for the first 30 days of employment. This gives unions an obvious leg-up in their quest to sign employees on as permanent union members. The advantage to unions is bolstered by the requirement for employers to share new employee information with the relevant union unless the employee objects. Unions may also ask the employer to pass-on certain information about the Union's role and functions to prospective employees.

   
• An employer and a union engaged in collective bargaining are bound to conclude a collective agreement, "unless there are reasonable grounds not to do so". It will be interesting to see how much practical effect this has on bargaining.  A fractious and prolonged impasse generally leads to mediation in any event.At this point, if there is no resolution, an employer may have strong grounds for relying on the "reasonable grounds" exception not to conclude a collective agreement.

   
• Union delegates will be entitled to spend reasonable time undertaking union activities on pay during the employee's normal hours of work.  The only conditions are that the union activities must not unreasonably disrupt the employer's business or the delegate's performance of their duties.However the use of the term "unreasonably disrupts" is unduly vague and it will be interesting to obtain the Authority's interpretation when a dispute inevitably arises.

The above is not an exhaustive list of the amendments to the Employment Relations Act 2000.  If you would like to discuss how the changes may affect you, please contact:

James Turner on (09) 966 3603 (jturner@mcveaghfleming.co.nz)  

See our Expertise page

Employment Law

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We are also well equipped to update your employment agreements to comply with the amendments and to assist with any other employment related matters.