Changes are coming for employers

Thursday 26 November, 2020

Jacinda Ardern and the Labour Party have won an outright majority in Parliament, unprecedented since the introduction of MMP in 1996. The incoming Labour Government has entered into a Co-operation Agreement with the Green Party but will not be subject to the constraints of a coalition agreement, unlike many MMP Governments. Accordingly, it seems likely that the new Government will enact the law changes indicated before and during its election campaign. This week, we are looking at what that might mean for employers.

Headline changes: minimum wage, sick leave, public holidays

The first major change for employers is that the minimum wage will increase from $18.90 to $20 per hour on 1 April 2021. Some economic commentators have questioned whether this should occur given the current economic downturn arising from the COVID-19 pandemic, however, given that the Government chose to proceed with the increase in the minimum wage from $17.70 to 18.90 during the COVID-19 lockdown, the proposed increase is likely to occur.

The Government has indicated that it will seek to pass legislation within the first 100 days to increase minimum sick leave entitlements from 5 days to 10 days, although it hasn’t yet indicated when the law change will come into effect. As it is intended to prevent the spread of illnesses, by encouraging people to stay home from work when they are sick, it seems likely, in light of the current COVID situation, that the Government will aim to implement the changes as soon as possible.

A new public holiday in midwinter to celebrate Matariki will be introduced from 2022. An exact date has not been determined but the Government intends for it to always fall on a Monday or a Friday within Matariki.

The Government has also indicated that it will amend the Holidays Act so that employees can take sick and annual leave as they accrue rather than waiting until they have been employed for 6 and 12 months. Many workplaces already allow new employees to use leave as it accrues, so this change may not prove particularly disruptive.

Legislative protection for dependent contractors and security guards

Early in 2020, MBIE released a discussion document identifying options for helping vulnerable contractors who depend on one business for most of their income and have little control over how they work. The Government intends to work with unions and employers to introduce a new statutory regime to protect dependent contractors, including:

• allowing contractors to bargain collectively;
• requiring written contracts;
• introducing a duty of good faith for dealings between contracting parties.

The Government also intends to recognise security guards as vulnerable workers to protect their terms and conditions, particularly when businesses undergo restructuring.

Fair Pay Agreements

The Labour Government also intends to introduce sector-wide Fair Pay Agreement systems, which would provide occupation and industry-specific minimum employment standards. Legislation will set the minimum content for each Fair Pay Agreement.

• Agreements will cover all employees and dependent contractors;
• Registered unions will represent employees during bargaining and only unions will be able to initiate bargaining for the first agreement;
• Over 50% of workers and employers will need to support the agreement in order for it to take effect;
• Once agreed, Fair Pay Agreements would cover all employers in the sector;
• Regional variations and exemptions of up to 12 months for employers facing severe financial hardship can be negotiated.

Prevent employers undermining collective agreements

The Government will change the Employment Relations Act 2000 so that unions do not have to establish that employers who automatically pass on gains from collective bargaining to non-union workers intended to undermine the collective agreement. It will now be considered a breach of good faith if an employer passes on gains without the agreement of the union, if it can be shown that the effect of the employer’s actions has been to undermine the collective agreement.

Structural changes

Given the new Government’s unprecedented position of strength, it is possible that it may look to make long term, structural change to employment law in New Zealand. Sign up to our newsletter (at the bottom of this page) if you want to stay up to date with any proposed changes.

If you want to know more or have concerns about how these changes may affect your business, our experts below can help.