Proposed Employment Law Changes

Friday 9 March, 2018

The Labour-led Government has recently announced the first round of the employment law reforms that it promised pre-election.  Although changes were expected, the exact nature and extent of those changes had previously been unknown. 

The Employment Relations Amendment Bill was introduced to the House on 29 January 2018 and had its first reading on 1 February 2018.  The purpose of the Bill is to restore key minimum standards and protections for employees and to implement a suite of changes to promote and strengthen collective bargaining and union rights in the workplace.  The changes are intended to introduce greater fairness in the workplace between employees and employers, in order to promote productive employment relationships. 

The majority of the changes are roll-backs to amendments that were made by the previous National-led government and in general provide greater rights for employees.

The most notable proposed change is restricting the use of 90-day trial periods to employers with fewer than 20 employees, leaving larger organisations with access only to “probationary periods”.   Once introduced, 90-day trial periods became a popular tool for employers who had employees that were not “working out” or who employers had performance concerns about. The 90-day trial period proved to be a popular mechanism for ending an employee’s employment within their first 90 days, with the protection of the employee being prevented from raising a personal grievance against the employer in relation to the dismissal.

Whilst probationary periods can be an effective means of ending the employment of an unsuitable employee, care must be taken when a process of this nature is carried out, as employees will have the right to challenge the dismissal if they consider that there have been procedural or substantive errors made by the employer.  An employer is required to adhere to due process, including natural justice and good faith obligations before dismissing an employee during a probationary period.

Statutory rest and meal breaks was a topic that received significant attention when the previous National-led government made amendments to this law by removing specific time periods as to when an employee was entitled to take a break.  The law as it is currently drafted allows employers and employees to negotiate in good faith and reach an agreement over the timing and length of the rest or meal break.  In the absence of a specific agreement, the employer is entitled to choose a reasonable time for the employee to take a break, taking into consideration its operational needs.   The proposed change to this piece of legislation will see statutory rest and meal breaks and the specific timing of when an entitlement arises reintroduced in the workplace for the majority of employees.

Another area that is subject to significant change is the strengthening of collective bargaining and union rights in the workplace.  Many local governments have union members and are parties to collective agreements.  One of the significant proposed changes is the restoration of the “30 day rule”.  The proposed change is to reinstate the law back to its former position where for the first 30 days of employment employees that carry out work covered by the collective agreement must be employed under terms the same as those under the current collective agreement.

Other changes to collective bargaining include restoring the duty to conclude bargaining unless there is a good reason not to, repealing the process to have bargaining declared over, removing the right of employers to opt out of Multi-Employer Collective Agreements, and restoration of union access to the workplace without first obtaining the employer’s prior consent.

Other proposed changes include:

• Pay rates to be included in collective agreements
• Greater protections against discrimination for union members
• Employers must pass on information about unions in the workplace to prospective employees

It is also proposed that reinstatement will again become the primary remedy in unjustified dismissal cases.  Although rarely ordered by the Authority, there is likely to be an increase in employees seeking reinstatement where they have been dismissed from their employment.

As the changes will affect all employers, it is important for local authorities to be aware of the proposed changes.  It is anticipated that there will be some changes to the Bill, however it is important to be aware of the proposed changes as there will come a point where local authorities will need to review and amend their employment agreements and policies to bring them in line with the changes that are eventually made.

The Bill is currently at Select Committee stage, with submissions to the Select Committee closing on 30 March 2018.

If you would like to discuss further the proposed changes and what they might mean for your organisation, please get in touch with one of our experts below.