Proposed changes to the Employment Relations Act 2000 – What you need to be aware of

During Labour’s election campaign, the Party released a plan which detailed their intentions for their first 100 days in office (“100 Day Plan”).  Since the campaign, the Labour-led Government has released the proposed changes to the Employment Relations Act 2000 (“ERA”) which are predicted to affect New Zealand’s employment landscape significantly. In this regard, it is important to be aware of what changes Labour are proposing and how the changes may affect you. The proposed changes are recorded as:

  1. The amendment of the existing 90-day trial period as implemented by the former National Government (“trial period”);
  2. The doubling of Labour Inspectors (“Inspectors”);
  3. Minimum wage increase from $15.75 to $20.00 by 2021;
  4. Introduction of Fair Pay Agreements;
  5.  Extend paid parental leave;
  6. Changes to redundancy provisions; and
  7. The abolition of youth rates.

Removal of the 90-day trial period
Section 67 of the ERA addresses Probationary Agreements and outlines the particulars of the existing 90-day trial period. Labour is set to change the ERA to allow employees to bring a claim against employers where they feel they have been unfairly dismissed during their trial period. These claims will be heard through short hearings without lawyers. The remedies available to workers may be reinstatement or damages of up to a capped amount.

Labour will release more information regarding the trial period reform in the coming months. In the meantime, it is recommended that employers become acquainted with what constitutes unfair dismissal under the current employment legislation. 

Doubling of Labour Inspectors
Inspectors monitor and enforce compliance with employment standards. They use investigations and audit programmes to find and investigate potential breaches of employment standards and to enforce compliance.

Currently, only 60 Inspectors are inspecting the entire country. Labour has proposed to increase the number of inspectors to 110. The increase implies that New Zealand has transitioned out of the education and compliance phase of the implementation of the ERA and into the enforcement phase. 

For any businesses that are not fully aware of their obligations under the ERA, or are not fully compliant, it is recommended to seek the advice of an employment lawyer.

Minimum wage increase
The minimum wage is set to increase from $15.75 to $16.50 per hour by 1 April 2018 with the goal to raise gradually to a minimum wage of $20.00 per hour by 2021.

Fair Pay Agreements
A key and controversial piece of Labour’s workplace relations package has been to develop and introduce a system of collective bargaining for each industry. This system is intended to allow unions and employers, with the assistance of the Employment Relations Authority, to create Fair Pay Agreements that set minimum conditions, such as wages, allowances, weekend and night rates, hours of work and leave arrangements for workers across an industry, based on the employment standards that apply in that industry.

Paid Parental Leave
A commitment was made during the campaign to increase paid parental leave from 18 weeks as it currently stands, to 26 weeks by 2020.

Changes to redundancy provisions
Consultation is to start on changing the minimum redundancy provision protection for workers. Recommendations such as the development of initiatives that smooth the transition of people made redundant into alternative jobs, made back in 2008, have been identified as the basis on which to change the provision. However, no further details have been offered by the Labour-led Government.

Abolish youth rates
Labour has also proposed to remove youth pay rates. Youth pay rates are 80% of the adult minimum rates. The proposal has been endorsed by Labour’s coalition partner, NZ First.

A majority of these proposed changes are expected to be passed in Parliament in the coming months. If you are a business owner or an employee, make sure you watch this space.