What does a National-led government mean for employment law?

As the special votes are counted and coalition talks begin following New Zealand’s General Election, we summarise the impact of a new National-led coalition government for employment law.

The National Party was relatively quiet throughout its election campaign regarding employment law. However, there are numerous laws that National has identified it would repeal if it was successful in forming a government after the Election. Some of these are identified in its “100 Day Action Plan”. They reflect the diametrically opposed view of employment laws to that of Labour. 

Act has been vocal in its opposition to aspects of current law, and New Zealand First has stated its interest in providing remedy to those who lost their jobs by non-compliance with Covid-19 mandates. This provides for a potentially interesting time ahead for New Zealand’s employment law framework.

Fair Pay Agreements

National has stated it will immediately repeal the Fair Pay Agreements Act 2022. It’s position is that the legislation adds unreasonable costs to business and there is opposition to the compulsion of employers to bargain across industry sectors. It is unlikely we will see any fair pay agreements concluded under this legislation. However, there is no indication about how National proposes to address fair pay agreements where bargaining has already commenced under the existing statutory framework.

Act supports repeal of the Fair Pay Agreements legislation.

Trial Periods

National and Act propose the reinstatement of all employer’s ability to utilise 90-day trial periods, regardless of employee numbers. Currently, trial periods can only be used where an employer has 19 or fewer employees. This is part of the National “100 Day Action Plan”, therefore it can be expected that an amendment to the legislation may be introduced relatively quickly.

Trial periods enable an employer to dismiss an employee within the first 90 days of employment, without having to establish good cause or work through a full and fair process. The employee is prevented from raising a personal grievance in respect of the dismissal (but can pursue an unjustified disadvantage claim, or claim for statutory breaches such as a breach of good faith).

Minimum Entitlements, including wages and sick leave

National and Act differ on their position regarding the 2021 Labour-led Government’s increase of minimum sick leave entitlement from 5 to 10 days per year. National has stated there is no plan to change the 10 days entitlement. Act has previously indicated its preference to reverse the increase. It is unclear whether this remains its position.

Act has proposed a three-year freeze on minimum wage increases.

In the past, parties on the right have been critical of mandatory prescriptive requirements around meal and rest breaks, but there is no explicit indication that these would be targeted for change.

Parental Leave

National has proposed the introduction of new rules around the taking of parental leave to allow parents more flexibility about when and how they choose to take leave. Currently, a birth parent can transfer part of their leave entitlement to their partner, but they are not allowed to take that leave concurrently. The proposed changes would enable parents/caregivers could choose how they want to spend the leave.

Independent Contractors

Act has proposed to amend the Employment Relations Act to address legal issues regarding employee – contractor status. This would be achieved by amending the Act to prevent contractors who have explicitly signed a written contractor arrangement from challenging their employment status. Alongside this, contracts would be required to meet certain minimum standards that are intended to protect workers’ freedom to contract.  

Employment Relations Authority

Act has stated that the current Employment Relations Authority process to resolve personal grievances between employers and employees is slow, costly and open to abuse. It proposes to:

• Require Authority Members to release a determination within one month of an Investigation Meeting, rather than the three-month current timeframe;
• Dismiss Authority Members who do not meet KPIs including a new one month deadline for issuing determinations;
• Prevent an Authority Member from ordering reinstatement where an employee has been unjustifiably dismissed (presently the primary remedy if sought by an employee), and leaving this remedy for an employer to decide; and
• Remove eligibility for remedies to an employee if it is determined that their behaviour contributed to the personal grievance, in order to “rebalance the playing field so both employer and employee behaviour are treated equally”. Presently, in considering any award of remedies, the Authority must consider the behaviour of an employee and the extent to which their conduct (if any) contributed to the situation that gave rise to the personal grievance. A reduction in the type and quantum of remedies may follow.

Presently, Authority Members are required by statute to issue determinations within three months of an Investigation Meeting being concluded, or the last day on which the Authority received evidence. However, this can be extended in exceptional circumstances, and in practice, the statutory deadline is not always met. The risk of a rushed or less thorough determination being issued is the potential for increased challenges and therefore increased costs arising from an appeal. Also, reduced reasoning within a determination can lessen the ability for parties to understand how the Authority made findings. If a party feels that a process has happened to them, rather than being engaged in it and believing they can influence the outcome, it will rarely feel fair and outcomes can be less effective.

Pay transparency

The Ministry of Business Innovation and Employment has introduced a range of documents detailing the development of pay transparency legislation for New Zealand. This is in part to address the significant and persistent gender pay gap in New Zealand, as well as the ethnic pay gap. 

Act does not support a mandatory and broad pay transparency regime (which was being advanced by Labour) on the basis that it does not want additional mandatory requirements on business, with Act describing the proposed pay reporting as more “red tape”. 

A number of business and union groups including the Employers and Manufacturers Association and Business NZ have spoken in support of pay transparency to create more equitable workplaces, with mandatory pay gap reporting proposed said to pose minimal strain on companies. While National Party’s women’s spokesperson Nicola Grigg said she supported a requirement for large companies to report on their gender pay gap, the Party’s position is unclear.

Immigration and Seasonal Workers

The Recognised Seasonal Employer scheme allows the horticulture and viticulture industries to recruit workers from overseas for seasonal work when there are not enough workers already in New Zealand. Over five years, National proposes to increase the worker cap from the 19,000 presently to 38,000 per year.

National also proposes changes to Accredited Employer Work Visas for agriculture. It would remove the existing median wage requirement of $30 per hour while also creating a path to residency for those working under the scheme.

National has also proposed:

• A six-month temporary visa for qualified overseas nurses and midwives and their family without needing a job, offering $10,000 grants to up to 1000 overseas nurses and midwives each year.
• Changing working holiday visas to lift the upper age from 30 to 35 for all eligible countries.
• Amending the Employer Accreditation Scheme wage requirements to be in line with an industry average that is possibly reflective of skills and experience.
• Allowing people from eligible countries to: apply for a second Working Holiday Visa; and to apply for a third visa if they work in tourism, hospitality or agriculture, with other sectors to be considered based on labour need.
• Introducing three new visas: International Graduates Visa; Global Growth Tech Visa; and Digital Nomad Visa; to attract highly qualified and skilled people to New Zealand.

Freedom of association and bargaining

Another potential area for change is repeal of the ‘30-day rule’ which requires an employer to offer all employees the equivalent of the terms of any applicable collective employment agreement during their 30 days of employment. This enables non-union members to get the benefit of collectively negotiated terms, which has been criticised as enabling any employee to enjoy the benefit of the work of union negotiated collective terms for free. 

Other laws that tend to attract attention from a right leaning Government include: the retrenchment of union rights, including the entitlement of union officials to access worksites at any time to check on compliance and solicit new members; removing the requirement to conclude a collective agreement unless there are good reasons not to (by stepping this requirement back to the requirement that an employer negotiate in good faith, but with the right to refuse to settle); and pay deductions for partial strikes.

Bills before the Select Committee

There are a number of Bills presently before the Select Committee which will also likely draw attention. These include the:

• Employment Relations (Restraint of Trade) Amendment Bill introduced by Labour MP Helen White, which would prevent the use of restraint of trade clauses for low and middle-income earners, and impose some restrictions on the use of restraints in other situations. Submissions on the Bill to the Education and Workforce Committee closed on 18 September.
• Crimes (Theft by Employer) Amendment Bill, introduced by Labour MP Ibrahim Omer, that would amend the Crimes Act to provide that not paying an employee their wage is theft. Submissions on the Bill were due 12 October.

Holidays Act Reform

Despite ongoing issues with compliance and challenges for employers and employees alike in applying the Holidays Act to modern working arrangements, all parties have been quiet on the possibility of reform. Disappointingly, the Holidays Act Taskforce recommendations in 2019 for reform appear to remain in the 'too hard basket'.

New Zealand First

If a coalition Government includes New Zealand First, then its intention that employees who lost their jobs due to non-compliance with Covid-19 mandates be reinstated and compensated may be raised. However, details on the quantum of compensation, or suitability of reinstatement have not been provided and there are significant practical challenges that arise in the ability to implement such a policy after a long period of time has passed. 

NZ First also proposes to delay a planned pay rise for Members of Parliament until “essential frontline workers have been adequately compensated with their own pay rises”. However, mechanisms for how this would be provided for, enacted and the extent of cover, have not been advised.

Keeping you up to date

Employers, employees, contractors and all other workers need to remember that the law has not changed and there should be compliance with existing legislation. 

Once a government is formed, there will be a short timeframe until the Christmas/summer break when Parliament breaks before resuming in February. Accordingly, there is likely to be a delay in any substantive action on legislative change. Although political parties have expressed their intention to repeal or change legislation, this must go through Parliamentary process. Parties to employment relationships should continue to meet their obligations and commitments under existing law.

We will keep you updated. In the meantime, if you have any questions about employment law matters, the specialist employment law team at DTI Lawyers can assist. You can contact us by email at reception@dtilawyers.co.nz or phone 07 282 0174.