The Labour Party’s new term in Government will bring significant changes to employment law that will provide benefits for workers but increased cost and compliance for employers.
The changes will fundamentally alter a number of established norms in New Zealand employment relationships.
Specific detail is light in some areas, because the laws are not yet written, but the key changes facing Kiwi businesses include doubling sick leave, increasing the minimum wage, the introduction of Fair Pay Agreements, and new requirements to ensure pay equity.
The new employment landscape will be one of increased regulation, increased cost, and more avenues for dispute which will impact small business most.
While large employers will be able to pay experts to achieve compliance, small business owners will be left behind because of a level of complexity that requires professional advisory which drives up costs significantly.
These complexities make employing new people as a small business owner sound very daunting indeed.
Labour has promised to increase the annual sick leave allocation from five days to 10 days – or two working weeks for a full-time employee.
Because the Holidays Act does not pro-rata sick leave it means under the new entitlement a part-time worker who only works one day per week could still get 10 days sick leave – effectively 10 weeks off work.
Changes to the Holidays Act also include allowing sick leave to be taken when needed which could reduce an employer’s ability to challenge or withhold sick leave if they suspect an employee is not actually sick.
Minimum wage increase, Fair Pay Agreements
Along with the adult minimum wage increasing to $20 per hour on April 1 next year, Fair Pay Agreements which establish minimum employment entitlements by industry sector are also on the way.
These are effectively government-mandated collective employment agreements which add significant complexity to the labour landscape.
Australia has them. They are typically much more complicated than normal employment agreements. Australia has attempted to simplify or remove them a number of times unsuccessfully.
Kiwi employers can expect increased employment standards complexity, having to spend more on professional support to interpret them, more disputes, and bigger penalties if they fail to comply with all the terms.
New requirements to record pay-rates by gender, ethnicity, and age will also be introduced to ensure pay equity.
Employers will need to accurately record pay and benefits for all employees that can be easily categorised, and they will likely be required to disclose these records under certain circumstance if they are in a pay equity dispute.
Extending employment protections to dependent contractors could affect tradies, courier drivers, taxi drivers, farm workers, IT / software contractors and a number of other professions.
The Government is still working through the details but has stated: “At a minimum we would want to ensure that the right to collectively bargain is extended, and we would also look at extending statutory minimum entitlements like being able to take sick leave.”
For example this could mean a sub-contracting builder, who only works for one building contractor, will be able to take paid sick leave and claim other standards.
Critically, this could extend to termination, meaning if a job is shut down the main contractor may not be able to cease the contract and might have to consider proper redundancy consultation. Dependent contractors could also take personal grievances.
Holidays Act Review
The Government review of the Holidays Act is good news for employers. It is an unnecessarily difficult piece of law that has needed updating for some time.
When employers like the Police and the Ministry of Business Innovation and Employment have been hit with massive holiday back-pay issues due to the Holidays Act failing, the signal is pretty clear. How can small or medium sized business get this right? Changes to this Act will be welcome.
– Jason Ennor is an employment law expert and CEO of human resources platform MyHR.
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