Proposed Changes to Employment Law in New Zealand


John Key and Kate Wilksinson announced a number of changes to employment law recently.  While the information is publicly available it is somewhat scattered over various government web sites.  The draft Bill relating to these changes will be subject to public submission once it has been referred to the relevant Select Committee.

  1. 90 day trial period extended to all employers regardless of size of the business.
    This will require prior agreement by the parties. Certain criteria will need to be met before employers can dismiss people within this period.
  2. Employer is to provide employees with a signed employment agreement.
    Where the agreement is not signed, the employer will have to provide an unsigned copy.  This proposal is designed to clarify uncertainties caused by case law.
  3. Amendments to the justification test(103A of the Employment Relations Act 2000).  This will require the Employment Relations Authority to look at what a hypothetical fair and reasonable employer could have done in all the circumstances at the time the dismissal or action occurred. On that basis a dismissal or action by an employer may be deemed justified.
  4. Substance over Form Changes are looking at having overall fairness prevail over the process as is currently the case under the Employment Relations Act 2000.
    Changes proposed include: taking into account employer’s resources, avoiding unnecessary scrutiny on process and a stronger focus on the key elements of fairness (proper investigation, communicating with the employee, giving the employee a reasonable opportunity to respond to concerns, fair and open minded consideration of employee’s explanations, verify whether or not the employee has been treated unjustly).  In essence the changes are a codification of case law requirements.
  5. A Code of Employment Practice relating to disciplinary and dismissal procedures.  Finally I would almost say.
  6. Easier access to Alternative Dispute Resolution (mediation).
    Theoretically this should assist employers and employees in risk assessment at an early stage and avoid costly litigation.
  7. Allow the Employment Relations Authority to give priority to mediated cases.
    An incentive for mediation of course. Sometimes however cases simply are not (or no longer) suitable for mediation and this amendment could cause prejudice to parties or force them to undertake a mediation knowing that it will not succeed.
  8. Allow the Employment Relations Authority to advise when mediation is impractical or inappropriate.
    This could tackle the issues identified under 7.
  9. Allow mediators and Authority members to make recommendations to parties about how the problem may be solved.
    Parties have 7 days to decide whether or not they agree and if they agree the recommendation(s) become binding.
  10. Allow the Employment Relations Authority to dismiss vexatious or frivolous claims. There will be is a right of appeal.
  11. Allow the Employment Relations Authority to penalise parties who do not attend investigation meetings and who file late claims without good reason.    The first change I get, but the second proposed change I do not.  Would it not be easier to just dismiss a late claim altogether?
  12. Removing reinstatement as a primary remedy as reinstatement is rarely practicable or reasonable. Reinstatement will still be available though, but where appropriate.
  13. Treating personal grievances which are not actively progressed as withdrawn.
    As long as notice is given by the ERA of such intention this seems a good move that should assist in clearing backlogs of dormant claims.
  14. Developing a code of professional ethics for employment advocates.
  15. Union access to workplaces after consent by the employer
    Consent however cannot be unreasonably withheld and would have to be for a lawful reason.
  16. Employers allowed communicating directly with staff during bargaining, including about terms of any settlement offer.
    I guess individual bargaining will still be prohibited.
  17. Cash for holiday time allowed for a week of holiday.
    Only employees will be able to request the change and although employers may decline the request without giving a reason, they can’t force an employee to accept cash in exchange for annual leave.
  18. Simplifying the way payment for sick leave, bereavement leave, public holidays and alternative holidays is calculated for employees that work irregular hours.
    The proposal is for the pay rate to be calculated by averaging the gross earnings for the preceding year or less.
  19. Allowing employers and employees to agree to transfer the observance of public holidays to another identified working day.
    This would enable people of non Christian faiths to take days off to enable them to observe different holy days.
  20. Proof of sickness or injury within 3 consecutive days of an employee taking sick leave, so long as the employee’s reasonable costs are covered.
    The employer would no longer need reasonable grounds to make the request.  I could foresee this causing practical problems.
  21. Increase (doubling) of penalties to $10,000 for individuals and $20,000 for employers who do not comply with the Holidays Act.
  22. Making the Employment Relations Authority more accountable and judicial in its conduct and decisions.
  23. Formalising the conduct of Authority investigations.
  24. Search and freeze orders to be issued by the Employment Court only.
  25. Allowing the Employment Relations Authority to remove matters to the Employment Court of its own motion as opposed to when a party requests such a move only.
  26. Right to cross examine witnesses during Authority investigations.
    This will make the Authority much more like a court, cases will inevitably take longer and will encourage more legal representation.  Effective cross examination will require professional involvement but at the same time I see it as a good thing that will end up serving justice.
  27. Allowing the Authority to consider whether minimum legal entitlements could be bargained away before they refer a matter to mediation.
  28. Preventing minimum entitlements being negotiated away in mediations. Entitlements such as minimum wage or holiday entitlements will still be allowed to be the subject of negotiation but not reduced below the legal minimum.  27 and 28 are related changes.
  29. Allowing a party to withdraw a claim in the Employment Court without affecting the claims of another party in the same proceeding.
  30. Allowing people between 16 and 18 to enter into binding agreements with their employers.
    Such agreements are currently subject to approval by a court.
  31. Giving legal definition to the role of Labour Inspectors to give them greater powers to manage complaints and support businesses to achieve compliance.
  32. Allowing Labour Inspectors to enter into enforceable agreements with employers so as to allow willing employers to avoid legal proceedings.
  33. Allowing Labour Inspectors to issue Improvement Notices similar to the notices of Health and Safety Inspectors.
  34. Allow for penalties and interest to be awarded in the case of long-standing and repeated non compliance with a demand notice(s) that require employers to comply with their obligations to pay wages and allowances.
  35. Allowing Labour Inspectors to seek a penalty action from the Authority where the employer has failed to provide a copy of an employment agreement.
  36. Increasing penalties.
    Double the maximum penalties to $10,000 for individuals and $20,000 for employers who do not comply with the requirements of the Employment Relations Act.
  37. Allowing the Employment Court to deal with pre-proceeding discovery regardless of whether the matter is or is intended to be brought before Authority or Employment Court.
    Discovery lies at the core of the justice system and this change is applauded as it stimulates better assessment of the strength of cases and justice on the basis of the facts.

Overall, I guess these changes can be applauded for they have the potential to bring back a balance that has been lost under labour and have to potential of more efficient and effective justice.

3 thoughts on “Proposed Changes to Employment Law in New Zealand

  1. Pingback: Proposed Changes to Employment Law in New Zealand « The Desk of … | St Georges Day Bank Holiday

  2. Pingback: Proposed Changes to Employment Law in New Zealand « The Desk of … « Careers Employment Direct

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