Employment Relations Amendment Bill 2018 shakes up employment rights

The first of the much awaited employment law reforms of the Labour-led government’s ‘first 100 days plan’ have now emerged in the Employment Relations Amendment Bill 2018, which was released on 31 January 2018. Notably, however, the Bill does not include any provisions relating to the controversial sector-wide fair pay agreements which would need to be the subject of extensive consultation, potentially holding up the passage of the Bill through Parliament. The Bill is expected to have its first reading very soon, the government says early in February 2018, with a view to passing into law by 1 April 2018.

The changes of more universal application relate to restrictions on trial periods; restoration of specific times for meal and rest breaks; and restoration of reinstatement as the primary remedy in unjustified dismissal cases. 

Key things to note in the Bill are:

Trial Periods

Trial periods can still be included in employment agreements for employers with 19 employees or less.

Larger employers with 20 employees or more will lose the right to include trial periods in employment agreements from the date 4 months after the date of Royal Assent. In the Bill’s current form, large employers will still be able to include trial period provisions in employment agreements so long as the agreement is signed by both parties any time before the date 4 months from the date of Royal Assent. It would appear the employer will still be able to rely on the trial period clause even if the trial period has not started, or if the trial period has started, it has not yet expired by the date 4 months from the date of Royal Asset.

Trial period clauses included in new employment agreements signed on or after the date 4 months from Royal Assent will be unenforceable. Larger employers will still have the option of including probationary clauses in their employment agreements which will still put the employee on notice their performance and behaviour are being monitored. However, this will not obviate the need to act in good faith and follow a fair process in line with the employer’s other statutory obligations and any internal policies and procedures, as the employer is required to do for its other employees.

Once the opportunity to use trial periods is lost, many large employers will inevitably act more conservatively about hiring decisions and it will be all the more important to carry out due diligence on preferred candidates before offering employment. 

Meal and Rest Breaks

The right to prescribed minimum 10 minute rest breaks and 30 minute meal breaks will be restored for employees. The limited exception is only for employees in essential services where both the continuity of service is critical for public safety and the cost of replacing the employee with sufficient skills to fill the break is “unreasonable” and compromises public safety. In these circumstances, it will be open to the employer and employee to agree the breaks be taken in a different manner and/or compensatory measures.

In all other cases, it is open to the employer and employee to agree the timing of breaks, but in the absence of agreement, there is a rigid default timing of the breaks set out in the Bill. These provisions will take effect on the date 4 months after the date of Royal Assent. Employers who do not already have agreed times for breaks are well advised to agree break times with their staff now, whether by inclusion of specific times in employment agreements, or variations to employment agreements, by inclusion in employee handbooks, or relevant workplace policies.

Continuity of Employment in Business Transfers 

The small employer (19 or less) exemption from vulnerable worker transfers in restructuring has been removed. Outgoing employers must give affected employees notice of the right to elect to transfer no later than 20 working days before the date the restructuring takes effect. The time for vulnerable employees to give their notices to elect to transfer has been extended to 10 working days after receiving the outgoing employer’s notice of the right to elect. These provisions will come in force in the date 4 months after the date of Royal Assent.  These changes will inevitably hold up settlement of business sales where vulnerable workers are involved. 

Collective Bargaining

The Bill will restore a large number collective bargaining rights which had been watered down or removed under the previous government. The duty to conclude a collective agreement in bargaining unless there is good reason returns. If there is a collective employment agreement in place, employers will be required to provide new employees with information about the role and functions of the union, how to join the union and to “encourage active choice” on whether or not to join the union. It will be mandatory for new employees to be employed on the same terms and conditions as the collective for the first 30 days of their employment. These changes will take effect on the date 4 months after the date of Royal Assent.

Reinstatement

Reinstatement will again become the primary remedy in personal grievance cases wherever reasonable and practicable if the employee specifically seeks that remedy. This will come into effect the day after Royal Assent. This change will inevitably lead to reinstatement claims being added to personal grievances, whether genuinely sought or not, to put pressure on employers to make compensation payments to buy out the risk of reinstatement. It is not clear yet, but this provision will probably not have retrospective effect and is likely to apply to dismissals which take place on or after the day after Royal Assent, not for dismissals which occur prior to this date.

The Bill will go through consultation through the select committee process following which there may be some changes. However, it is unlikely there will be major changes.


For further information please contact

SJD

S-J Davies

Email: sj.davies@harkness.co.nz

Direct Dial: +64 7 834 6682

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