Employment law is a political football. It often swings one way or the other depending on which political party is in charge.
The Employment Relations Act 2000 has been in force for 20 years and there is little political appetite for wholesale change, but there are always subtle yet significant changes when the balance of power in the Beehive shifts. These usually involve unpicking the previous Government’s amendments.
However, the introduction of Fair Pay Agreements if Labour returns to power would be reasonably significant. Increased unemployment and ongoing job insecurity arising out of the pandemic mean employment law is likely to be an important focus post‑election.
National says it will:
- Repeal the Government’s changes to the Employment Relations Act
- Simplify the employment dispute resolution process
- Get rid of the “no win no fee” basis of representing employees
Most of this is par for the course. 90-day trial periods would be restored to all businesses and bargaining and workplace access would get slightly more difficult for unions.
The “no win, no fee” part is more significant. It appears National wants to remove the ability of advocates to represent dismissed employees on a “no win, no fee” basis. The intended effect is to likely to remove the incentive for advocates to take unmeritorious claims to shake the money tree, knowing the employer is incurring costs.
This would not dispense with advocates altogether because the Employment Relations Authority and Employment Court is not restricted to barristers and solicitors representing employees, including because there is a long tradition of representation by union officials and employers’ advocates.
Labour says it will:
- Have a $20 minimum wage from 1 April 2021
- Increase sick leave from 5 days to 10 days
- Implement Fair Pay Agreements (FPAs)
- Legislate for “dependentcontractors”
The increase to the minimum wage under the Ardern Government was very significant and had a knock on effect to maintain relativity. If Labour comes to power again, the minimum wage will increase to $20 from 1 April 2021, but it is not clear whether we will see the same significant increases to the minimum wage over the remainder of the electoral cycle.
The increase in sick leave from 5 days to 10 days is significant and this policy arose post-pandemic for obvious reasons. While Australia has 10 days’ paid sick leave, this is pro-rated for part-time employees. In New Zealand, it doesn’t matter whether you’re full or part time, you get 5 days of sick leave. This means that employees who work 1 day a week essentially have 5 weeks of sick leave, whereas their full time colleagues have 1 week. This is a real issue in industries where there is a significant proportion of part time employees. It seems inequitable to have this outcome, and we hope that consideration is given to this issue, particularly as many businesses are struggling.
FPAs are intended to be a base set of terms and conditions of employment that, once negotiated, would apply to an entire industry regardless of whether a particular business had been involved in the bargaining. FPAs would be a significant shift away from individual or enterprise bargaining. FPAs could provide a floor of terms and conditions of employment for employees who might lack bargaining power in their own workplace and they could also act to prevent competition based on squeezing down labour costs; but they could also create an uneven playing field for small businesses who are less able to absorb additional costs than their larger counterparts.
It is not clear what legislation for “dependent contractors” would involve, but the policy seems to be intended to offer protection similar to employee rights, and is a reaction to the emerging gig economy. This is an emerging trend worldwide. Notable examples include cases taken in the UK and US seeking declarations that Uber drivers were employees, and there is case pending in the Employment Court about the status of Uber drivers.
The Green Party policy largely aligns with Labour, but includes proposals to further extend paid parental leave, although this would presumably be a cost for Government, not employers. The Greens also propose a minimum redundancy payment for all employees of four weeks’ pay.
ACT would restore 90-day trial periods for all businesses and put a moratorium on minimum wage increases while the economy is recovering from COVID-19. There is also a policy about streamlining the personal grievance process, including performance management and dismissal processes. This would likely allow more flexibility in dismissal processes and less focus on procedural errors. It would also simplify the Employment Relations Authority process. This latter policy is sensible, as often the cost involved in dealing with a personal grievance is out of proportion to the amount of money at stake, and can make access to justice harder for both employers and employees.
The nature of New Zealand’s MMP system and the variables in any election mean it is difficult to predict what might happen with employment law after the election, but there will no doubt be some changes to employment law that employers, employees and unions will need to navigate and adapt to.