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What the election could mean…

It’s election year and changes of government often bring changes to employment relations law. While employment relations law has been relatively stable in New Zealand in the 21st century, there is traditionally a stark divide between the employment law philosophies of our two main political parties.

However, the current National Government has largely kept the Employment Relations Act 2000 intact, and has uncharacteristically enacted a more rigid system for the enforcement of minimum entitlements, passed new health and safety laws and enacted stricter controls around working hours. It has also increased the minimum wage regularly.

So, what are the various political parties saying they’ll do if elected? Would a Labour-led Government really create that much of a change? What if the evergreen Winston Peters becomes king-maker? What if ACT sweeps to power buoyed by the good people of Epsom? What if Colin Craig rises zombie-like from political oblivion?

Likely with Labour…

Labour has pledged to increase the minimum wage to $16.50, and to keep increasing it to two-thirds of the minimum wage “as economic conditions allow”. That allows it a lot of wriggle room in its policy. In essence, Labour’s policy is not too different to what is currently occurring. The National Government usually increases the minimum wage by 50c each year and it sits at roughly 50% of the average wage at the moment.

More significantly, Labour’s policy is to pay all “core” public service employees at least the living wage. The living wage in New Zealand is currently $20.20 per hour. It is not clear when this would take effect from. It is also unclear what a “core” public sector employee is, nor how many core public sector employees are currently paid below the living wage. Labour has said its policy would cost $15m, and this is presumably a per annum figure. We assume the policy applies to both central and local government, as both are part of the public sector.

Such a policy could have the effect of increasing wages across the board, as private sector employers may need to match public sector rates in order to attract staff. Also, public sector workers on higher pay may see a pay boost to maintain relativity.

Labour says it will double the number of labour inspectors to 110 at a cost of $9m per annum.

Labour will not do away with trial periods, but it will introduce a speedy, lawyer-free referee service to determine challenges to dismissals that arise under trial periods. In our view, it would be simpler to say that either trial periods exist or they do not. Under the referee system, remedies will be capped, but reinstatement will be available. While no detail has yet been released, this could restrict access to the courts and undermine the right to justice. A tribunal forced to make speedy decisions without lawyer involvement may get the wrong answer, and any restriction on appeal rights from the tribunal could saddle an employer with a reinstatement order that cannot be challenged. If the referee’s powers were restricted to modest monetary remedies alone with restricted appeal rights, this could be more palatable, but it still undermines the whole concept of a trial period. It is also not clear how evidence will be heard and whether it will be under oath. Labour says this service will cost $4m per annum.

Labour has also pledged to introduce Fair Pay Agreements, which will comprise a common set of terms and conditions of employment applying to a particular industry. Labour says wages and conditions will be set by “pay and experience”, so wage increases based on length of service alone may be a feature of FPAs. Labour says, “Negotiations on FPAs will begin once a sufficient percentage of employers or employees within an industry call for one. This threshold and the precise implementation of FPAs will be developed in government in consultation with all stakeholders.”

The devil is in the detail, and it is not clear how negotiations will be conducted, whether industrial action could occur in FPA negotiations, nor whether there will be an arbitration court that could make a final determination on an FPA. Also, it is not clear whether employer and employee agreement would be required to enter into FPA negotiations or whether FPA negotiations could be commenced unilaterally by employees. Finally, it is not clear whether employees who are not members of a union would have representation in FPA negotiations.

Without that detail, it is difficult to assess the impact FPAs will have, but the concept of an FPA is a reasonably significant departure from our current law, which provides for individual employment agreements or collective agreements. The concept of an FPA is certainly an interesting one worthy of debate.

Going Green…

The Green Party’s industrial relations policy is quite comprehensive, and generally similar to the Labour Party’s. Like Labour, it supports an increase to the minimum wage to 66% of the average wage, but without Labour’s proviso of “as economic conditions allow”. It would also require all employees to be paid the minimum wage and abolish the starting out wage.

The Green Party’s industrial relations policy is quite comprehensive, and generally similar to the Labour Party’s. Like Labour, it supports an increase to the minimum wage to 66% of the average wage, but without Labour’s proviso of “as economic conditions allow”. It would also require all employees to be paid the minimum wage and abolish the starting out wage.

The Green Party appears to be the only party to directly address the issue of labour hire workers. It would create laws requiring labour hire workers to be employed on the same terms and conditions as directly employed employees and give them the right to transfer to the contracting employer if they work for it for 6 months. This is an emerging area of law, and the UK, the EU, Ireland, South Africa and the province of Ontario in Canada have recently enacted legislation dealing with this phenomenon in the gig economy.

The Green Party has a policy of industry standardisation of terms and conditions of employment, although it is not quite the same as Labour’s FPA policy and refers to multi‑employer collective agreements instead.

Oddly, the Green’s policy says “Require employers to consider, in good faith, requests for flexible working arrangements from the parents of young children”. A law allowing this has been in place since 2008. In fact, the National Government even extended the ability to request flexible working hours to all employees.

Equal pay is another focus of the Green Party. The Green Party’s website says one of its policies is to support an Equal Pay Amendment Bill. This is a private member’s bill by Green MP Jan Logie. The bill failed on its first reading in May 2017 but presumably the party seeks to revive it if it’s in the Government. The party says, “This bill would require all employers to collect information about how much men and women are paid, to make it easier to find out where there is discrimination. Ensuring transparency around pay is an easy way to ensure women get paid fairly – this bill will make that a reality.” The Bill would require an employer to provide data about the pay and gender of employees doing the same type of work to any employee’s representative on demand.

There is a risk the bill would create unnecessary compliance costs, as such information could already be obtained via the Employment Relations Authority or Employment Court to support any claim for discrimination before those judicial bodies. The Authority or Court would be better placed to ensure the confidentiality of such information. The bill may not really advance equal pay claims, particularly seeing as the recent equal pay case and settlement were not about gender discrimination by the same employer, but gender discrimination between industries.

New Zealand First…

New Zealand First says it will lift the minimum wage to $20 per hour over three years starting in 2018 with tax assistance for employers and abolish the starting out wage.

It also says it will “change laws that allow individuals to be employed on a permanent ‘casual’ basis”. Given the recent legislative banning of “zero hours” employment agreements and the existing common law safeguards preventing employers from mischaracterising permanent employees as casual employees, this may not be that big of a change and such a law change seems unnecessary.

New Zealand First also says it will make hiring New Zealanders a priority and invest in training for them.

What actions will Act take?

ACT does not appear to have an industrial relations policy on its website, but it tends to take a very free market view of employment relations, including by calling for the abolition of the minimum wage and Employment Court. Any such policies are unlikely to be implemented, particularly given its minor role in Parliament. Such policies would also bring New Zealand out of step with international labour law norms.

Maori Party

The Maori Party says it will introduce a living wage and double the existing Maori and Pacific trade training and cadetships.

No change from National

The National Party does not appear to have a specific employment relations policy on its website, but presumably it would continue with the moderate approach of the past few years. We are unlikely to see a return to the days of the Employment Contracts Act 1991.

In summary, a Labour/Greens/New Zealand First coalition, should such a hydra occur, would probably increase the minimum wage and abolish the starting out wage, consider some method of industry standardisation of terms and conditions of employment, pass laws restricting irregular employment, and perhaps increase the pay of the lowest paid public sector employees.

The Conservative Party does not appear to have an employment relations policy either, but it would do well to consider strengthening sexual harassment laws given its former leader Colin Craig’s behaviour. No matter what law changes occur, there is a consensus that writing bad love poetry to your employees is never a good idea…

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  • The ABCs of redundancy

    As the global economy toughens, many employers are having to consider ways to reduce their overheads. Inevitably redundancies are often part of this consideration. With this in mind, we thought it timely to revisit the main obligations on employers when making staff redundant.

  • What about my EPP?

    A recent case from the Employment Relations Authority (“Authority”) has also raised a new potential hurdle when restructuring – the implications of having no employee protection provision (“EPP”) in the employment agreement.

  • Future legislation under Labour

    The current Government has a number of other Bills and proposals that are currently in the pipeline or working their way through the Parliamentary system. Many of these have already been mentioned in our last newsletter (available at www.sbmlegal.co.nz). However, some of the newer initiatives recently introduced are also of real significance.

  • Keep your friends close and your enemies closer!

    There is an old adage that good leaders should keep their friends close and their enemies even closer. This is well illustrated in an important Court of Appeal decision involving a Mr Salt, who was based on a tiny but rather notorious rock in the Pacific Ocean, Pitcairn Island.

  • Law changes still in progress

    Most new governments find the lure of rewriting our employment laws impossible to resist. This election is no exception. Regardless of which parties emerge victorious after 8 November, more change is on the way.

  • The National Party’s Policy

    Unsurprisingly, a number of Labour’s initiatives are unlikely to survive if the National Party leads the next Government. National has made it clear it will not make sweeping changes to the Employment Relations Act. However, the changes it wishes to make are still significant.