New Zealand: Employment standards get a shake up

Last Updated: 24 February 2016
Article by Doug Alderslade, Geoff Carter and Marie Wisker

Most Read Contributor in New Zealand, September 2016

The Employment Standards Legislation Bill has now been reported back from the Select Committee and the aim is that it will be passed in time to come into effect on 1 April 2016 – just before the 4 April commencement date for the new Health and Safety at Work Act.

Employers need to start thinking about the potential implications for their business.

All new employment agreements will have to comply immediately with the new standards. Existing agreements will have a transition period of 12 months.

Unfair employment practices

Availability provisions – "zero-hours contracts"

Availability provisions make the employee's performance of work conditional on the employer providing work and require that, where work is provided, the employee is available to accept that work. It may relate to all hours of work under the agreement, or work performed in addition to agreed hours of work.

Employers are now prohibited from having an 'availability provision' in an employment agreement unless there are genuine reasons based on reasonable grounds for including it, and the employee is compensated for making him or herself available to perform work.

Genuine reasons include whether the employer can meet business demands without resorting to an availability provision. The policy behind this is that employers should aim to put strategies in place to cover work flows, rather than requiring employees to be on zero-hours contracts.

An availability provision that does not comply with the genuine reasons test and provide for compensation is unenforceable. The employee can refuse to perform the work and cannot receive adverse treatment by the employer as a result.

Employers and employees can agree that a salaried employee's remuneration includes compensation for making themselves available for additional hours of work.

Agreed hours of work

An employee's hours of work must be recorded in their collective or individual employment agreement or there must be an indication of the arrangements related to when the employee is to work.
The select committee has clarified that it is not necessary for employers to guarantee hours of work or specify particular hours if that is not possible.

"Hours of work" is to be defined as including any or all of the following:

  • the number of guaranteed hours of work
  • the days of the week on which work is to be performed
  • the start and finish times of work, and
  • any flexibility in the matters referred to in bullets two or three.

Cancellation of shifts

Employment agreements must now specify a reasonable period of notice that an employer is required to give a shift worker before cancelling a shift. It must also include the amount of reasonable compensation payable if that notice period is not given. Reasonable compensation must consider what the employee would have worked had he or she been required to work the shift, the period of notice actually given and any costs the employee might have incurred in preparing for the shift.

If these requirements are not met, the employee is entitled to be remunerated as if they had worked the shift. Compensation for cancelled shifts will be included in the calculation of an employee's ordinary weekly pay and relevant daily pay for the purposes of Holidays Act entitlements.

Secondary employment

Employment agreements must not restrict secondary employment without genuine reasons. These reasons must be stated in the employment agreement and might include such things as protecting an employer's:

  • commercially sensitive information
  • intellectual property
  • commercial reputation, or
  • preventing a real conflict of interest that cannot be managed by any other means.

Enforcement of employment standards

There were extensive submissions on the requirement for employers to keep employment records to demonstrate compliance with minimum entitlement provisions.

Employers are now required to keep a record of hours worked, including for salaried workers. If workers are doing their "usual hours" (which would include "any reasonable additional hours worked under the employee's employment agreement") the record-keeping obligation will be met by having those hours stated in the wages and time record, the employment agreement, or in a roster or similar document.

If low-salaried workers are working in excess of their "usual hours" (even if the employment agreement requires employees to work all necessary hours to complete their duties), minimum entitlements could be breached.

There are new powers created to enforce breaches of employment standards that can be brought by a Labour Inspector as a separate matter to an employment relationship dispute or grievance raised by an employee.

Deductions from wages

The Wages Protection Act 1983 requires an employer to obtain an employee's written consent before making deductions from wages. The Bill clarifies that a general deductions clause in an employment agreement counts as written consent. However, the Bill also puts a positive obligation on employers to consult with the employee before making the deduction.

Employers are prohibited from making unreasonable deductions from employees' wages. The Bill does not define what this is but we anticipate that it would be unreasonable for an employer to deduct losses the employer has suffered through the fault of a third party, such as customer theft.

Extension of Paid Parental Leave and Employment Protection Act (PLEPA)

The Bill introduces a new definition of "primary carer" into the PLEPA, which will broaden the eligibility of parental leave beyond the natural parents to individuals with a permanent caring role.

Primary carers of premature babies will receive an extra week of parental leave for each week that the child was born prematurely.

Paid parental leave recipients will be able to do up to 40 hours paid work after the first 28 days of a child's life without losing their entitlements.

Unpaid extended leave will also be able to be taken in more than one period of time (that is, not in a continuous block), but the employer and employee must reach mutual agreement about the dates of any extended leave period.

Separately to the Bill, the length of paid parental leave will be extended to 18 weeks (from 16) on 1 April 2016.

The Bill can be accessed here.

Our thanks to Jenna Riddle for writing this brief counsel.

The information in this article is for informative purposes only and should not be relied on as legal advice. Please contact Chapman Tripp for advice tailored to your situation.

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