New Zealand: Employment Law Update - Changes are coming

Last Updated: 27 March 2016
Article by Ashley-Jayne Lodge

The Employment Standards Legislation Bill passed its third reading on 10 March 2016 and includes a raft of changes designed to prevent unfair employment practices and strengthen enforcement of employment standards. Find out what this could mean for you.

The Employment Standards Legislation Bill (the Bill) passed its third reading on 10 March 2016. The Bill makes a raft of changes to key pieces of legislation to ensure fairer and more productive workplaces, and provides increased protections and benefits for employees and employers.

The Bill includes a range of measures to prevent unfair employment practices, strengthen enforcement of employment standards, and extend the scope of parental leave.  These changes will come into force on 1 April 2016.

'Zero Hour' contracts

Zero hour contracts are employment agreements that do not provide any minimum hours of work, but require the employee to be available to work as and when required. These contracts often also restrict the employee from gaining secondary employment, but without promising minimum hours of work.

As of 1 April 2016 these restrictive practices will be prohibited. Where employees and employers agree on minimum number of hours of work these must be stated in the employment agreement.

The Bill also prohibits employers requiring employees to be available outside the hours that are set out in the employment agreement, unless the employee is being reasonable compensated for their availability. Availability requirements and corresponding compensation rates will need to be specified and stated in the employment agreement. The employer cannot require the employee to be available unless there are a minimum number of hours that have been agreed to.

If you think you are using contracts that contain clauses that will be prohibited as of 1 April 2016 then give our employment team a call to discuss how to bring the contracts in line with the new legislation.

Parental Leave Changes

As of 1 April 2016 the duration of paid parental leave will be extended to 18 weeks. The Bill has made some further interesting changes to the parental leave scheme. These changes will allow more flexibility for non-standard family arrangements, and support parents who wish to maintain a career. The Bill also allows for certainty for employers in situations where they cannot afford to hold a position open indefinitely.

The Bill extends parental leave to those in non-standard working arrangements. This includes casual, fixed-term employees, workers with more than one employer, and other types of work that is not on a full time basis. Workers who have recently changed jobs may also be eligible for parental leave provided they meet certain conditions. The aim of the legislation is to maximise the benefits to parents and primary carers, who will also be entitled to leave entitlements. Primary carers are those who take responsibility for the development and upbringing of a child on more than a temporary basis.

The Bill has also introduced 'Keeping In Touch' days. These will allow employees to return to work for up to 40 hours during the period of paid parental leave once the baby is at least four weeks old. The hours can be used for training purposes, skill development or to make sure the employee has a smooth transition back into full time employment.

Parents of preterm babies will get extra entitlements where their baby is born before the full gestation period. For every week that the baby was born before the full gestation period the employee will also be entitled to three 'Keeping In Touch' hours.

Employers will also gain some certainty from the new legislation. Where an employee takes parental leave but does not intend to return to work, they will now be able to resign from their employment without losing parental leave entitlements. This allows the employer to hire a permanent replacement, rather than having to temporarily fill the role.

Enforcement of Minimum Standards

The Bill recognises that some employers are still not meeting minimum employment standards, and aims to gain compliance by increasing penalties and the powers available to Labour Inspectors.

For the most serious breaches the penalties are increasing to $50,000 for an individual and for a company the greater of $100,000 or three times the financial gain for a company. There will also be non-insurable pecuniary penalties for those employers who do not meet the minimum entitlement provisions such as minimum wage, annual holidays and written employment agreements.

Labour inspectors will be given increased powers and will be able to request any employment record to make sure that the minimum standards are being adhered to. They are also gaining greater ability to information share between government agencies to maximise their ability to investigate breaches.

We suggest any employer who thinks they may not meet the minimum standards to contact us and we can help work through the practicalities of the new laws.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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Ashley-Jayne Lodge
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