Australia: NZ Employment Update

Last Updated: 30 March 2011
Article by Sean O’Sullivan and John Hannan

From 1 April 2011 significant changes to employment law will come into effect. Now is the time to ensure your policies and procedures are up to date. Here is a brief explanation of each of the new provisions.

Employment Relations Act 2000 changes

90 day trial period

  • A 90 day trial period for new employees will be available to all employers.
  • An employee who has agreed in writing to a trial period and is dismissed during that period will not be able to bring personal grievance proceedings.

Change to test of justification for dismissal

  • The current standard is what a reasonable employer 'would' have done in the circumstances. The new standard will be what a reasonable employer 'could' have done in the circumstances. This change should make it easier for employers to justify dismissals or other disciplinary action.
  • In deciding whether a dismissal meets the test, the Employment Relations Authority or the Employment Court will have to consider a number of factors including:
    • The investigation the employer undertook having regard to the resources of that employer.
    • Whether the employee was told about the employer's concerns and given a reasonable opportunity to respond to those concerns.,/li>
    • Whether the employee's explanation was given genuine consideration by the employer before any action was taken.
  • Minor defects in an employer's process will not make a dismissal unjustifiable if those errors did not result in any real unfairness to the employee.

Changes to the Employment Relations Authority process and the Mediation process

  • The changes put more focus on mediation and its processes.
  • The Authority will have to give priority to matters which the parties have attempted to resolve by mediation.
  • Parties will be able to agree in writing to give a mediator the power to make a recommendation. The Authority will also have the power to make recommendations. The parties can accept or reject the recommendation. Accepting a recommendation makes it binding and enforceable. There is no recourse to the Authority or the Employment Court once the recommendation is accepted except for enforcement purposes.
  • Parties will be entitled to cross-examine witnesses in investigations before the Authority.
  • Under the current law the remedy of reinstatement must be ordered by the Authority if it is practicable and reasonable to do so. Reinstatement will now no longer be the primary remedy. Under the new law the Authority may order reinstatement if it is practicable and reasonable to do so.

Union access, communication during collective bargaining

  • Unions must get the consent of the employer before accessing/entering workplaces. Consent must not be unreasonably withheld. Effectively this reverses the current situation where unions have rights of access and the onus is on the employer to justify a refusal of access.
  • Employers will now be able to talk more openly with their staff about matters relevant to bargaining for a collective agreement while such bargaining is underway. Restrictions on what can be communicated remain, so caution is required.

Holidays Act 2003 changes

Proof of sickness or injury when sick leave is taken

  • Under the current law an employer can only require proof of sickness or injury if the employee takes leave for three or more consecutive calendar days.
  • From 1 April 2011 an employer can require an employee to provide proof of sickness or injury for a period of sick leave that is less than three consecutive calendar days.
  • Employers need to request proof as soon as possible. Employers must pay the employee's reasonable costs of obtaining the proof.
  • Sick leave does not need to be paid if the employee cannot provide proof of sickness or injury.

Transfer of public holidays and cashing up annual leave

  • Employers will be able to agree in writing with employees to transfer the observance of public holidays to another day. That day must be a day which would otherwise be an ordinary working day for the employee.
  • An employee may request that up to one week of their annual leave entitlement be paid out. The request must be in writing. Employers are required to consider the request within a reasonable time and advise in writing as to whether the request is approved. An example is a full-time employee cashing up one week who would then work 49 weeks and be paid a total of 53 weeks instead of working 48 weeks and being paid 52.
  • Employers may adopt a policy that they will not adopt either of these changes. If you would like assistance in drafting such a policy please contact us.

Average daily pay calculations for calculating pay for statutory holidays and sick days

  • Where the current 'relevant daily pay' cannot be calculated because of fluctuating work patterns, a new calculation formula, 'average daily pay', applies.
  • The formula averages daily pay for the last 52 weeks.

Changes effective from 1 July 2011

  • Gone are the times of having no written individual employment agreement. Now is the time for employers to make sure that they provide employees with a signed employment agreement, or where not signed, an unsigned copy. Employers need to retain copies of the employment agreements and be able to provide them to employees at their request.

© DLA Phillips Fox

DLA Phillips Fox is one of the largest legal firms in Australasia and a member of DLA Piper Group, an alliance of independent legal practices. It is a separate and distinct legal entity. For more information visit

This publication is intended as a first point of reference and should not be relied on as a substitute for professional advice. Specialist legal advice should always be sought in relation to any particular circumstances.

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