Parliament has presented employers with two early Christmas presents: new 90 day trial periods for businesses with fewer than 20 employees, and changes to KiwiSaver, mainly lowering minimum employee contributions and maximum employer compulsory contributions to 2%. Both these measures were passed under urgency on 12 and 11 December respectively. Key points for employers are outlined below.
90 DAY TRIAL PERIODS WITH NO UNJUSTIFIED DISMISSAL CLAIM AVAILABLE
The Employment Relations Amendment Bill 2008 introduces 'trial periods' for businesses with fewer than 20 employees, when they take on a new employee.
Key features of this Bill are:
- Businesses with less than 20 employees (at the beginning of the day of hiring) will be able to put new employees on a trial period of up to 90 days.
- Although passed under urgency, trial periods will not come into force until March 2009.
- Trial period provisions must be written in an employment agreement. The length must be specified.
- Employers must give notice if they dismiss an employee during a trial period. The employee cannot bring a personal grievance (or other legal proceedings) 'in respect of' their dismissal. But they can still bring a claim based on discrimination, racial or sexual harassment or a disadvantage grievance.
- Good faith provisions of the Employment Relations Act 2000 (ERA) apply to trial periods. But the good faith provisions relating to consulting and providing information on the decision to dismiss, do not apply to trial periods. Also, employers are not required to comply with section 120 requests for reasons for a trial period dismissal.
- The current probationary provisions in the ERA are still available to all employers. 'Trial periods' will be different to 'probationary periods'.
- Employees can only undergo one trial period. Employers cannot put an employee on a trial period if they have previously employed that person.
CHANGES TO KIWISAVER: TAXATION (URGENT MEASURES AND ANNUAL RATES) BILL 2008
Parliament has passed changes to KiwiSaver. In brief, the changes introduce the following from 1 April 2009:
- The Bill repeals 10 September amendments to the ERA allowing disadvantage grievances relating to membership of a KiwiSaver scheme. The Government says those September amendments are not needed because it has now amended the KiwiSaver Act 2006 to require employer contributions to be paid on top of an employee's pay.
- Minimum employee contributions of 2% of gross pay instead of 4%. Employees will be able to choose to contribute 2%, 4% or 8% of gross salary. The default rate for new employees will become 2%.
- Compulsory employer contributions capped at 2% of gross salary instead of 4% (and the exemption from employer superannuation contribution tax capped at 2%).
- No employer tax credit.
- No $40 a year fee subsidy (existing members will keep their subsidy for the remainder of their membership year).
- Compulsory employer contributions must be paid in addition to gross salary.
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