The Government's employment law changes came into effect on 1 April 2011. This Brief Counsel focuses on the key practical issues that flow from the new amendments.

This advice is necessarily generic and is not a substitute for specific advice in relation to your particular circumstances.

Trial periods

All employers can now use 90 day trial periods for new employees. Trial clauses should be simple, and will be interpreted by the Courts very strictly.

For the trial clause to be effective, the employment agreement containing the trial clause must be (a) signed by both parties (b) before employment starts. A recent Employment Relations Authority case held that a trial period clause was not valid because (amongst other things) the employee had signed the agreement after lunch on her first day (Parkes v Squires Manufacturing Limited, Employment Relations Authority, Wellington, 11 February 2011).

In addition, before a job is verbally offered and accepted, employers should advise the prospective employee that they will be including a trial provision (ideally employers would have something in writing to show that this has occurred.)

Employers should also remember the distinction that exists between trial periods and probationary periods (which, in older template agreements, will sometimes be labelled as a 'trial period'). Employees who are dismissed during a probationary period can still bring a grievance challenging their dismissal.

Undoubtedly, teething issues around the new trial period law will continue for some time. Given the potential early pitfalls, we strongly suggest employers act cautiously and take advice before relying on a trial clause.

Cashing up leave

Under the new law, employees can ask to have up to one week of their minimum statutory leave paid out in cash. All employers should have a policy covering cash up requests.

Employers who do not want to cash up leave can adopt a policy that states they will not consider these requests. In the absence of such a policy, employers must consider requests and advise the result in writing within a reasonable time. However they do not have to give a reason for declining a request.

Employers may adopt different policies for different parts of the business.

Employees cannot request a cash-up until their next entitlement date on or after 1 April 2011 (usually this will be their next anniversary date). Importantly, leave can only be cashed up at the employee's request. An employer cannot require cash up requests, or even raise the matter in negotiations.

Signed agreements

From 1 July 2011 employers must retain a signed copy of each employee's individual employment agreement, to be available to the employee on request, or (where the employee has yet to sign) a copy of the intended agreement.

It is now more important than ever to have signed agreements for all staff. The new law makes it harder to argue that an unsigned agreement is binding, meaning there will be real uncertainty if something goes wrong.

Sick leave

Employers now have more flexibility to request medical certificates when an employee takes statutory sick leave for an illness that lasts less than three days. However, in these circumstances the employer has to:

  • inform the employee as early as possible that the certificate is required, and
  • meet the cost.

Employers should check that their template clauses allow them to take advantage of this change (many won't, and will need to be amended).

Other changes

Other changes include:

  • the ability to transfer public holidays to another significant working day
  • relaxing (slightly) the test an employer must meet when justifying warnings and dismissals, and removing reinstatement as the primary remedy
  • requiring unions to seek an employer's permission before they enter a workplace (employers should ensure that managers are aware of how to respond to these requests as consent cannot be unreasonably withheld and there is a strict process that must be followed)
  • employers can now communicate directly with employees during collective bargaining about matters relevant to the bargaining (bargaining process agreements may need to be tweaked to allow for this change)
  • increased penalties for non compliance (from $5,000 to $10,000 for individuals, and from $10,000 to $20,000 for companies and other bodies corporate), and
  • wider powers for labour inspectors to enforce undertakings and issue statutory improvement notices.

See our November publication for more details.

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.