Changes to New Zealand Employment Law are coming thick and fast since the pandemic landed within our borders. Now is a great time to familiarise yourself and get ahead of the changes ensuring your employment agreements are up-to-date so that your organisation can continue to sail smoothly.

Ten days’ sick pay

Last week the Holidays Increasing Sick Leave Amendment Bill passed its final reading in Parliament. It will shortly receive Royal Assent and become law. It is then only two months later that each employee who passes their relevant anniversary date will become entitled to ten days’ paid sick leave, rather than the previous five. Employers will need to update employment agreements and policies accordingly, including in relation to the carry over rules (which are also being adjusted to maintain the maximum entitlement at 20 days).

Vulnerable employees: extended protections for business transfers and outsourcings

New legislation is extending the statutory protection for employees affected by business transfers, out/in-sourcings and service provider changes.

Currently certain limited groups of staff are recognised as “vulnerable employees” who are then offered a statutory right to transfer automatically to any new business owner or operator on the same terms and conditions of employment as enjoyed prior to the relevant business change. At present, vulnerable employees include any employee providing cleaning or food catering services, and in some cases those undertaking laundry services. From 1 July the definition is being extended to include employees undertaking ‘services in the security sector’. If transactions involve any employees undertaking this type of work, then it will be important to give early consideration to their special rights. It is not clear from the order including this work whether it extends to all jobs in any industry that have an element of security work, or just work in the security sector.

Trans-Tasman travel bubble

With the highly anticipated Trans-Tasman travel bubble now in place New Zealanders and Australians are free to travel between their countries, and without having to quarantine (at a time when any other international travel is highly restricted). However, many New Zealand employers are considering steps to limit the potential disruption and cost should employees be stranded as a result of a sudden bursting of the bubble (as has already happened with a local lockdown in Western Australia).

Potential new employer rules include blanket bans on travel, deducting the extra period from annual leave, indications that employees may be dismissed if they cannot return within a reasonable time and/or requirements to ensure employees can remote work if they are delayed. Such rules could be challenged and employers should seek advice before adopting any policies in this area.

No jab = No job?

As vaccinations are rolled out to the New Zealand population, many employers are examining the steps they can take to encourage or even force vaccination. However, human rights considerations and limits on employer powers mean that an instruction to vaccinate is unlikely to be enforceable except in specific high-risk circumstances. A possible exception relates to workers covered by the COVID-19 Public Health Response (Vaccinations) Order 2021, which states that employers must not allow employees to carry out work at MIQ facilities or affected airports or ports, unless they are vaccinated. Even then, a decision to dismiss a non-compliant employee would carry significant risk and advice should be sought before issuing any staff communications on vaccination.

Social Unemployment Insurance

Finance Minister Grant Robertson has stated that the Government is considering implementing a ‘social unemployment insurance scheme’ this year. This would be akin to the ACC scheme in that it would allow employees to claim 80% of their previous income for a limited period of time (it is unclear for how long as yet) in the event that they are made redundant. Like the ACC scheme, we can assume that it will be compulsory for employers and that levies would be need to be paid by employers and self-employed contractors.

A number of questions arise, such as the impact of redundancy compensation and whether it will cover other ‘for cause’ terminations.

At the moment, the Government has indicated that this is only in the initial stages and there will be public consultation regarding the scheme.

Fair pay agreements

In what is the most significant reform to industrial relations since the Employment Relations Bill was passed, the Government recently announced the details of the proposed Fair Pay Agreement framework.

This will include allowing unions to negotiate on an industry-wide basis, if they can satisfy a public interest test, or reach a support threshold of 10% or 1000 workers in coverage. The union will then have power to negotiate directly with employer representatives, and any resulting agreement will set base wage rates, ordinary hours, overtime and penal rates (and other topics if agreed). It will be possible to build in regional variations (e.g. to account for the cost of living), and to have preferential payments for union members. Once a proposed agreement gains more than 50% support from both sides’ bargaining representatives it will need to be ratified by the employers and employees.

If agreement is not reached, or any agreement is not ratified, ultimately the parties can go the Employment Relations Authority, which will simply make a ruling on the terms that will bind both parties. This will effectively re-introduce compulsory arbitration in New Zealand, which was abolished by the Employment Contracts Act in 1991.

Spark a conversation

For more information about the recent changes to employment law, get in touch with our employment specialists James Warren, Charlotte Parkhill, or Greg Cain.