As part of the government’s employment law package, various changes to New Zealand’s employment laws will come into force on 1 April 2011. The changes are being made to the Employment Relations Act and the Holidays Act and are intended to reduce compliance costs, increase business confidence in recruiting new staff, speed up the resolution of workplace disputes and provide greater choice for employers and employees.

The changes are outlined below:

Extension of 90 day trial period to all employers

The 90-day trial period is being extended from employers with less than 20 employees, to all employers. This means, from 1 April 2011, any employer and employee can enter into an employment agreement which provides for a trial period of 90 days or less. During these 90 days the employer can dismiss the employee without risk of a personal grievance for unjustified dismissal.

Employers must keep personal files for every employee

Employers will be required to keep up to date personal files for each employee. This includes retaining the following: signed copies of employment agreements; copies of the terms and conditions, policies/handbooks that govern the employment relationship; and copies of intended agreements provided to employees (even if those documents have not been agreed to by employees). Any documents held in the employee’s file must be made available to them upon request. Employers have until 1 July 2011, to get their files up to the new standard.

Justification for dismissal and fair process

The test for considering if an employer’s actions and decision to dismiss an employee were fair and reasonable will be based on “whether the employer’s actions and how it acted were what a fair and reasonable employer could (rather than would) have done in the circumstances at the time.”

Minimum requirements of fair and reasonable process will be set out in the Act and employers will no longer be so scrutinised for minor procedural defects.

Union access only with employer’s consent

Union representatives who want to enter a workplace will need the employer’s permission to do so. Employers must respond to the request within one working day, allowing the union representative to enter or providing written reasons if consent is denied. There are very limited circumstances in which consent can be denied, so employers should tread carefully when contemplating denying access.

Employers may communicate with employees during collective bargaining

Employers will be able to communicate with their employees during collective bargaining. This can include communication about proposals for collective agreements. However, employers must avoid bargaining with employees directly who have representatives acting for them as this will undermine the representative’s authority.

Mediation

Mediation of disputes is encouraged and the Authority will give priority to mediated cases that have not settled. Mediators and Authority members will be given powers to make written recommendations, with the consent of the parties, which will be binding. 

Employment Relations Authority

The Authority will also have the power to impose penalties on parties who delay or obstruct an investigation and can dismiss frivolous or vexatious proceedings, e.g. proceedings which waste time and/or have no merit.

If no action is taken on a matter for 3 years then it will be treated as withdrawn by the Authority.

Remedies

Reinstatement in dismissal cases will no longer be the primary remedy but one of the possible remedies available.

The maximum penalties will be increased to $10,000 for individuals and $20,000 for companies. These are on top of any other losses e.g. wages, compensation for hurt and humiliation.

Holiday Act changes

Employees will be able to “cash up” one week of their four weeks leave. This will only be permissible at the request of the employee and should not be discussed by parties during salary negotiations.

Employees who have irregular working hours and pay, will now have their holiday, sick and bereavement leave calculated on an “average daily pay” basis.

Employers and employees will be able to agree to transfer the taking of a public holiday to another working day.

If you are an employer or employee and would like to discuss any of the above changes please call Alan Knowsley for a relaxed and confidential initial chat.