What do HR leaders need to know?
The passing of the new Employment Relations Amendment Act will introduce four key changes to New Zealand's labour law.
Workplace Relations and Safety Minister Brooke van Velden previously said the bill is about "backing business to hire with increased confidence."
"Rebalancing the employment relations settings, as this law does, brings more choice for businesses and workers to create and enter working arrangements that suit their individual needs," van Velden said in a previous statement.
Leading law firm Bell Gully also described the changes as "significant" and that they will "strengthen the position of employers."
'Specified contractor' concept
One of the four key changes under the amendments is the new "specified contractor" concept.
"Any worker who performs work arrangements that meet a specific set of criteria will be a "specified contractor," and they will be excluded from the definition of an employee that currently applies under the Employment Relations Act 2000," Bell Gully explained.
The concept comes after a controversial employment dispute between Uber and four of its drivers over the latter's employment status.
The Supreme Court ruled that the drivers were employees of Uber, a decision that the ride-hailing platform said "casts significant doubt on contracting arrangements across New Zealand."
Personal grievance changes
The second key change is the change of remedies under the personal grievance regime.
Under the amendments, payouts for employees who are found guilty of serious misconduct will no longer be available.
Bell Gully said this represents a view that the "Employment Relations Authority and the courts should prioritise consideration of the reason for an employer's action or dismissal over the process by which the employer reached that decision."
The change comes after the government noted the rising average compensation for hurt and humiliation in legal disputes, while the average reduction in remedies for contributory behaviour is decreasing.
Van Velden also noted that there are instances where employers end up paying or reinstating a former employee who had engaged in serious misconduct.
"This is not the balance personal grievances are meant to strike," she previously said.
Income threshold for unjustified dismissal
The third key change is the introduction of a high-income threshold for unjustified dismissal claims.
"Employees whose annual remuneration meets or exceeds NZ$200,000 cannot raise a personal grievance in respect of their dismissal," Bell Gully said.
Van Velden previously said in a statement that this reform aims to provide greater labour market flexibility.
"Workers who are wanting to move up the career ladder and be considered for more challenging positions will benefit from this policy," she said.
"This policy allows employers to give workers a go in these high-impact positions, without having to risk a costly and disruptive dismissal process if things don't work out."
Removing the 30-day rule
The fourth key change is the removal of the 30-day rule for employment arrangements.
In New Zealand, a new hire's contract was previously required to reflect a collective agreement within their first 30 days, regardless of whether they choose to join a union.
Van Velden previously said this status quo was "convoluted and confusing," while adding another administrative cost and dragging workplace productivity.
The change under the Employment Relations Amendment Act will allow employers to offer a different individual employment agreement to a new hire from day one, even if there is a collective agreement covering the role.
"If a new employee chooses to negotiate the terms and conditions that suit their personal preferences or situation, they should have that choice realised from day one of employment," van Velden previously said.
The changes under the Employment Relations Amendment Act are expected to take effect the day after Royal Assent.
