Five major changes to employment law in NZ

There are five pending changes to employment law which all employers need to be prepared for

Five major changes to employment law in NZ

There are five pending changes to employment law which all employers and business owners need to be prepared for, according to Ashlea Maley, Senior Workplace Consultant at Employsure.

This is due to the Employment Relations Amendment Act 2018, the Domestic Violence Victims’ Protection Act 2018, and the Minimum Wage Order 2019. These include:

1. The Minimum Wage increase
2. Reinstatement of set meal and rest breaks
3. Limiting of 90-day trials to businesses with fewer than 20 employees
4. Leave entitlements and protections for victims of domestic violence
5. Strengthened collective bargaining and union rights

In particular, small businesses often find wage changes confusing and frustrating. They require time and meticulous planning to forecast and adapt to the changes and factor them into the way you do business, according to Maley.

“There is no way to escape wage increases. The only thing you need to worry about is how you keep your business running smoothly with the extra expenses,” Maley said.

While the Government, unions, and activists say the costs of minimum wage hikes are negligible, small business will feel the greatest impact.

Maley said it’s easy for Government and the unions to say the impact is inconsequential but it is small and medium businesses who struggle to offset

those costs: “The cost of doing business becomes more challenging as mandatory wage increases are introduced. Small business employers often need to reduce the number of staff to keep up with rising costs or increase their prices,” she said.

Minimum wage increases are a topical public debate because employees, customers, and employers are all impacted: “The minimum wage increase could have a domino effect with product and service prices passed onto customers,” she said.

What employers can do to be ready for the increase
From 1 April 2019, the Adult Minimum Wage will increase by $1.20 per hour to $17.70 an hour. The Starting-out and Training Minimum Wage rates will increase from $13.20 to $14.16 per hour; remaining at 80% of the Adult Minimum Wage.

“For any adult employees not currently earning at least $17.70 an hour, this pay increase is a variation to their employment contract,” said Maley.

“You may need to provide them with a variation in writing and make the relevant changes to their pay and pay slips.”

“Being fully aware of the wage increases is something that is vitally important to running a business. Employees have to be paid at least the minimum hourly wage rate for every hour worked.”

So is this increase likely to encourage other workers (i.e. those one step above the minimum wage) to demand pay increases too? And what should employers to do control/meet those demands?

“For more senior and experienced employees already earning more than the minimum wage, you may want to consider what impact this will have on those employees,” she said.

“Bear in mind that there are other benefits you may be able to offer them that will not add to your wage bill.

Offering flexible working conditions is a common way to keep your team happy. It may cause some minor inconveniences at times, but it is a cheap and extremely effective way to make people happy without adding excessive financial pressure to your business,” she said.

This is the second jump in the minimum wage and there were a number of impacts noticed last time.

Maley added that any time small businesses are faced with rising labour costs, they often find other ways to offset the increase, such as raising prices and reducing hours.

“To make up for higher costs, some employers raise prices, cut hours for their existing employees, reduce staff numbers, or start working more shifts themselves.”

However, according to Maley, not all employers will be required to increase employees’ wages, provided the rates currently paid are above the increased minimum wage rates being introduced.

However, if employers pay at the current minimum wage rates, they should start forecasting the increase to their wages bill, and increase pay only from 1 April 2019.

Changes to rest and meal breaks
Rest and meal break rules will be introduced from 6 May 2019. There is a return to more regulation about the timing, frequency and duration of breaks.

“Employers and employees will need to mutually agree when breaks are to be taken. This agreement could be outlined in the employment contract, in a roster or in another system.”

“If there is no agreement set out, the law will require the breaks to be in the middle of the work period, so long as it’s reasonable and practicable to do so. Employers must pay for minimum rest breaks but don’t have to pay for minimum meal breaks.”

It’s also important to remember an employee must be given their entitled breaks; “Breaks cannot be exchanged for extra pay or time in lieu.”

Ensuring adequate breaks can make a noticeable difference to an employee's physical and mental well-being at work.

“People can't keep performing at a high level without having breaks of some sort,” said Maley.

“These should be matched to the nature and intensity of the work, for example a construction worker may need short frequent breaks to relieve the pressure of operating loud machinery or heat conditions.

“Employers need to account for factors that lead to fatigue or impact on an employee's ability to perform work effectively, under their workplace safety obligations.”

90-day trial periods
From 6 May 2019, 90-day trial periods will be restricted to businesses with fewer than 20 employees.

“If you want to use a 90-day trial period for a new employee, it remains crucial that, before starting work for you, the employee has signed an employment agreement containing such a clause.”

Larger businesses with 20 or more employees will no longer be able to use 90-day trial periods. However, they may continue to use probationary periods to assess an employee’s skills against the role’s responsibilities.

“We hear from SME and large business clients that the 90-day trial periods allow them to fill roles quicker and minimise the risk of unjustified dismissals as they assess cultural fit and if the employee has the right skills for their business growth.”

However, Maley said, “The safest defence against hiring the wrong employee is having a vigorous recruitment process.”

Domestic violence leave
From 1 April 2019, victims affected by domestic violence will have the right to request a short-term (up to two months) variation of their working arrangements. This could include variation to days and hours of work, place of work, and duties.

Requests can only be refused by an employer on certain grounds.

Maley said if you receive a request in writing, you must respond to it within ten working days.

“If you wish to request proof of the issue (such as a medical certificate, court order or police report), you must ask for this within three working days of receiving the request.”

An employee who has been working for you for more than six months will also be entitled to ten paid days leave to deal with effects of domestic violence on themselves or a child.

“If you are in any doubt about how to respond to an employee, please seek appropriate workplace specialist advice without delay.”

How the powers of unions and collective bargaining are changing
The 30-day rule will come back from 6 May 2019. This means that for the first 30 days, new employees must be employed under terms consistent with the collective agreement.

The employer and employee, may, however agree more favourable terms than the collective.

Union representatives also have the right to enter workplaces without consent, provided the employees are covered under, or bargaining towards, a collective agreement.

However, Maley said union representatives can only enter your workplace for certain purposes, must be respectful of normal operating hours, and follow health, safety and security procedures.

Where no collective agreement or bargaining exists, union representatives still need to seek consent before entering your workplace.

“Balanced and constructive engagement between employers and unions can be positive for everyone.”

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