Explainer: Employment Law Changes

April 29, 2024

The change of government means new priorities and standards for New Zealand’s employment law. This  Explainer outlines some of the changes that have been implemented already, and the changes that employers can expect.

Recent changes

Re-instatement of 90 day trials

As campaigned on by both the National and ACT Parties, and included in their coalition agreement, the Government has reintroduced the ability for all employers to include a ‘trial period’ of up to 90 days in employment contracts. Previously this was only available to employers with fewer than 20 employees. Trial periods allow for an employee to be dismissed within this period without being able to bring a personal grievance in respect of their dismissal.

This does not prevent an employee bringing a personal grievance against their employer on another matter, and employees still cannot be dismissed on the basis of any prohibited grounds of discrimination under the Human Rights Act. A trial period must also be included in an employee’s employment agreement, agreed to before the employee starts work, and cannot be contrary to any collective employment agreements that cover the employee.


Repeal of ‘Fair Pay Agreement’ Legislation

Another common policy of the National and ACT parties was the repeal of the Fair Pay Agreements Act 2022. This legislation would have allowed for unions and employer associations to bargain for minimum employment standards, which would have applied across entire industries.

Several applications were underway at the change of government, prompting a repeal of the legislation under urgency, though no agreements had been concluded at the time of the repeal.


Strengthened migrant worker protections

In January 2024, the Worker Protection (Migrant and other Employees) Act came into force, strengthening protections for migrant workers and creating stronger enforcement measures for employers using migrant labour. The Act requires employers to provide employment-related documentation within 10 working days when requested of them by an immigration officer, and enables the Chief Executive of MBIE to publish the names of employers who commit offences against the Act.

The Act also introduces new infringement offences for employers. These include allowing someone to work who isn’t entitled under the Immigration Act to do that work, getting someone to work in a manner inconsistent with the work-related conditions of an employee’s visa, and failing to comply with an immigration officer’s request for employment-related documentation.


Changes on the horizon

Simplifying the Holidays Act

One area of reform that has been a long time coming is the simplification of the Holidays Act. In 2021 the government accepted all 22 recommendations of the Holidays Act Taskforce Report, and the current government has taken up the baton as one of its upcoming legislative priorities. These changes are intended to correct the difficulty of employers to properly calculate and pay out employee holiday pay entitlements, most prominently by multiple government agencies with arrears in the billions of dollars.

The Government has not yet detailed the changes they will make to the Holidays Act, but the recommendations of the Taskforce included new formulas and tests for leave entitlements, expanded access to some currently available forms of leave, and increased transparency for employees on their entitlements.

While these changes are being determined, the current obligations still apply, including for employers to remediate historical underpayments.


Explicitly stated ‘independent contractor’ arrangements to be recognised as such

One of the most significant developments in the modern employment space is the rise of the ‘gig’ economy and ‘platform work’, where people provide services through an online platform such as an app or website. There is significant contention around whether the individuals providing these services are “employees” for the purposes of the Employment Relations Act (and therefore entitled to benefits such as the minimum wage and paid leave), or whether they are simply contractors (as the platforms’ agreements tend to stipulate).

The coalition agreement between the National and ACT parties includes a commitment to maintaining the current status quo. This will mean that workers with contracts explicitly describing their work as independent contracting cannot go to court claiming to actually be employees.


Protections for employers against vexatious Personal Grievances

The Minister for Workplace relations has also indicated changes to simplify the personal grievance process, and increase the protections for employers against vexatious complaints by employees, noting the significant burdens of legal costs and the impacts to reputation. The Minister has indicated these changes will include setting a high-income threshold above which a personal grievance may not be pursued, and to remove eligibility for remedies where the employee is at fault for the personal grievance.


Clarifying the Health and Safety at Work Act

Another priority for the Government with little revealed detail so far is a reform to the Health and Safety at Work Act. The Minister for Workplace Relations has signaled a review of the Act to check that it remains fit for purpose. Identified issues with the Act include opaque obligations for businesses, impractical requirements, and superfluous activities aimed at compliance rather than actual safety measures.

There will be upcoming consultation in the coming months on the possible changes to the Health and Safety at Work Act.


Migrant workforce changes

The New Zealand First Party’s coalition agreement with National also included commitments to changes in  employment law, largely focused on the migrant workforce. The changes agreed include improving the Accredited Employer Work Visa to focus on attracting in-demand skills and workers, making Immigration New Zealand engage in proper risk management and verification so migrants fill gaps in New Zealand’s workforce, and investigating the establishment of an “Essential Worker” workforce planning mechanism to allow for long term planning around skill and labour shortages.

The coalition agreement also included a commitment to stronger enforcement and action on migrant worker abuse. The details of these changes have not been announced yet, but a National Party member’s bill has been drawn from the ballot that will increase the maximum penalties for slavery offences in New Zealand. As a bill from a member of a governing party, it can be expected to pass.


Continued increases to minimum wage

As part of the coalition agreement between the National and New Zealand First parties, the minimum wage will continue to moderately increase yearly, starting with a change on April 1 from $22.70 to $23.15 per hour.

For further information on the issues raised in this brief, please contact Director Rob Ogilvie.

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