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Employment law reform the most significant in decades.

Employment law reform the most significant in decades.

The Government has introduced a new bill to amend the Employment Relations Act 2000, with the goals to strengthen collective bargaining, reinstate minimum standards and employee protections, and prevent 90-day trials being used by big businesses.

Proposed labour law changes.

Restoration of:

  • statutory rest and meal breaks
  • duty to conclude bargaining unless there is a good reason not to
  • earlier initiation timeframes for unions in collective bargaining
  • 30-day rule where for the first 30 days new employees must be employed under terms consistent with the collective agreement
  • union access without prior employer consent
  • reinstatement as the primary remedy to unfair dismissal.

Restriction of 90-day trial periods to small business employers (fewer than 20 employees)

Removal of the opt-out where employers can refuse to bargain for a multi-employer collective agreement

Repeal of partial strike pay deductions for low-level industrial action

Further protections for employees in vulnerable industries

The proposed changes have received mixed reaction from employers and government officials. Contention about the employment law reforms focus on fears about increased costs and reduced flexibility for businesses, leading to a risk of a shrinking jobs market, according to Government officials.

In a regulatory impact statement from the Ministry for Business, Innovation and Employment, they identified the following risks associated with the Employment Relations Amendment Bill:​

  • reduced employment due to changed incentives on employers to hire new workers
  • an increase in industrial action and protracted bargaining due to the need to conclude agreements and include pay rates in collective agreements
  • an increase in partial strikes by removing an employer’s ability to deduct pay for partial striking
  • lower productivity due to less flexibility (mainly from the need for guaranteed meal breaks).

While these bold predictions are likely to impact New Zealand’s economy, in particular, there are four key changes most likely to directly affect small business.

Collective bargaining.

Businesses will be concerned about the measures that are proposed for essentially unlimited union access, particularly the collective bargaining parameters where if a union initiates collective bargaining with a business they must negotiate.

90-day trial periods.

Restricting the availability of 90-day trial periods to small businesses is a better outcome than removing them altogether. Trial periods allow opportunities for an untried employee while reducing the ‘unfair dismissal’ risk to the employer of it not working out. This is a very real issue for small businesses.

Unfair dismissals.

At the same time, the Government has decided to change the rules around unfair dismissals, with reinstatement to again be the primary remedy to an unfair dismissal. This will restore an onus on employer and employee to work positively together following a challenged dismissal process – perhaps a good discipline on both parties following an employment relations breakdown.

Meal and rest breaks.

The current system – allowing employers and employees to mutually agree on when meal and rest breaks can be taken, depending on the needs of the business – will be changed to a system of statutory breaks with flexibility allowed only in essential services. Changing to a more regulated approach isn’t ideal for business agility, and will add another layer of complexity for managing people in the workplace.

Be prepared.

The changes announced seek to improve the position of employees across the board, amending legislation passed by previous National governments. Although they may wind the clock back in certain areas, the changes announced so far have been predictable and tempered with an understanding of small business realities. It is vital for employers to be aware of any implications for their own business and prepared for the Bill to become law.

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