Employment Standards Overhaul: Stop And Review

Summary of Key Changes

The main changes are:

• to extend paid parental leave to more workers and to increase the flexibility of the scheme;

• to strengthen enforcement of employment standards; and

• to address issues such as “zero-hour contracts” and other unfair employment practices.

The most significant changes to parental leave are to extend parental leave payments to employees with non-standard working arrangements (such as casual workers), to extend the entitlements to a wider group than simply biological and formal adoptive parents, and to give greater flexibility to employees for unpaid parental leave. 

Employment Standards & Unfair Employment Practices

The changes to employment standards and to unfair employment practices will be of great interest to all employers.  Employers should be aware of the following:

Minimum employment standards

There will be tougher sanctions imposed for serious breaches of minimum employment standards.  Fines of up to $100,000.00 or three times the financial gain for a company can be imposed in the most serious breach cases (such as where employees are “exploited”).

There are also clearer and more onerous record keeping requirements in terms of wages, time, holidays and leave records, and a greater emphasis on ensuring record keeping requirements are met by businesses.

Claims in relation to breaches of employment standards will be more readily referred straight to the Authority rather than to mediation.  This is because such breaches are intended to be treated seriously and are more likely to be based on disputes of fact and so require specific findings of fact to be made.

Employers will need to ensure that they adhere to minimum employment standards and that their records are accurately and consistently maintained to a high level.

Unfair employment practices (including zero-hour contracts)

After last minute negotiations between the government and opposition parties, “zero-hour contracts” will no longer be allowed.  The following practices will also be prohibited:

• Employers expecting employees to be available (i.e. on call) outside their normal working hours without a genuine reason and without reasonable compensation being offered for that availability;

• Employers cancelling a shift without providing reasonable notice or compensation to the employee for cancelling that shift;

• Employers putting unreasonable restrictions on secondary employment of employees;

• Employers making unreasonable deductions from employees’ wages.

Instead, any agreed hours must be specifically set out in the employment agreement.  If employers require employees to be available over and above the agreed hours set out in their employment agreement, employees must be reasonably compensated for that availability.  Employees will be free to decline such extra work unless they have an availability provision in their employment agreement, and they are provided with reasonable compensation for making themselves available for performing that work.

Secondary Employment

Employers will also be prevented from restricting secondary employment for employees unless they have genuine reasons based on reasonable grounds to do so.  Those grounds include any risk of loss to the employer of knowledge or intellectual property, or the employer’s competitive reputation, or preventing a real and unmanageable conflict of interest.  If by undertaking such secondary employment the employee’s performance with the employer is adversely affected then that could amount to genuine reasons based on reasonable grounds but employers will need to consider such issues very carefully before taking any action based on any such actions by employees.

Wages Protection Act

Finally, the Wages Protection Act 1983 will be amended in relation to deductions that can be made from employees’ wages.  At present, employees can give a general consent to deductions to be made from wages for amounts owed by the employee to the employer.  The changes will mean that even where there is a general consent given to lawful deductions (as is common within employment agreements), the employer must consult with the employee before any specific deduction proposed is implemented.  This does not extend to lawful deductions such as for Kiwisaver.

Deductions will not be allowed for unreasonable matters such as to cover losses caused by a third party through breakages or theft where an employee has no control over a third party’s conduct.  This change has been made as a result of some employers making deductions for matters such as petrol station drive offs, which of course are matters generally outside of an employee’s control.

Conclusion

Given the wide-ranging nature of the amendments and the number of statutes which will be amended as a result, employers are encouraged to take specific legal advice in relation to the ramifications of these changes.  It is anticipated that at the very least changes to existing employment agreements will be needed to clarify an employee’s working hours, to provide for their availability to work outside of their usual working hours, to clarify when employees will be allowed to undertake secondary work and to clarify when deductions can be made from an employee’s pay.

The above information is of a general nature only. You should contact our firm for advice relating to your specific circumstances.