Government set to shake up employment law

The Government is progressing its employment agenda, with the minimum wage increasing from 1 April and its proposed changes to the Employment Relations Act currently before a select committee

Changes to increase the minimum wage to $16.50 an hour, which took effect at the beginning of this month, are only a small part of the Government’s plans to overhaul New Zealand’s employment laws.

The Employment Relations Amendment Bill passed its first reading in Parliament in February, with a select committee report due in August. The proposed changes include limiting the 90-day trial period to businesses with fewer than 20 staff and the restoration of statutory rest and meal breaks, as well as rolling back a number of changes made by the previous National Government.

However, Jennifer Mills, Head of National Employment Law Practice and Partner at Anthony Harper, expects that the proposed changes won’t have a substantial effect on the construction industry.

One of New Zealand’s leading employment lawyers, Ms Mills says that the majority of the proposed changes are aimed at strengthening unions’ rights and obligations around collective bargaining.

“In New Zealand, unions tend to deal with larger employers and the level of membership tends to be quite low in the private sector. As such, most small businesses are not likely to be significantly affected by the majority of the proposed changes.”

She added that the nature of the building and construction industry also meant that there was not a strong union presence within the industry.

Hiring unlikely to be affected

Ms Mills says that employers’ hiring intentions are generally driven by their business needs and commercial demands, and doesn’t think restricting companies with 20 or more staff from using 90-day trials will significantly affect hiring intentions.

“However, it will cause employers to be more cautious when hiring new employees and they may become more reluctant to take a chance on certain job applicants. This may affect job opportunities for young people and workers who are looking to change careers, among others.”

Auckland-based builder and managing director of Court Construction, Cam Court, agrees the overall affect may not be wide-reaching, but believes the 90-day trial should remain available to all employers.

 “Current employment laws are very employee-focused and it can be difficult to move people on if they don’t work out. Having the 90-day option gives businesses the confidence to trial someone, and we desperately need to increase the number of people joining our industry.

“It would be unfortunate to see bigger companies, who are large employers, deterred from trialing potential apprentices because of that risk.”

Probation period viable alternative

Ms Mills says that employers unable to use 90-day trials could consider using probationary periods as an alternative screening tool.

“Although this doesn’t prevent an employee from raising a claim of unjustified dismissal, probationary periods can make it easier for employers to justify the dismissal of new employees who have not performed to the expected standard,” she says.

“The courts have acknowledged that the procedural requirements leading up to dismissal tends to be less stringent when an employee is on a probationary period. In addition, employers will have greater flexibility to decide on a reasonable probationary period, which is not limited to 90 days.”

Breaks still negotiable

Concerning the reintroduction of statutory rest and meal breaks, Ms Mills says that employers and employees can still negotiate when breaks are to be taken.

“If an employee and employer have agreed on the times at which the employee will take rest and meal breaks, then these breaks must be taken at the agreed times,” she said.

“In the absence of an agreement between the parties, the Bill provides a prescriptive regime for when each break will be provided.”

For a six to eight hour day, an employee is entitled to two ten-minute paid rest breaks and one thirty minute meal break. Employee’s working more than eight hours in a day will be entitled to additional rest and meal breaks.

Ms Mills also said that the proposed changes would not affect whether a person can be engaged as a contractor or employee, and are not intended to affect workers who are legitimately employed as contractors.