New employment standards

A number of changes have been made to core parts of New Zealand’s employment law after the Employment Standards Legislation Bill came into force on 1 April. Here’s what you need to know

The main changes that will affect employers are:

• Paid parental leave has been extended to more workers and also made more flexible.
• Enforcement of employment standards has been strengthened.
• Zero-hour contracts and other unfair employment practices have been prohibited.

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

Employment standards and unfair employment practices
These changes could be particularly relevant to those in the construction industry, as they outline when deductions can be made from an employees’ wages and address work outside of agreed times. Employers should be aware of the following:

1.Minimum employment standards
There will be tougher sanctions imposed for serious breaches of minimum employment standards. Fines of up to $100,000 or three times the financial gain for a company can be imposed in the most serious cases (such as where employees are “exploited”).

There are also clearer and more comprehensive record keeping requirements in terms of wages, hours worked, holiday 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 Employment Relations 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; therefore,
they require specific findings of fact to be made.

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

2.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 (ie, on call) outside their normal working hours without a genuine reason and without reasonable compensation 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 are 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.

A) Secondary employment

Employers are also prevented from restricting their employees’ secondary employment opportunities, unless they have genuine reasons to do so. Those reasons include any risk of loss of knowledge or intellectual property to the employer, or competitive reputation, or preventing a real and unmanageable conflict of interest.

If an employee’s performance with their employer is adversely affected by secondary employment, then that could amount to genuine reasons based on reasonable grounds. However, employers will need to consider such issues carefully before taking any action.

B) Wages Protection Act

Finally, the Wages Protection Act 1983 was amended in relation to deductions that can be made from employees’ wages. At present, employees can give a general consent for 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 is implemented. This does not extend to lawful deductions such as KiwiSaver.

Deductions will not be allowed for unreasonable matters, such as covering 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.

3.Meeting your requirements
Given the wide-ranging nature of the amendments and the number of statutes amended as a result, employers in the construction industry are encouraged to take specific legal advice in relation to the ramifications of these changes.

For employers, it is anticipated that changes to existing employment agreements will be needed to ensure compliance. At the very least, changes should:

• Clarify an employee’s working hours.
• Provide for their availability to work outside of those hours.
• Clarify when employees will be allowed to undertake secondary employment.
• Clarify when deductions can be made from their pay.
  

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This article was prepared by Andrew Marsh, a Partner of Saunders Robinson Brown. Andrew specialises in employment law and heads Saunders Robinson Brown’s employment team. If you have any queries in relation to this article or any general employment matters, please contact Andrew Marsh on (03) 377-4470 or andrew.marsh@srblaw.co.nz

The information in this article is intended as a general guide only and is not intended to be legal advice. Detailed advice should be obtained to cover a specific situation.