Five Employment Law Changes to Expect Under the New Government
New Zealand’s 54th Parliament has been sworn in and, as usual when there is a change in the governing parties, employment law is one of the first areas to be adjusted.
The coalition deals between National, Act and NZ First reveal plans that will likely offer employers greater flexibility. Staying ahead of these changes will allow you to adapt quickly as they are rolled out.
Here is a summary of what we know so far.
1. The End of Fair Pay Agreements
The previous government had set up a structure for industry-wide minimum standards to be bargained for and agreed. The bargaining process was underway for a number of sectors, including hospitality and early childhood education.
It is expected such bargaining will now no longer be progressed, with the new government indicating that the legislative machinery for facilitating these agreements will be repealed by the end of the year.
This means employers will have ongoing flexibility when setting pay rates and conditions, regardless of their sector and subject to any collective agreements in place.
When: Stay tuned for formal repeal in the coming weeks.
2. Expanded 90-Day Trial Periods
Currently only employers with fewer than 20 employees can impose 90-day trials for new hires. Soon this option will extend to all employers regardless of size, reverting back to the position as it stood when National was last in power.
Once this change is made, employers will be able to insert trial period provisions in employment agreements for all new staff. In the event those new recruits are dismissed within their first 90 days of employment, they won’t be able to bring a claim against their employers in relation to their dismissal.
The government has indicated that this change will not take effect until the new year, after going through a select committee process. It is possible that this means there could be further tweaks to how the 90-day trial period law operates.
The current law has caught out employers at times where they have failed to ensure the employee signs the agreement containing the trial period before starting work, or because they had previously employed the person. The new government may take the opportunity to simplify some of these requirements.
When: We’ll know more in the early new year.
3. Slower Minimum Wage Rises
In its deal with NZ First, National has committed to “moderate increases to the minimum wage every year”.
That suggests minimum wage increases will continue but likely at a reduced pace compared to recent years, where the minimum wage has increased from $16.50 in 2018 to $22.70 in 2023 — an increase of $6.20 over that period.
When: The minimum wage rates are typically adjusted with effect from 1 April each year. Keep alert for announcements on this front in the first quarter of 2024.
4. Health and Safety Reform
A strong theme in the deal between National and Act is paring back of regulation. Consistent with this comes a signal that health and safety laws will be reformed to simplify compliance requirements.
But there is little detail on what this reform will look like, and it is likely to go through a period of consultation. Until more is known, current health and safety obligations remain in force.
When: Don’t expect these changes to be implemented quickly.
5. Limits on Personal Grievances
Finally, there are indications that the way in which personal grievances are handled could be modified.
The most significant of these is the possibility that employees who earn over a certain income threshold may not be able to raise a grievance at all. Exactly what that threshold might be, or how it is calculated, is up for grabs. But inspiration may be drawn from Australia, where in some states those currently earning over $167,500 are prevented from making a claim of unfair dismissal.
The other suggestion is that employees who are at fault will not be entitled to receive any remedies even if they have a successful grievance claim. This is somewhat curious, given that the Employment Relations Authority and the Court are already required to consider whether an employee has contributed to their grievance, and to reduce remedies accordingly. They also have a discretion not to award any remedies at all. So we will need to wait and see what is intended by this suggested change.
When: Like the changes to health and safety, it is likely these tweaks will be slower to roll out and there will be plenty of warning.
What This Means for Employers
Changes in employment law are inevitable when a new government takes power. The coalition deals signal increased flexibility for employers through expansions to 90-day trials and slowed minimum wage increases. Fair pay agreements will be repealed by Christmas, but other reforms such as those to health and safety and the personal grievance regime will take more time to filter through.
The key, as always, will be to stay informed as things change and work on adapting to the evolving employment landscape.