Jennifer Wyatt Sargent of Wyatt Sargent & Associates Ltd explains the major changes for New Zealand employers brought into effect by the Employment Standards Legislation Bill.
One bill – the Employment Standards Legislation Bill – gave rise to five amendment Acts, which all came into force on 1st April 2016. They are intended to address concerns over poor compliance across all industry sectors. However, the changes seem to have been designed for standard working relationships, which means some non-standard employers may struggle to apply them to their businesses (think agriculture which is often criticised for non-compliance with minimum employment standards).
Most employers are aware of, and comply with, employment standards: basically the need to provide minimum entitlements regarding public holidays, annual leave, sick leave, pay, etc, and to ensure each employee has an employment agreement. It’s the small proportion that don’t plus the serious repercussions this can have for vulnerable people such as immigrants and unskilled workers that led to the changes. For example, the Masala chain of Indian restaurants where two managers paid workers as little as $2 an hour and one also pleaded guilty to immigration and exploitation charges
Zero hour contracts are now prohibited. Under the Employment Relations Amendment Act (No. 3) 2016, employers are required to include the agreed hours of work in employment agreements and employees can refuse additional hours without being penalised in any way providing the agreement does not contain an availability provision.
An availability provision whereby an employee has to make him/herself available to accept any work from the employer can only be included if the agreement provides guaranteed hours of work to the employee. The employer has to have genuine reasons based on reasonable grounds for including an availability provision (e.g. businesses like airlines and health care) and the employee has to be paid reasonable compensation for being available, whether the work eventuates or not.
Employers are now limited in their ability to prohibit or restrict an employee from obtaining secondary employment. Prohibiting an employee from working for another employer is unenforceable unless there are genuine reasons for the prohibition and those grounds are expressly recognised in the employment agreement. Genuine reasons can include commercially sensitive information, intellectual property and the avoidance of conflict.
Employment agreements must include a reasonable period of notice for the cancellation of shifts and the compensation to which the employee is entitled if that notice period is not complied with. If these provisions are not included in the agreement, or the employee is not told of the cancellation until the start of the shift, or the shift is cancelled part way through, the employee must be paid for the shift in full. There are some potential issues. The compensation to which the employee will be entitled will presumably take into consideration any costs the employee will have incurred to get to work in time for the shift (e.g. childcare, travel costs); it is likely that more notice will be required where the employer has more control over the cancellation of the shift; and a shift is not defined, so while it covers genuine rostered workers, it might end up covering 9 to 5 workers as well.
The onus is on employers to show justification for any actions that lead to breaches of the provisions covering agreed hours of work, availability provisions, the cancellation of shifts and secondary employment as such breaches constitute an unjustified disadvantage.
Most employment agreements contain a clause permitting the employer to deduct money from an employee’s pay (e.g. overpayment of wages). Under the Wages Protection Amendment Act 2016 the employer must consult with the employee before making a specific deduction under this clause and get the employee’s written consent. Unreasonable wage deductions (think people leaving petrol stations without paying and the petrol company then deducting the money from the employee on duty at the time) are not permitted, regardless of whether the employee has given their consent.
If an employee has not been paid wages or has been paid less than the amount prescribed by the Act, the Minimum Wage Amendment Act 2016 allows unpaid/underpaid wages to be recovered despite any express or implied agreement by the employee to the non-payment or underpayment. The wages in question can also be recovered from people other than the employer.
Under the Parental Leave and Employment Protection Amendment Act 2016 changes to parental leave mean maternity leave is replaced by primary carer leave, which has been extended to cover all permanent relationships and non-standard workers. Government-funded primary care leave has been extended to 18 weeks. Employers will need robust systems to ensure people don’t abuse the changes to parental leave.
The Holidays Amendment Act 2016 enables unpaid holiday pay entitlements to be recovered from the employer or from people directly involved in the non-compliance. Holiday and leave records must include the number of hours worked each day and the pay for those hours for all waged and salaried employees. The “usual” hours of salaried workers include additional hours worked by the employee in accordance with their employment agreement and those additional hours must be recorded to ensure, for example, the extra hours don’t cause the employee’s hourly rate to drop below the minimum wage. The calculation of holiday pay is an area that has already attracted a lot of attention where non-standard working arrangements are concerned (think the underpayment of holiday pay by the Ministry of Business Innovation and Employment – the organisation responsible for monitoring and enforcing minimum employment standards).
The above Acts significantly enhance the enforcement of minimum employment standards with:
- Name and shame provisions
- Preventing a person from employing or being involved in the hiring of employees for up to 10 years
- Penalties of up to $50,000 for an individual employer and up to $100,000 or three times the amount of the financial gain arising from the breach (whichever is the greater) for a body corporate
- Extending liability for breaches of certain minimum entitlements to people involved in the breach
- Record keeping being sufficiently detailed to demonstrate the organisation’s compliance with minimum entitlement provisions.
All employment agreements that came into effect on or after 1st April 2016 must comply with the changes. Employers have a transition period until 1st April 2017 to ensure existing employment agreements comply.
To discuss the information in this article or for more Human Resources advice please contact Jennifer Wyatt Sargent at Wyatt Sargent & Associates Ltd. This article was previously published in “Window on Swanson Road”, Issue 91, June/July 2016.