Publications
Tinkering with employment law: changes to consider
With major reform completed in recent years, the Government is now tinkering away at the edges of employment law. Amending legislation is being contemplated or introduced and Parliament is also being asked to consider a number of Members' Bills. In this update we provide a short overview of changes – proposed and certain - and their impact for employers and employees.
Employment Relations Amendment Act
Certain amendments have been introduced to clarify the protections available to "vulnerable" employees under the Employment Relations Act. The amendment arose following the Employment Court decision in Gibbs v Crest Commercial Cleaning Limited.
In this case, the court determined that the particular wording of the Act introduced in 2004 did not cover "second generation contracting" or "succession contracting". These contracting situations generally occur where a function is contracted out and the principal chooses to change the company that is contracted to provide the services.
The amendments provide that the increased protections available to vulnerable employees will apply in situations of sale or transfer, contracting-in, contracting-out, and subsequent contracting. The Act now sets out examples of each type of situation. This means in each of these contracting situations, employees who are deemed vulnerable have a right to elect to transfer to the new employer. For example, if company A lost a cleaning contract to company B, the company A employees could choose to transfer to company B (even though they would have no prior connection with company B).
Employers need to bear in mind these changes if and when considering changing contractors in "vulnerable areas". The areas depend on the particular industry but may include cleaning, laundry, orderly and food catering services. The amendments may also be relevant to contractors when pitching for work in these areas.
KiwiSaver scheme
The KiwiSaver Act was a key plank of the Government's 2005 Budget, and is an attempt to encourage retirement savings by encouraging employees to join a voluntary scheme where retirement savings are deducted from their wages or salaries.
After 1 July 2007, the scheme will start automatically for people who begin employment, change employers and those who opt-in to join. It will not apply to existing employees, except for those that opt-in.
Employees may already be starting to think about whether they wish to be part of the scheme.
Employers may wish to consider whether they should nominate a scheme for their employees; whether they wish to add employer contributions and the future of any existing superannuation schemes in place. Closer to the introduction, employers will also need to become alert to their administrative obligations under the KiwiSaver Scheme - including information that needs to be provided to new employees and obligations in deductions for savings.
Parental leave for self-employed
Parental leave legislation was extended to cover self-employed people as well as employees, earlier this year. In addition to people with their own businesses, this could have implications for organisations that contract with self-employed businesses. These amendments also reduced the time that is allowed between taking parental leave to six months (reflecting the minimum period to qualify for parental leave).
Law Reform (Epidemic Preparedness) Bill
This Bill would allow for additional powers in the event of an outbreak of avian flu or a similar epidemic. This Bill has yet to be reported back from select committee and there may be further changes before it becomes law. It could, however, come into force later in the year.
In its present form, the legislation would enable the Government to issue an "epidemic notice", which would trigger a range of rights and obligations – allowing various health and security measures to be taken to control the spread of an epidemic, and unlocking administrative powers to cope with possible social consequences. Among other things, employers would be given power to direct employees to take annual leave without the 14 days' notice that is usually required.
Members' Bills
There are a large number of employment-related Members' Bills in the legislative process. These include:
- Wayne Mapp's Employment Relations (Probationary Employment) Amendment Bill which proposes a 90-day period where employees could be dismissed without recourse to a personal grievance. Although the withdrawal of Maori Party support means the Bill is unlikely to progress, the issue of probationary periods is likely to reappear on the agenda in future.
- Sue Kedgley's Employment Relations (Flexible Working Hours) Amendment Bill which proposes requiring employers to honour parents' requests for flexible working arrangements. The Bill has been put on hold for a year to allow the Department of Labour to undertake further studies.
- Sue Bradford's Minimum Wage (Abolition of Age Discrimination) Amendment Bill which proposes removing the "youth rates" component of the minimum wage legislation.
- Easter Trading Bills - various Members' Bills before Parliament propose lessening the restrictions on shop trading hours over Easter (which has been a contentious issue over recent years).
Employers would be well-advised to consider the possible effects for their business of these various actual and proposed changes in employment legislation.
For further information, please contact your usual Bell Gully advisor or:
AUCKLAND
Rob Towner
Partner
WELLINGTON
Andrew Scott-Howman
Partner
Matt McGoldrick
Solicitor
Disclaimer
This publication is necessarily brief and general in nature. You should seek professional advice before taking any action in relation to the matters dealt with in this publication.
