Is New Zealand’s employment law landscape set to change?

Changes are coming, regardless of final make-up of Parliament

BY Gillan Service and Megan Richards 28 Oct 2023

The National Party has received the largest share of votes following the General Election and are expected to lead the next Government. While we won’t know the final make-up of Parliament until the special votes have been counted, the National Party is now in coalition talks with the ACT Party (and probably New Zealand First Party).

While employment and industrial relations were not the focus of this election, there are inevitable changes on the horizon, and employers need to be ready to adapt. At this stage, it is unclear exactly what policy changes will be implemented over the next three years, although some guidance can be gleaned from the policies proposed by each of the potential coalition parties leading up to the election.

Some of the major employment policy changes announced by these parties during their election campaigns are set out below.

National Party focuses on Fair Pay Agreements

The National Party’s campaign manifesto sets out that in the first 100 days it will:

Stop all work on Labour’s proposed Income Insurance Scheme
Bring back 90-day trial periods for all New Zealand employers
Abolish Fair Pay Agreements.

The National Party’s campaign manifesto also proposes to:

Amend current parental leave laws to allow both parents to take Government paid parental leave concurrently
Increase the cap on seasonal workers from 19,000 to 38,000
Ensure that businesses making less than $60,000 are exempt from GST
Allow additional working holiday visas for people in sectors with worker shortages.

ACT Party looks at 90-day trial periods

The ACT Party’s campaign manifesto sets out that in the first 100 days it will also reintroduce 90-day trial periods for all New Zealand employers (consistent with the National Party’s position).

The ACT Party also proposes to:

Remove the 2 January public holiday
Amend the Employment Relations Act 2000 to prevent contractors from challenging their employment status in the Employment Court
Amend the Employment Relations Act 2000 to restrict the availability of reinstatement as a personal grievance remedy
Speed up the personal grievance process by imposing stricter time limits on the Employment Relations Authority.

New Zealand First Party proposes changes to visas

The New Zealand First Party proposes to:

Restore 90-day trial periods
Restore the Targeted Trade and Apprenticeship Fund
Establish support for seniors and their employers
Replace the Accredited Employer Worker Visa with a Critical Skill and Labour Shortage Visa
Examine the feasibility of lifting the adult minimum wage to $25 per hour by allowing businesses a tax concession to do so.

What does this mean for your business?

It is likely we will see a mixture of the above proposals (or variations of) implemented in the coming years under the new National-led government. Employers will need to be alert to these proposed policies and be ready for change.

In our view, there are two key areas in employment law space that are set to change in the near future:

Trial periods: All three parties have proposed restoring 90-day trial periods for all New Zealand employers. This would mean all businesses are entitled to include 90-day trial period provisions within their employment agreements and rely on these if dismissing an employee within this timeframe. Once reinstated, your template employment agreements will need to be updated, should you wish to use trial period provisions for new employees moving forward.
Fair Pay Agreements: Both the National Party and the ACT Party have promised to abolish the Fair Pay Agreements system. If abolished, employees will no longer be entitled to bargain for such agreements. At present, it is unclear what will happen to Fair Pay Agreements undergoing bargaining at the time of any repeal. We anticipate repeal legislation will be tabled in Parliament in the near future.

Gillian Service is a partner at MinterEllisonRuddWatts in Auckland. Megan Richards is a partner at MinterEllisonRuddWatts in Wellington.