Year in review and legal outlook for 2020

by James Warren is a partner in the Employment team at Kensington Swan

Ongoing change is the notorious hallmark of New Zealand employment law, and 2019 maintained that reputation. We saw a number of fundamental revisions in the legal landscape, the full implications of which are yet to be seen. 2020, as an election year, may have less legislative reform on the agenda, but the long-term outlook remains set to “changeable”. 

2019 in review

Key legislative changes:

• Renewed focus on reinstatement as the primary remedy for employees who have been unjustifiably dismissed.
• Strengthening of union rights and collective bargaining requirements.
• Reinstatement of set meals and rest breaks, with enhanced regulation around the timing, frequency and duration of breaks.
• 90-day trial periods restricted to businesses with fewer than 20 employees.
• New protections for victims of family violence, including paid leave and flexibility around working arrangements. 
• Statutory minimum adult hourly wage increased to $17.70 (and set to move to $18.90 from 1 April 2020).

Major case law developments included:

• First instance of the Employment Court endorsing the Employment Relations Authority’s power to fix remuneration in a collective agreement.
• The Employment Court holding that financial uncertainty is a normal business risk and not a sufficient reason to offer fixed-term employment.
• Ruling that compliance orders against employers can in some circumstances be extended to holding companies and individual directors.
• Clarification of ‘availability’ rules: compulsory overtime for waged employees held to be unenforceable unless separate payment offered for that right.

Other changes of note include:

• Commencement of consultation on ‘Fair Pay Agreements’, setting out a potential new framework for the negotiation and setting of minimum terms and conditions across entire sectors.
• Government discussion paper on preventing the exploitation of ‘dependent contractors’ and the misuse of independent contractor agreements to avoid the protections and rights given to employees.
• MBIE emphasis on holding individual directors and managers to account - 19 cases taken to the Authority or Employment Court resulting in total awards of over $250,000 in wage and holiday pay arrears, and $475,000 in penalties.
• Continuing upwards trend in the value of hurt and humiliation awards to employees in the Employment Relations Authority and Employment Court.

Overall, the general picture has been one of increasing compliance risk and cost for employers.

20/20 horizon gazing

As highlighted above, the current Labour-led coalition government has introduced a range of reforms aimed at increasing the power of unions and further protecting employees.  A number of significant proposals remain on the agenda, these include Fair Pay Agreements, new safeguards for migrant workers, and potential tax changes together with new protections for independent contractors. 

The outcome of the general election scheduled in 2020 will likely determine whether these come to fruition. A National-led coalition could also be expected to reverse some of the recent reforms, but fundamental reform of the Employment Relations Act 2000 still currently seems unlikely. 

The Employment Relations (Triangular Employment) Amendment Act will come into force in June. 

This will implement a new right for employees of labour hire companies or who are otherwise working for a “controlling third party” separate from their employer to bring claims against those third parties. 

Whatever the result of the general election, the Government is likely to support the general desire amongst employers for changes to the complex and opaque obligations imposed by the Holidays Act 2003. The present review of the Act is very likely to lead to it being amended or replaced, in an effort to simplify the calculations required to manage leave entitlements and pay. 

Looking across the Tasman, numerous employee underpayment scandals have led to a focus on “wage theft”. New Australian legislation may impose criminal sanctions in this area, potentially having direct consequences for company groups which operate in both locations. Likewise, the recent introduction of the Australian Modern Slavery Act and its stronger whistleblowing protections may have an impact. These changes may also be pointers for future reform in New Zealand. 

James Warren is a partner in the Employment team at Kensington Swan, with specialist experience supporting organisations in both the UK and New Zealand with workforce change, employee relations and disputes, and the employment issues arising out of commercial transactions.