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Employment Changes – What will they look like?

Now is the time to sit back and reflect on what the potential employment landscape will look like going into 2018-19 year with the influence of the Labour-led Government.

We are all aware the minimum wage has increased from $15.75 per hour to $16.50 per hour. The Government's target is that the minimum wage will be $20 per hour by 1 April 2021. What does this mean for every other employee? With a labour shortage in particular skilled areas and shortages to find employees, an expectation for pay rises will be seen and it is likely these will be reflective of the % increase in the minimum wage. The current increase was approximately 5% and it would not be unreasonable to expect employees to requesting a similar percentage increase in their pay packets.

Equal Pay has commonly been bandied around in the media on the basis that gender should not influence what people are paid. Labour is considering a Bill to be bought before the House that will smooth the way the woman bringing claims to the courts if they feel that not been paid equally. For many of us who are employers I believe we would all agree that a person should be paid for a day’s work done regardless of race, sex or religion.

The current paid parental leave is for 18 weeks. From July 1 this increased to 22 weeks and further increases to 26 weeks from July 1, 2020.

One of the more interesting proposals that would cover into effect is the idea of independent contractors. I have always applied the saying if it looks like a fish, smells like a fish, then it is a fish. A contractor should be exactly that; they are independent of the organisation and ply their services for trade in exchange for remuneration. The concept of dependent contractor is that of someone who is effectively under the “control” of an employer but do not have the legal rights of an employee. The concept of dependent contractors has come out of recent UK court decisions giving them minimum protections but not full employee rights. This will create an interesting hybrid whereby for tax purposes they will be contractors and entitled to the full deduction of expenses against gross income but enjoying the protection of rights as an employee. We look forward to IRD’s comments that will come out in regards to their take of the concept of dependent contractors.

It is likely that collective-bargaining will return back to the table with unions given the right to initiate collective-bargaining in advance of employers with duties under collective-bargaining to reach an agreement. There is likely to be a tightening around rules restricting collectively negotiated terms to be passed onto non-union employees thereby strengthening the position of unions. Further the Government aims to put a legislative framework in place to allow unions and employers to create fair pay agreements. These agreements will set minimum conditions such as wages, allowances, weekend and night rates, hours of work, and leave arrangements for workers across any particular industry rather than between employee and employer.

Trial periods were introduced by the National government as a way of encouraging employers to take a “punt” on employees. It is likely the current Government will modify these trial periods to include reasons for dismissal. Lawyers will be locked out of the dispute resolution process rather unjustifiable dismissal claims will be heard by a “simple, fair, and fast referee service”. The decisions will not be open to appeal. If such a scheme was to be introduced it would mark a fundamental change in the way the current dispute system works and add additional complications to the employment dispute resolution regime.

In 2011 the concept of reinstatement as a primary remedy for employee disputes under a dismissal was removed and treated equally with other remedies that could be considered. By bringing back reinstatement as a primary remedy it will be the first thing to consider as a remedy to an unjustifiable dismissal which could cause conflict within smaller organisations and undermine a “team” environment.

In 2008 a Ministerial Advisory group recommended a statutory entitlement for redundancy of at least four weeks paid for the first year of service and two week’s pay for every subsequent year up to 20 years. This would mean that if an employee was with the same company for 20 years they would be entitled to 42 weeks of redundancy under the proposed scheme. While the current Government has not adopted this recommendation, they do wish to begin consultation on improving minimum redundancy provisions within contracts to protect employees.

While some proponents may argue that employment law has swung more towards protecting the employer over the employee, there is a balancing act between stimulating growth within businesses and being stifled by unnecessary employee actions. Every good employer will always encourage and reward good employees and my concern is that some of the proposals likely to be instigated over the next three years of office could have long-term and negative impacts upon smaller employers. These will be interesting times.

Written by David Waine


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