With National having reached coalition agreements with both ACT and New Zealand First, we now have the first real picture of the new government’s agreed policy agenda. So, what is on the cards for employment law in the next term, and how does the agreed policy match up with the parties’ election platforms?
Reinstatement of trial periods for all businesses
Currently, only employers with 19 employees or less can rely on a trial period. National and ACT have promised to reinstate the 90-day trial period for all employers within their first 100 days. This would allow any employer with a compliant trial period in their employment agreement to dismiss an employee within the first 90 days of employment. The employee would be statutorily barred from raising a personal grievance relating to the dismissal.
Fair pay agreements
The former Labour government had established the fair pay agreements (FPA) scheme, which provided a mechanism for collective bargaining to be initiated across an entire industry or occupation. A FPA would bind all employers within that industry, or all employers that employ employees within that occupation. The wide scope and binding nature of these agreements have been unpopular with employers and employer advocacy groups.
National has fervently objected to the FPA system since its introduction. In agreement with ACT, National has committed to repealing the FPA system by Christmas 2023. No FPAs have been implemented yet (although bargaining has been initiated for several), so their repeal should not mark a significant change to the industrial relations landscape.
Employment status and contractor arrangements
At present, a person working as an “independent contractor” can challenge their employment status and seek a declaration that they are in fact an employee. This applies whether or not the worker has signed a written independent contractor agreement. Unlike employees, contractors are not afforded the protection of the Employment Relations Act 2000 (like the ability to raise a personal grievance) or the benefits provided by the Holidays Act 2003 (such as annual and sick leave).
The new government has pledged to “maintain the status quo that contractors who have explicitly signed up for a contracting arrangement can’t challenge their employment status in the Employment Court”.
What is meant by “maintain the status quo” is not entirely clear. The status quo would mean leaving the law as currently drafted, which requires an assessment of the ‘real nature of the relationship’, based on all the facts of a case. The existence of a signed contractor agreement is not determinative. The Employment Court has adopted a purposive approach in recent times to interpreting the law, with a focus on ensuring that workers who are vulnerable workers are afforded employment protections. However, this appears to be at odds with what the political parties now forming the government campaigned on. The ACT party in particular wishes to see a greater emphasis on the contract the parties have signed. This would provide certainty regarding employment entitlements and litigation risk to those engaging contractors, but is not “maintaining the status quo”. Such a change in approach would require a change to the law.
This is an area to watch going into 2024.
Simplifying personal grievances
During its election campaign, ACT pledged to remove an employee’s entitlement to remedies if their conduct was at fault in the personal grievance. This is going to be “considered” under ACT’s coalition agreement with National.
Currently, if an employee is held to have contributed to the circumstances giving rise to the personal grievance, the remedies they are entitled to can be reduced. However, reductions over 50% are rare, and the courts have been unwilling to reduce remedies by 100%.
Under the National/ACT coalition agreement, the government has also agreed to consider implementing an income threshold for raising personal grievances, under which any employee over a certain income threshold would be prohibited from raising a personal grievance. This is similar to the current position in Australia, where the threshold is approximately NZ$180,000.
New Zealand First has secured National’s agreement to moderate increases in the minimum wage each year. This reflects a slight departure from the election promise of raising the minimum wage to $25.
As part of its 100-day plan, National has committed to stopping work on the proposed Income Insurance Scheme.
Health and safety
National and ACT have agreed to “reform health and safety law and regulations”. It is not entirely clear what this would entail, however, the phrasing suggests that it may involve amendments to the Health and Safety at Work Act 2015 and subsequent regulations. ACT campaigned on providing greater certainty and protections for businesses when implementing health and safety measures such as mandatory COVID vaccinations within the workplace. The nature and scope of any agreed reforms are currently unclear.
Possible changes in the future
Notably, several of ACT and New Zealand First’s promises did not make it in the coalition agreements. Whether these will find their way into the legislative agenda in the future is yet to be seen. These include:
- Enforcing strict KPIs for Members of the Employment Relations Authority, requiring they issue judgments within one month;
- Removing reinstatement as a potential remedy for personal grievances;
- Restoring the Targeted Trade and Apprentice Fund; and
- Implementing a Seniors Employment Plan.
In sum, the coalition agreements indicate the new government’s desire to be seen to provide more certainty to employers. Beyond reversing some of the previous Labour government’s initiatives, it will be interesting to see the direction the new coalition government will take employment law over the next few years.
For more information, or for specialist advice on any employment issues, please contact a member of our employment law team.
Disclaimer: The content of this article is general in nature and not intended as a substitute for specific professional advice on any matter and should not be relied upon for that purpose.