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Employment Relations Act 2000 - Key Changes

Francis Peters
Francis Peters

ARTICLE by Kim Wight, Solicitor and Francis Peters, Solicitor

May 2011


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EMPLOYMENT RELATIONS ACT 2000 – Key Changes:

THE HOLIDAYS ACT 2004 – Key Changes:

Changes to the Law on Employment Relations and Holidays:

INTRODUCTION:

As from 1 April 2011 there are significant changes to the law governing the relationship between an employer and their employees.

The changes can be broken down into two parts. The first part relates to changes to the Employment Relations Act 2000. The second relates to changes to the Holidays Act 2003.

Generally, the changes to the Employment Relations Act affect both employee and employers, and govern the relationship between them , in relation to employment agreements, personal grievances and trial employment periods.

Changes to the Holidays Act affect employees leave entitlements and relate largely to employees absences from work.

EMPLOYMENT RELATIONS ACT 2000

The key changes can be summarised as follows:

  • requiring employers to retain employment agreements;
  • extending the 90 day trial period for new employees to all businesses;
  • changes to union access to workplaces;
  • changes to the personal grievance provisions;
  • changes to penalties and remedies;
  • the role of mediation.

THE HOLIDAYS ACT 2004:

The key changes to the law can be summarised as follows :

  • allowing employees to ask to cash up a maximum of one week of annual leave;
  • changes to the calculation of payments for public holidays, alternative holidays, sick leave and bereavement leave;
  • requirements regarding requesting proof of sickness or injury;
  • changes to transferring the observance of public holidays

 

 

Requiring Employers to Retain Employment Agreements (comes into force 1 July 2011):

Employers will be required to retain a signed copy of the employment agreement or the current signed terms and conditions of employment.

Where an employee has been provided with an intended agreement, the employer must retain a copy of the intended agreement regardless of whether or not it has been signed.

An employer must provide a copy of the agreement on the request of the employee.

The requirements above are being put in place to ensure that an employee has access to their employment agreement and that the agreement is maintained.

 

Extending the 90 Day Trial Period for New Employees to all Businesses:

Previously the law, allowing a new employee to be on trial for 90 days, was only applicable to employers with fewer than 20 employees.

Changes to the law mean that the 90 day trial period for new employees is now extended to cover all employers, regardless of how many employees that are employed by a business.

 

Changes to Union Access to the Workplace

Under the new law union representatives must gain the permission of the employer prior to visiting the workplace. However, an employer must not unreasonably withhold their permission. If an employer does withhold their permission, then they must provide written reasons no later than one working day after the date of the decision. This asking of permission is now mandatory by virtue of s20A of the Employment Relations Act 2000

Prior to the amendment, unions possessed the unencumbered right to access the workplace to discuss union business or to recruit potential members.  While unions had to exercise this reasonably and take into account normal business operations, they did not have to ask the permission of the employer.  

An employer has one working day to respond after a request from a union to visit a workplace is received. It is assumed that the union representatives have permission to enter the workplace if an employer does not respond to a request by a union representative within two working days.

 

Changes to the Personal Grievance Provisions

The new law changes the test that is applied when deciding whether or not an employer has acted fairly in most cases where a dismissal or some form of disciplinary action has taken place.

The test is now “whether or not the actions of the employer were what a fair and reasonable employer could have done in all the circumstances”.

Effectively, S 103A of the Act now stipulates that a minimum requirement of “a fair and reasonable process” will be utilized. It can be understood that these changes are intended to increase the level of understanding and compliance on the procedural aspects of disciplinary action and concurrently to focus on the substance of the decision.

An Authority or Court that is considering an employment matter must consider whether or not the employer:

  • Sufficiently investigated the allegations against the employee (having regard to the resources which are available);
  • raised their concerns with the employee;
  • gave the employee a reasonable opportunity to respond; and
  • genuinely considered the employee’s explanation.

However, an employer’s actions are not unjustified just because there is a mistake in the process if the mistake was minor and did not disadvantage the employee.

Changes to Penalties and Remedies:

The main change is that reinstatement will no longer be the primary remedy in dismissal cases.

This change is more in line with what actually happens in employment disputes, where the award of reinstatement is an extremely rare one indeed.

This legislative change will also aid employers in relation to defending cases where reinstatement is used by a former employee as a force of influence to intimidate employers, rather than a genuine desire to regain employment with their former employer.

The maximum penalties for non-compliance will increase from NZ$5000.00 to NZ$10000.00 for individuals and from NZ$10000.00 to NZ$20000.00 for companies or bodies corporate institutions.

The Role of Mediation:

A new mediation service will provide early problem resolution without representation as a step before formal mediation.  The Employment Relations Authority will have to give priority to cases which have been to mediation.  Mediators will have a new power to make recommendations at the parties' request.  Parties would then have 7 days to decide whether to accept the recommendation, with accepted recommendations becoming binding.

The rationale driving this is that the promotion of mediation will allow some matters to be resolved earlier and more cost effectively.  This would save courts costs and would accordingly be beneficial to both parties to undertake.

Cashing up Annual Leave:

An employee is now entitled to ask their employer to pay out up to one week of their annual leave. An employee can ask to cash up less than a week at a time. It is important to note that the request must be made in writing. The amendment slots in sections 28A to 28F, which are basically provisions which enable employees to require their employer to pay out up to one week of their annual holiday entitlement per year.

However it is essential to note that Employees will not, however, be able to cash up annual holiday entitlements that arise before 1 April 2011, when the amendment came into force.

The Act further re-iterates that for such a request, the employer’s decision must be in writing.

An employer is entitled to have a workplace policy that they will not consider any requests to cash up annual holidays. The amendment to the Act does provide a regime by which an employer can choose to opt out of subscribing to paying out, by virtue of s 28E. This could be useful to employers, but a specific provision would have to be inserted into the employment agreement between an employer and an employee.

Changes to the Calculation of Payments for Public holidays, Alternative Holidays, Sick Leave and Bereavement Leave:

Section 9A was inserted into the primary Act by virtue of the latest amendment.

Section 9A essentially states that an employer may use an employee's average daily pay in relation to calculating payment for a public holiday, an alternative holiday, sick leave, or bereavement leave if:

  • it is not possible or practicable to determine an employee's relevant daily pay
  • the employee's daily pay varies within the pay period when the holiday or leave falls.

The section also provides a regime by which an employee's average daily pay must be calculated The formula is basically the employee's gross earnings for the 52 calendar weeks before the end of the pay period immediately before the calculation is made divided by the number of whole or part days during which the employee earned those gross earnings, including any day on which the employee was on a paid holiday or paid leave.

Requirements regarding Requests of Proof of Sickness or Injury:

The new legislation provides employers with the right to request proof of sickness or injury within the first three days of any employee taking sick leave.

This is only if the employer informs the employee as soon as possible that the proof is required, and agrees to meet the employee’s reasonable expenses in obtaining such proof.

In requesting proof of sickness, the employer is now no longer required to have reasonable grounds to suspect that the sick leave being taken by the employee is not genuine, which was formerly required by the repealed s 68(1A) of the Holidays Act 2003.

Transference in relation to Observance of Public Holidays:

Pursuant to the new amendment, employers and employees can now agree to transfer the public holidays to another working day in order to meet the needs of the business or for the personal needs of the employee

It is also important to note that any such request must be considered in good faith and any agreement must meet the following minimum requirements:

  • Any public holiday being transferred must be identified and otherwise be a working day for the employee;
  • The day it is being transferred to must be identified or identifiable, otherwise be a working day for the employee and not another public holiday; and
  • The purpose of the transfer cannot be to avoid paying the employee time and a half for working on a public holiday or providing them with an alternative holiday

However S 44 C of the Act provides an “opt-out” system for employers, who may choose to exempt themselves as being subject to the provisions mentioned above.

 

This article was compiled and written by Kim Wight, Solicitor and Francis Peters, Solicitor.

Please feel free to direct any queries you may have in relation to your employment matters to Francis Peters. Francis can be contacted via his DDI on 09-837-5743, or alternatively via email fpeters@corbanrevell.co.nz