Signs of major changes ahead in employment law
OPINION: It has been an exciting start for the new Government, and it seems that significant change is afoot in New Zealand. But what about employment law? What is going to change there?
Two significant pieces of legislation have changed employment law in recent years. The Employment Contracts Act completely liberalised employment law in 1990 and then the Employment Relations Act in 2000, introduced by Margaret Wilson, tipped the balance back toward workers, but only so far.
National made a few changes to employment law during its three terms. Labour, however, has several significant reforms in the pipeline.
The minimum wage will go from $15.75 an hour to $16.50 shortly. The plan is to raise it to $20 an hour by 2020. Labour has also pledged to ensure all public sector employees will be paid the living wage, currently $20.20 an hour.
This change will be very welcome to workers on the minimum wage. The industry that will be most affected will probably be aged care, much of which is government-funded anyway.
Hospitality and farming will also be significantly affected. These industries are not funded by taxpayers and the effects are bound to include the loss of some jobs. Some businesses might struggle to survive.
Ninety-day trial periods are being overhauled in an unusual way. New employees can still be placed on one, but they can challenge their dismissal. A new referee service will be established just to deal with these claims. A referee will hold a short hearing without lawyers and can decide to reinstate the employee to their position or award damages.
Back in the old days, parties were represented by unions and the Employers Association.
But now, a very small percentage of the private sector is unionised and employees who are not union members are unlikely to have anyone competent to assist them in disputes concerning 90-day trials.
Employers will often be represented by their human resources manager or chief executive, while a worker will not be able to have a lawyer present and may well struggle to compete with the professionals on the other side.
So a system that seeks to do rough justice may actually create injustice. It would surely be easier to have trialperiod claims heard like other personal grievances.
Changes to achieve pay equity will also have far-reaching effects.
Labour is doing away with the recent Pay Equity and Equal Pay Bill proposed by National. Labour wants to promote a system of comparison that is more generous to workers. The pay in a female-dominated industry could be compared with a male-dominated industry of a similar skill level.
Labour intends to implement a system of Fair Pay Agreements (FPAs) which will be agreed by businesses within an industry and the relevant unions. These FPAs will set basic standards for pay and other employment conditions.
Whatever pay equity changes and fair pay agreements result, they will significantly affect employers.
Labour proposes to include statutory support and legal rights for ‘‘dependent contractors’’ who are effectively workers under the control of the employer but who do not receive the legal protections of employees.
Clearly there is need for change, particularly in certain industries. In the cleaning industry some workers are called contractors when anybody would believe they are employees. Often these individuals are migrant workers and their basic protections are denied by their employer calling them ‘‘contractors’’. It makes sense to protect these people.
But in the IT industry, many individuals consider themselves small business owners, even if they work for only one principal contractor.
Writing legislation to protect workers such as migrant cleaners, but not the independently-minded IT experts and others who benefit from contracting, will prove a challenge.
The Government also has a number of less significant or immediate changes in the melting pot.
With employment law legislation the devil is in the detail. Until we see the final product we simply won’t know the extent of the changes. One thing is for sure, this government is a change government.
A system that seeks to do rough justice may actually create injustice.
❚ Peter Cullen is a partner at Cullen – the Employment Law Firm. He can be contacted at peter@cullenlaw.co.nz