EAL has been regularly updating employers on the possible upcoming key changes to the employment landscape, so employers have ample time to prepare for them. A summary of the key changes that are on the horizon below:
Minimum Wage Increase
On 1 April 2025, the minimum wage will increase from $23.15 per hour, to
$23.50 per hour. The training and starting out wage rates will also increase from $18.52 per hour, to
$18.80 per hour.
There is no need to update any existing employment agreements, you can simply inform affected staff by advising them of their increase in writing. This increase will have no direct impact on employees earning above the prescribed minimum wage rates.
Contractor vs Employee
In an effort to assist business owners with more clarity on whether a person is a contractor versus an employee, the Government announced they are looking at developing a “gateway test”. This proposed test is intended to give more certainty on the status of a person and therefore reduce disputes over these classifications.
We are unsure of what exactly the test would comprise of, but we are looking forward to more clarity on this topic.
More on this to follow during this year as EAL follows it.
Pay Secrecy Legislation
In an attempt to ensure harmony in the workplace, a lot of employment agreements includes a clause prohibiting employees from discussing or disclosing their wages/salary with others – including other employees of the same employer or even a third party.
A Bill proposing the removal of these clauses/restrictions passed its first reading back in November 2024. If it passes its final reading, employers will no longer be able to take formal action against Employees who disclose/discuss their wages or salary with others, or subject an employee’s remuneration to confidentiality obligations.
Earnings Claim Threshold for Personal Grievance
Last year the Government announced a possible earnings threshold for employees claiming a personal grievance for unjustified dismissal. This would mean that employees earning
more than $180,000.00 per year will be precluded from raising an unjustified dismissal claim.
Pay Deductions for Partial Strikers
An employer cannot deduct pay off an employee participating in a partial strike unless the employer suspends the employee or issues a lockout notice.
A new proposal is before Parliament to allow an employer to make pay deductions from employees pay who are participating in a partial strike.
This will hopefully encourage both parties to reach an agreement on resolution as soon as possible.
Amending Employee Remedies in Disputes
Proposing to hold employees accountable for their actions and/or behaviours by removing certain remedies when they are found to be at fault in employment disputes.
- Removing the employee’s eligibility for reinstatement back into the job
- Removing compensation for hurt and humiliation
- Removing all remedies for employees whose behaviour amounts to serious misconduct.
Another few proposed changes are:
- Requiring the ERA and Employment Court to consider if the Employee’s behaviour obstructed the Employer’s ability to meet their fair and reasonable obligations
- Allowing remedy reduction of up to 100% where an employee has contributed to the situation which gave rise to the personal grievance claim
- Increase the threshold for procedural error in matters where the Employer’s actions against the Employee are considered fair and reasonable.
The Holidays Act 2003
A difficult and uncertain piece of legislation indeed. This remains a work in progress, but changes are being introduced to Parliament.
The main suggestion for change here is regarding the various formulas, calculation approaches and legal definitions regarding the payment of holiday entitlements, including annual leave and holiday pay.
Movement on this is a bit slower since the current Government seem to be approaching this from scratch, and we do not expect any changes until end 2026. As always, we will keep you up to date as and when the changes need to be implemented.
Termination of Employment by Agreement
Brought forwards by an Act Member's Bill in May 2024 draws from the UK’s "protected conversations" model, allowing for confidential, "without prejudice" discussions which enables Employers and Employees to openly discuss ending the employment relationship without legal repercussions. If both parties agree, termination terms are formalized, side-stepping the sometimes costly and stressful process involving a corresponding employment dispute.
Restraints of Trade Bill
The Employment Relations (Restraint of Trade) Amendment Bill is proposing to prohibit the use of restraints of trade on employees. To that end, these post-employment contractual obligations, i.e. non-competition clauses which prevent employees from working for competitors as an example, will have no effect where an employee earns less than three times the minimum wage.
In addition, this Bill proposes, that if an employer wants to use a restraint of trade with an employee, then the employer will be required to pay an equal amount to half of the employee's weekly earnings for each week the restraint is in place, which will be a major cost consideration that employers will need to carefully consider when wanting to use a restraint of trade.
Finally, the other key proposed change is that restraints will be limited to no more than six months.
Wage Theft Bill
The Crimes (Theft by Employer) Amendment Bill has passed committee stage in Parliament and looks likely be added to the Crimes Act 1961 which makes an employer a criminal if they make unauthorised deductions to an employee's salary or wages. Should this Bill pass Employers will need exercise extreme caution and care regarding any deductions from an employee's pay.