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latest news in employment law

New Government, New Employment Laws, More Costs for Employers

Published 10 Nov 2017

With the coalition deals now signed off and the new Government officially sworn in, it's time to dissect the proposed changes and what they will mean for businesses.

Already announced is the intention to increase the minimum wage to $20 per hour by April 2021, starting with an increase to $16.50 per hour in April 2018.

There have been mixed reactions to this announcement, low paid employees and the Council of Trade Unions have celebrated the move, however many businesses have expressed concern about how this will impact their costs and are concerned that this would need to be passed on to their customers. The other concern for employers is maintaining wage relativity, employees who currently receive more than the minimum wage will expect their wage rate to increase in order to stay above the minimum rate and this is going to increase cost even more which may not be able to be absorbed by the company.

There has been suggestions that the Government will introduce tax cuts to help small businesses deal with this increase, however nothing has been confirmed at this stage. Without assistance to counterbalance the increases, there is a high chance that businesses would need to inflate prices at the disadvantage of the consumer, or face making employees redundant.

The other significant change which has been announced is the increase in paid parental leave. Currently at 18 weeks, the increase is set to be completed in increments, with an increase to 22 weeks by July 2018 and then a further increase to 26 weeks by July 2020.

Prime Minister Jacinda Adern stated that she hoped an increase in time off would make it more likely for an employee to return to work. She also acknowledged that finding someone to replace staff for longer could prove tougher for some businesses. As paid parental leave is provided by IRD there should not be financial burden on an employer with this change being implemented.

There have been other proposed changes put forward throughout the campaign which are yet to be confirmed, however most have support of all three coalition parties.

We are yet to hear exact details with regards to changes to the 90 Day Trial Period, however, what we do know is that there will be a requirement to provide reasons and justifications for the dismissal, and that a referee service will be set up to hear disputes claims with the priority response being reinstatement or a capped award.

Labour has also suggested that the number of labour inspectors will double, an increase up to 110 inspectors.

Another of Labour’s main workplace relations policies is to introduce fair pay agreements. This would be by agreement with businesses within an industry and the unions representing workers of that industry. The idea is to set basic pay standards and employment conditions across the industry. This would not begin until there was sufficient demand by employers and employees within an industry to call for one.

The Green Party are advocating for an increase in sick leave days from 5 to 10 day per year and would like to improve the rights of casual or temporary workers, as well as introducing an equal pay agreement for women in the workplace.

New Zealand First support the increase to minimum wage however they want to take this further by abolishing the starting out rate and removing a secondary tax on employment. They are also promoting a change to redundancy provisions and want to set a minimum redundancy notice provision at double what is currently in place, up to 13 weeks. They have also suggested introducing a paid paternal leave of 2 weeks which would increase over time to 4 weeks. They are the only party to have suggested changes with regards to health and safety, they are requesting a review of the Health and Safety at Work Act and to remove the bureaucratic process from this.

At this time there is still a lot of uncertainty around which policies will progress and which will fall to the wayside, the only confirmed changes are the increase to minimum wage and paid parental leave. 

As new changes are introduced we will update you and advise how they may affect your business.