Labour’s election promises – a new tide in employment relations

During the election, the Labour Party campaigned on the basis that if elected, it would make a number of policy changes in New Zealand’s employment law sphere once in government.

So what’s on the horizon for both employers and employees?

Originally published in the FTD magazine.

Traditionally, employment relations have always been an area of difference between National and Labour, so it comes as no surprise that this is going to be a major focus area for the new government. These policies have the ability to affect the landscape for both employers and employees alike, so ordinary New Zealanders will need to understand how Labour’s employment relations policies could impact them. This article sets out some of the Labour Party’s key proposals.

Ninety-day trial period

Labour wants to revamp 90-day trial periods by introducing the requirement for employers to give reasons for the dismissal and to have justification for their decision. Labour also wants to create a new ‘referee’ service to hear claims of unjustified dismissal during trial periods with the power to reinstate or award damages at a capped amount, which is a major disadvantage to employers as it significantly waters down the benefits for them of trial periods. The main difference offered by the new referee service is that lawyers will not be able to represent the employer or employee.

Changes to wages

Labour has promised to increase the minimum wage from $15.75 to $16.50 per hour within the first 100 days in office; $16.50 will then act as the base minimum wage for future increases. Over time, Labour wants to lift the minimum wage to two-thirds of the average wage as economic conditions allow. With regards to the living wage for the state sector, under the current law each public sector agency can negotiate and agree on rates of pay with their employees and the unions. Labour wants to pay all workers in the core public service at least the living wage ($20.20). Over time, this would be extended to core public sector contractors. So far, there has been no comment on how this would actually work. Labour has also promised to abolish the ‘youth’ wage rate, and wishes to restore the previous rest and meal breaks regime.

Paid parental leave

Labour has extended the parental leave payment to 26 weeks. This is to be phased in over three years – 22 weeks from 2018 and 26 weeks from 2020. This will be eight weeks longer than the current parental leave payment of 18 weeks.

Dismissal and redundancy

Labour intends to restore reinstatement as the primary remedy when a worker is found to be unjustifiably dismissed. As the law currently stands, reinstatement is just one of the remedies, and the Employment Relations Authority can order reinstatement where it is practicable and reasonable to do so. Labour has also proposed to consult on introducing minimum redundancy protection for workers affected by redundancy, taking into account the recommendations of the ministerial advisory group on redundancy in 2008. In its report, the group suggested a statutory redundancy entitlement of at least four weeks’ pay for the first year of service, and two weeks’ pay for each subsequent year of service. This change could have a significant impact on employers who may be making redundancies due to financial stress.

Strengthening unions

A large number of Labour’s policies are aimed at strengthening unions. In particular, Labour has promised to: ▶

  • Restore the unions’ ability to initiate collective bargaining in advance of employers
  • Restore the duty on parties who are in collective bargaining to reach an agreement, unless there is a genuine reason not to
  • Create a system of establishing ‘fair pay agreements’ – this would serve as a mechanism for unions and businesses within an industry to negotiate and set standards for pay and other terms and conditions for all employers and employees within the industry
  • Remove the ability for employers to deduct pay from workers taking strike action
  • Restore the right for new workers to be employed on the same terms and conditions as provided by an existing collective agreement covering their workplace – this is intended to reverse a change made by the National government so that new workers who perform work that is covered by a collective agreement must be offered the terms of the collective agreement
  • Restore the former regime which allowed union representatives to gain access to workplaces, without an express requirement to seek consent in advance
  • Ensure elected union workplace representatives are given reasonable time within the workplace or work unit to carry out their representative role – if enacted, union delegates or employee representatives will presumably have certain entitlements, including paid time, to perform tasks associated with the role.

Pay equity

Labour has promised to implement changes to the Equal Pay Act as recommended in the report from the joint working group. The Employment (Pay Equity and Equal Pay) Bill was introduced to Parliament prior to the election and following a report from the joint working group. The bill provides for a bargaining approach to deal with pay equity claims. Pay equity claims need to be raised with employers in the first instance. The employer has obligations to notify other potentially eligible employees (30 days) and to respond with a decision about whether the claim is accepted to have merit (90 days). If a claim was accepted as having ‘merit’, good faith bargaining would be required.

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