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What the new Government will mean for Employers

With the formation of a new Labour Government, attention has now turned to what this will mean. We take a look at how the new Government’s proposed employment law changes will affect employers.

Abolishing and Replacing of 90 day Trial Periods

Since 2008 employers have had the ability to utilise 90 day trial periods in order to test the suitability of new employees if they agree in writing to waive their ability to raise a personal grievance in the event of dismissal. However Labour’s workplace relations policy pledges to remove 90 day trial periods within the first 100 days of Government.

The new Government policy promises a revised trial period where employers shall be required to provide reasons for dismissal and employees shall have the right to challenge a dismissal before a referee. This referee shall meet both parties within three weeks of the dispute being lodged. If an agreement cannot be reached between the employer and terminated employee, a binding determination is made with potential penalties imposed against the employer.

For any employer looking to utilise a 90 day trial period in 2017 it is essential to take legal advice as to the current availability of a trial period and implications of the new Labour government’s soon to be implemented trial.

A New Class of Contractors: ‘Dependent Contractors’

The new Government has promised changes to the status of certain contractors within 12 months. In particular, the new Government policy includes creating new statutory rights for ‘dependent contractors’ where these contractors are effectively under the control of an employer. This will have a significant impact on small to medium builders relying on the flexibility of contract labour. Under current law the Employment Authority has the power to classify contractors as employees where this is the economic reality of their role. This proposed policy appears to extend these powers by creating a new default category of ‘dependent contractors’ who would receive the same rights as employees including the right to challenge a termination by raising a personal grievance.

Redundancy: Potential Mandatory Redundancy Payments

The new Government employment policy commits to consult on improving redundancy protection for workers and giving regard to the 2008 ministerial advisory group on redundancy and restructuring. This advisory group made ten recommendations which range from creating a mandatory obligation on employers to pay redundancy compensation to creating a statutory code of consultation for employers to follow when considering redundancies.

The thrust of the working group recommendations was on creating an obligation on employers to pay a mandatory redundancy payment according to a pre-determined statutory formula. Employer’s proposing to downsize their work force could therefore find themselves facing unexpected redundancy payments which were not included in the individual employment agreements of their staff.

Conclusion

With a comprehensive set of employment reforms promised in the next 12 months, it is inevitable that employers proposing work force changes in the next year will face uncertainty. Regardless of the government it is essential to take legal advice when implementing change but this is particularly necessary when there has been a change of government.

For advice on the current state of employment law or general assistance in all employment matters. Please contact Andrew Riches or Adam Gallagher of Saunders & Co.

Andrew Riches

Partner

T +64 3 963 1457
M 021 982 115
E andrew.riches@saunders.co.nz

Adam Gallagher

Senior Associate

T +64 3 379 7690
M 027 7219 130
E adam.gallagher@saunders.co.nz