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Employment Standards Bill introduced to Parliament

An Employment Standards Bill which proposes to  protect vulnerable workers and tackle harmful anti-competitive behaviour to create a level playing field for all businesses was introduced to NZ Parliament by Workplace Relations and Safety Minister Michael Woodhouse on Thursday 13th of August 2015.

“The changes aim to better support families by recognising the diversity of modern work and family arrangements and making it easier for parents to stay connected to the workforce.” Mr Woodhouse said.

The Bill will likely result in tougher sanctions for employers who intentionally breach minimum employment standards, increase the scope  for labour inspectors to check on employers and provide an impetus on the employer to keep clearer records of employment standard adhesion.

The Bill also aims to stop employment practices such as “zero-hour contracts as a reaction to the intense media coverage recently.  The Bill, however will allow employers to request an employee be available on demand, without the need to compensate them.

“The Government has been clear that there is no place for these type of employment arrangements and I particularly look forward to submissions from workers and employers on this aspect of the Bill. The Government is committed to ensuring the employment law is fair and supports the flexible, modern workforce that is critical for the productivity of our economy.” Woodhouse concluded.

The Bill proposes to amend the following Acts:

1.            Parental Leave and Employment Protection Act 1987

2.            Employment Relations Act 2000

3.            Holidays Act 2003

4.            Minimum Wage Act 1983

5.            Wages Protection Act 1983

Below is a summary of the details of the proposed changes and how these may affect you as an employer.

Tougher sanctions on serious breaches
For the most serious breaches, such as exploitation, the maximum penalty will increase to $50,000 for an individual and for a company either$100,000 (or three times the financial gain for a company) whichever is greatest. The changes here are significant as currently the maximum fine was $10,000 for an individual and $20,000 for a company.

The potential for public shaming is also increased as employers will be publically named if they have been found to have breached minimum standards by the ERA or Employment Court. Individuals could also face the possibility of being banned as employers if they commit serious breaches of employment standards.

Another big change is that senior employees within the company such as directors, senior managers, legal advisors and other corporate entities can also be held accountable for breaches of employment standards if they were knowingly and intentionally involved in the breach.

The government believes that most businesses will not experience any increase in compliance costs resulting from these proposals. As the author of the Bill, MP Woodhouse states:

“The Government is committed to ensuring the employment law is fair and supports the flexible, modern workforce that is critical for the productivity of our economy.”

The focus of the proposals is on businesses that are not currently meeting their obligations. They will face minor compliance costs to become compliant and risk facing financial penalties if they don’t (with serious breaches resulting in significantly higher penalties).

Clearer-record keeping requirements
Consistent record-keeping requirements for wages, time, holidays and leave will be required across all employment legislation. The Government has stated that there will be flexibility around the format for records, so long as “they can show compliance with the law”.

The main requirement will be that employers can produce a record of the number of hours worked each day in a pay period, and the pay for those hours, in an easily accessible format. The Bill does not specify the how these records should look.

Increased tools for labour inspectors
There will be an increased power for labour inspectors to:

a) request any record or document from an employer that they consider will assist them in determining whether a breach has occurred and;

b) share information with other government agencies, such as Immigration New Zealand, the Companies Office and Inland Revenue.

Labour inspectors may also request further records and documents from employers when they need to obtain supporting evidence to substantiate an alleged breach – for example, when the required wages and time records are not evident, or incomplete.

Changes to Parental Leave under new Bill
The proposed changes will extend paid leave to people with non-standard working arrangements and increase the flexibility of the scheme.

1.            It is proposed that casual, seasonal, temporary, fixed-term employees,  workers with more than one employer and employees who have recently changed jobs will be entitled to paid parental leave.  Currently, employees need to have worked for an employer for at least 10 hours a week over six months to become eligible for maternity leave.

2.            Eligible workers who have multiple employers will also be able to combine their income from each job to maximise their paid parental leave payment (up to maximum cap).

Parents will still have the option of choosing parental tax credit instead of paid parental leave.

3.            Parental leave entitlements will also extend to a wider group of other than biological and formal adoptive parents,  such as Home for Life parents, whāngai, grandparents, and others permanent guardians.  A “primary carer” is the main person taking day to day care of the child (not more than 5 years of age).  To be eligible, primary carers will need to be employed before assuming care of the baby and meet the same work-related criteria as birth mothers and adoptive parents. Each child will be allowed one primary carer.

NB  Employees will be able  to take unpaid parental leave more flexibly provided they meet certain criteria.
4.            Introduction of “Keeping in Touch” hours.

Employees will be able to work up to 40 hours during the 18 weeks paid parental leave.

The Keeping in Touch days are not compulsory and would only be used on mutual agreement between the employer and the employee.The baby will need to be at least four weeks old before the Keeping in Touch days can be used.
Extended unpaid leave to employees who have been with their employer for more than six months but less than 12 months.These employees will beable to take unpaid leave in addition to their paid leave, up to a total period of six months.Currently, an employee in this situation is only entitled to take paid parental leave of up to 16 weeks.
5.            An Increase in penalties for fraud.  The penalty for people who make a false statement, or intentionally mislead Inland Revenue, or anyone administering paid leave, will increase from $5,000 to $15,000.

Changes to Zero Hour Contracts and unfair employment practices
The Bill aims to prevent unfair employment practices such as “zero-hour contracts”. The changes will ban the following:

employers not committing any hours of work, but expecting employees to be available when required unless employee are able to refuse work offered or the agreement compensates employees for making themselves available;
employers cancelling a shift without reasonable notice or compensation to the employee;
employers putting unreasonable restrictions on secondary employment  of employees;
employers making unreasonable deductions from employees’ wages.
Where the employer and employee agree to a set amount of hours, they will be required to state those hours in the employment agreement.

An employer will not be able to send an employee home part-way through a shift or cancel it, without receiving compensation. Employers will be required to either give employees reasonable notice before cancelling work, or compensate them for late notice. Notice periods and compensation rates will need to be agreed and stated in the employment agreement.

Our Advice to you as an employer
Now is the time to review the employment standards you have in place at your business to ensure your employment agreements and policies will conform with the proposed changes, in light of the fact that there may be tougher new penalties for breaching minimum employment standards.  .

Please give us a call if you are unsure whether your current employment agreements and policies would meet the proposed changes

Disclaimer: We remind you that while this article provides commentary on employment law topics, it should not be used as a substitute for legal or professional advice for specific situations. Please seek guidance from your employment lawyer for any questions specific to your workplace.