Workforce Planning and the Prospect of Restructuring

Workforce Planning and the Prospect of Restructuring

* Last Updated 14 April 2020

 

Planning

Over the past 4 weeks we have all become somewhat accustomed to constant and rapid change. We’ve learnt pretty quickly to take a step-by-step and day-by-day approach to avoid wasting time and energy on plans that quickly become irrelevant.

 

But, having dealt with the blow of the lockdown, the time has come to get ready to adapt and adapt again. Having contingency plans in place will be essential for you to navigate the next 12-18 months by being nimble and flexible.

 

A good starting point is to map out at least three possible scenarios – perhaps starting with a best case, worst case and a middle ground. These might include:

  • Best case – Level 3 after 4 weeks of lockdown. Reverting to level 2 the following week. No further lockdowns eventuate. Borders remain closed, but non-essential national travel re-starts in June. Government stimulus packages are relatively successful and the economy, including your industry, shows promising signs of recovery.
  • Middle – Lockdown is extended to 6 weeks. The country remains at level 3 for an additional 6 weeks, with some businesses needing to remain closed. National non-essential travel is restricted on and off throughout the year, there are regular school closures and occasionally it looks like another lockdown is possible.
  • Worst case – NZ returns to Level 3 after 4 weeks but it’s too soon or community transmission of Covid-19 has sprung back under the radar. After a few weeks at Level 3, another lockdown is announced and this one continues for another 6 weeks. After that, Level 3 with heavy restrictions for a further 6 weeks. Your business is unable to open properly at Level 3 but can operate to a limited extent on-line, but your industry has been heavily impacted. Sales are virtually non-existent.

Now think through what impact each scenario will have on your workflow and cashflow. Then, how will you need to change or downsize your workforce to match this footprint? What will be the triggers (sales figures, production levels, cashflow) that will force you to look at headcount reduction? Consider how you can avoid ‘death by a thousand cuts’ – where you need to downsize, will it be possible to make a more significant change to avoid constant redundancies and hours reductions.

 

Restructuring

Having completed the planning, you should have a clearer idea of the conditions and thresholds that may necessitate a change process. Or, in some cases, it may be clear that you already need to consider the prospect of restructuring your organisation and reducing your employee numbers. This is a complex and difficult process.

Here is a step-by-step overview of what you will need to do next:

  1. Plan
  • First, you will need to write a business case for why you believe change is required. Include important details such as sales figures and projections.
  • Next, write a communication plan – who is potentially impacted by this proposed change and how will you communicate with them? Individually, team meetings or a company-wide briefing? Will anyone be on leave during this time? How and when will you communicate with them?
  • Finally, get your ducks in a row. Review Individual Employment Agreements, read Job Descriptions, pull payroll information to double check details such as pay, titles and hours. Run a risk assessment for each – is the role you are considering to be disestablished similar to another role in the business? If so, do both employees need to be included in the consultation process as two positions becomes one?

 

  1. Consult
  • Draft up letters for all affected employees. The letter must:
    • Explain the proposed change
    • Outline the proposed impact to their particular role
    • Give the reasons for this proposed change
    • Say what will happen to them if the change goes ahead
    • Include the details for how the employee can submit feedback and the deadline for this
    • Either propose a time for a meeting to hear feedback, or offer the opportunity for the employee to book a meeting if they want to ask questions or provide verbal feedback
    • Emphasise that no decision has been made, and that this won’t happen until you have received their feedback
    • Give details of a proposed timeline. Seek feedback on this as well
  • Hold your consultation meetings.
    • Ideally, where only a small number of people are impacted and redundancy is a possibility you will hold these face-to-face. You can set this meeting up ‘informally’ by simply inviting the employee to a meeting, but we recommend that you let them know that what you need to discuss may impact their role, and that they are welcome to bring a support person – allowing them time to arrange this. In large company-wide restructures, and with the Covid-19 restrictions, this will not always be possible.
    • Ideally, read through the letter
    • Answer initial questions, but try not to get into receiving feedback in this meeting
  • Hold feedback meetings. Often questions will be raised at these meetings. If you don’t know the answer, commit to coming back with it as soon as possible. You must remain open, honest and communicative throughout. If you take too long to respond to questions or do not answer them at all, you risk an argument that the deadline for feedback should be extended.

 

  1. Consider Feedback
  • It is important to consider feedback in good faith. If, as a result of the feedback, you want to make changes to the proposal you need to decide whether to go back and consult on the new proposal.
  • Give yourself time to adequately consider feedback – usually 48 hours
  • If you’ve received a lot of feedback from numerous employees, group it into themes and write out your response to each ‘thread’ and any changes to the proposal made as a result

 

  1. Confirm
  • Having considered any feedback and made a decision, you need to draft up a second letter outlining your decision. This should include:
    • A summary of feedback received and your response
    • Any changes made to the proposal as a result of the feedback
    • What your final decision is, and the outcome for the employee’s role, including timing. If applicable, you may include details around final pay
    • If redeployment is an option or a selection process will follow, provide the details for this
    • Consider what outplacement support you can offer and outline this in the letter – this could include career coaching, assistance with writing a CV, an interview technique workshop, and financial planning resources.

Change processes can be very complex and are difficult for everyone involved. Emotions are likely to run high and it is so important that you get it right. Positive People can help. Email us at info@positivepeople.co.nz or call 09 445 1077 for a confidential discussion.

More COVID-19 FAQs Answered Here (issued 3 April 2020)

Issue #2: More COVID-19 FAQs Answered Here

 

Question: Do I need to consult or get agreement to reduce pay?

The COVID-19 lockdown is an unprecedented event, and there are differing views about whether you need written agreement to a pay reduction, or if you only need to consult. It is generally agreed that a unilateral pay reduction with no consultation is a high risk strategy. We recommend running a short consultation and seeking written (email or text) feedback or agreement prior to confirming the temporary change to terms and conditions. You can also use this opportunity to have employees indicate in writing if they would like to ‘top up’ their pay by taking some annual leave (e.g. one day per week).

 

Question: Can we use annual leave balances to top up the wage subsidy?

If you are passing on the wage subsidy, employees may agree to take Annual Leave to top up the subsidy. Likewise, if you have reduced pay to 80%, they may request or agree to take one day Annual Leave per week to maintain 100% pay. You may also direct an employee to take Annual Leave, but you must first try to reach agreement. If agreement can’t be reached, you must give 14 days’ notice and it must be from the Annual Leave ‘entitlement’ – you cannot direct an employee to use their ‘accrued’ balance.

 

Question: If I accept the wage subsidy can I make people redundant during this period if things change?

You need to try your best to retain your employees you are currently receiving the wage subsidy for. If you applied for the wage subsidy for any employees after the scheme was modified at 4pm on 27 March 2020, you must retain those employees or you will be in breach of your obligations. The WINZ website states that if you breach your obligations by making someone redundant you need to repay the subsidy within five days.

 

Question: What are the options if someone has signed an employment agreement but haven’t started work yet?

If you have offered someone work and they have accepted, they have the same rights as other employees – even if they haven’t started working for you yet. You can apply for the wage subsidy and pass this on from after their start date. Just like with current employees, you need to consult if you wish to change their terms and conditions (reduce hours and/or pay) or make them redundant. If you have a Business Interruption clause in your agreement, you may choose to invoke this. But remember, even with this clause you must ask for feedback before confirming suspension without pay.

 

Question: What happens if an employee was due to return from parental leave during the lockdown period?

Similar to the above, if this was the agreed date for the employee to return to work you must proceed with that plan. Therefore, you can apply for the wage subsidy for this employee and pass it on to them from their planned return date. You should still consult with the employee prior to confirming any changes to pay or hours during the lockdown period – even if they haven’t returned to work yet.

 

Question: An employee had an overseas holiday booked to take place during the lockdown and had Annual Leave approved. Now they want to retract that request (we are not an essential business) but I want them to take the Annual Leave. Can I enforce that?

Technically you can, but for fairness and simplicity, many employers have wiped all Annual Leave requests from the start of the lockdown and will review this at the end of the initial 4-week lockdown period.

 

Question: Can/should casuals qualify for the wage subsidy and be paid something during the lockdown?

Yes, they can – you use average weekly hours to calculate the amount. However, as casuals should have no expectation of ongoing work and you have no obligation to offer it, technically you don’t need to apply for and pass on the subsidy. If you review a casuals average hours and decide to apply for the wage subsidy scheme on their behalf, you should also consider whether they are a true casual. If they regularly work a pattern of hours and could reasonably expect this to be ongoing, they may be considered ‘permanent’. An important definition if you need to restructure down the track.

 

Question: What are the potential scenarios where we might be at risk of having to pay back the wage subsidy to the government?

You need to repay some or all the COVID-19 Wage Subsidy if:

  • You no longer meet the criteria for the subsidy
  • You’re not meeting your obligation to use the subsidy to retain and pay your employees,
  • You’ve received insurance (eg, business continuity insurance) for any costs covered by the subsidy
  • You have provided false or misleading information in your application.

You can check the obligations here.

Obligations if you applied before 4pm on 27 March

Obligations if you applied on or after 4pm on 27 March

You can also make a repayment if you were overpaid or made a mistake on your application.

 

Question: Did the minimum wage increase go ahead? I’m worried that I won’t be able to access the system to make the changes.

The adult minimum wage rate increased $1.20 from $17.70 to $18.90 per hour on 1 April 2020. However, MBIE recognises that some employers may not be able to action the increase immediately, while also complying with lockdown requirements. If you cannot process the raise in time, you should communicate with your employees about this. You should then process the increase as soon as you are able to do so in compliance with any COVID-19 restrictions in place. You will need to pay employees back for any hours that were worked, but for which the required pay rate could not be processed at the time.

 

Question: Does the wage subsidy always need to be passed on in full?

Not always. If your employee’s usual wages are less than the subsidy, you must pay them their usual wages. Any difference should be used for the wages of other affected staff.

 

Question: Can I reduce an employees pay if they’re on minimum wage but can’t work? What happens when they come back to work – partially or fully?

During the lockdown and beyond, you must still pay workers for the work they do. This means employees—regardless of whether they are working from home, or from premises to do essential work—must be paid at least the new minimum wage for each hour they work. If the employee cannot work during the lockdown and does not wish to use any Annual Leave entitlements, you can access the wage subsidy and pass this on in full without topping it up to minimum wage for the employees normal hours, or requiring the employee to do any work. You should still follow a consultation to implement this reduction in pay.

 

Question: What should employees be paid for the public holidays over Easter?

For employees who would have otherwise worked on the public holiday (had the lockdown not been in place and had not been a public holiday), then they should be paid for that public holiday at their relevant daily pay as set out in the Holidays Act. If the employees pay has recently been reduced, then the relevant daily pay rate is this reduced pay rate – unless otherwise agreed with them. We know some employers who have reduced pay are choosing to pay public holidays at the employees ‘normal’ full pay.

 

Question: How do we manage pay for staff returning to work on reduced hours – specifically the point at which we have to ‘top up’ the wage subsidy (if the wage subsidy is what we are currently paying)?

Employees must be paid for any hours worked at a minimum – however, the wage subsidy can go towards this pay. However, many employees who cannot work and have taken a pay reduction during the lockdown, will expect to be paid more when they return to work. How you manage this is really going to depend on what pay reduction you have applied, and the hours worked on return. We think it all comes down to communication. If you think that pay reductions will need to remain in place even when employees return to work (either at normal or reduced hours) it is important that you communicate this possibility early and then consult with employees fully when the time comes.

 

Question: What are our H&S obligations when people do start returning to work?

Employee safety is paramount. It is likely that when employees return from the lockdown changes will need to be made to the way you work to keep everyone safe. We will be looking to government advice when the time comes and implementing all recommended measures (e.g. social distancing) as a minimum. We also recommend the following:

  • If you don’t have a Health and Safety Manager, appoint one person to be the COVID-19 co-ordinator. Communicate this person (ideally a senior manager) as the first point of contact for any related matters
  • Identify your risks and work to eliminate, isolate or mitigate these risks
  • Involve employees in a brain storming session to get their ideas on how best to manage the risks to themselves and their colleagues
  • Make an emergency plan
  • Review your sick leave, absence and travel policies. You may need to issue amended versions of these policies for the duration of the COVID-19 threat
  • Communicate regularly, in over-drive, with employees via email, text and social media
    • Publicise the supported need for employees to go home if unwell or not to come in if unwell
    • Publicise the hygiene recommendations like hand washing, management of coughing/sneezing etc.
    • Publicise the Ministry of Health guidelines and information
  • If practicable, promote remote working/video conferencing and flexible work options where required
  • Keep up-to-date with the current situation in the country and follow official advice as it is presented
  • Develop a relationship with a medical provider/doctor. Alongside Healthline’s dedicated COVID-19 number (0800 358 5453), this will ensure you have trusted guidance available to answer questions and deal with concerns such as when an employee needs to self-isolate
  • Discuss and agree (as much as possible) anything that comes up with employees

 

We know that every business is different. If you need help with working through the HR implications of Covid-19 in your workplace, call us on 09-445 1077 or email us at info@positivepeople.co.nz

Rest and Meal Breaks

 

Rest and Meal Breaks:

What the 6th of May changes might mean for you

Most employers are aware of the recent changes to rest and meal break legislation that were introduced last month. However, you may still be grappling with what, if any, change is required when you apply the new legislation to your workplace.

 

What changed?

Prior to the change, the law stipulated that employees were entitled to receive a ‘reasonable’ opportunity to take rest and meal breaks. The new legislation stipulates that employees are entitled to set breaks based on the number of hours that they work.

 

What are the entitlements?

Less than 2 hour total work period No breaks
2 – 4 hour total work period 1 x paid 10min break
4.01 – 6 hour total work period 1 x paid 10min break, 1 x unpaid meal break of 30mins
6.01 – 10 hour total work period 2 x paid 10min breaks, 1 x unpaid meal break of 30mins

 

When should the breaks be taken?

The employer and employee can agree when the rest and meal breaks are to be taken.

  • In many office-based roles, the employee will continue to have the responsibility to decide when to take their breaks based on the requirements of their role and their own preferences.
  • In other roles and work environments, you may have a roster that sets the rest and meal break times for all employees. This may be changed from time to time – usually in consultation with employees
  • You can also agree that flexibility is required around the timing of breaks i.e. “the first paid rest break can be taken at the end point of a production run at any time in the first half of the shift”.

Employers must consider their health and safety obligations in agreeing to the timing of breaks – i.e. in high risk environments or safety sensitive roles, you are obligated to manage the risks that may arise from worker fatigue.

 

What happens if you can’t agree on the timing of breaks?

The Act does outline the timing of breaks if the employer and employee can’t agree (see below), but also states that the employer can provide breaks at different times if it’s not reasonable or practical for breaks to be taken at the times set in law.

The times outlined in the Act are:

2 – 4 hour total work period ·         1 x 10 minute paid rest break in the middle of the work period
4.01 – 6 hour total work period ·         1 x 10 minute paid rest break one-third of the way through the work period

·         1 x 30 minute unpaid meal break two-thirds of the way through the work period

6.01 – 10 hour total work period ·         1 x 10 minute paid rest break halfway between the start of work and the meal break

·         1 x 30 minute unpaid meal break In the middle of the work period

·         1 x 10 minute paid rest break halfway between the meal break and the finish of the work period

 

Remember that even if you have employees that work in an office environment you have an obligation to ensure that breaks are being taken and your staff are sufficiently rested.

Positive People have 24 years experience helping employers develop HR policies and processes which are best practice, minimise risk and help to get the most from your team. Call us today to ensure you have your breaks sorted.

Employment Relations Changes

Employment Relations Changes:

What to Expect and When

Are you trying to keep up with what is happening with the upcoming changes to employment law? We’ve made it easy with a brief outline of the proposed changes and some information on what stage they are at in the process.

The key changes coming into force are:

  • Changes to the Employment Relations Act, including the 90-day trial period
  • Minimum Wage increase
  • Changes to the Holidays Act
  • Fair Pay Agreements

Employment Relations Act 2000 Amendment

The Employment Relations Amendment Act 2018 was passed into law on 6 December 2018. It introduced a number of employment law changes.

The main changes included:

  • The right to set rest and meal breaks will be restored, the number and duration of which depends on the hours worked. For example, an eight-hour work day must include two 10-minute rest breaks and one 30-minute meal break, while a four-hour work day must include one 10-minute rest break. Employers must pay for minimum rest breaks but don’t have to pay for minimum meal breaks. Employers and employees will agree when to take their breaks. If they cannot agree, the law will require the breaks to be in the middle of the work period, so long as it’s reasonable and practicable to do so.
  • 90-day trial periods will be restricted to businesses with less than 20 employees.Businesses with 20 or more employees will not have access to 90-day trial periods. They will be able to use probationary periods to assess an employee’s skills against the role’s responsibilities. A probationary period lays out a fair process for managing performance issues and ending employment if the issues aren’t resolved. However, it is a much more complex and protracted process to use to terminate employment than a trial period.
  • Strengthening collective bargaining and union rights
  • Restoring protections for vulnerable workers, such as those in the cleaning and catering industries, regardless of the size of their employer

More information on these changes can be found here

Timing

Most of the changes relating to strengthening union and collective bargaining rights were implemented on 12 December 2018. Changes to rest and meal breaks and 90-day trials will come into effect on 6 May 2019

Minimum Rate Increases

The Government has announced it will increase the minimum wage to $17.70 an hour on April 1 2019, with further increases to take it to $20 by 2021.

Changes to the Holidays Act

A review was commenced following several high-profile cases where employers have failed to pay their employees the correct rate for annual leave.

The current Act states that holiday pay can be calculated two ways; either on the basis of ordinary weekly pay at the beginning of the holiday period or on the average weekly earnings over the previous 12 months, and that employers must pay whichever rate is the highest. Where employees are part time, have overtime rates or have bonus or incentive payments these rates can be significantly different. The practicality of calculating this every time an employee goes on leave is very difficult and many payroll systems are not set up to do this correctly. The review will cover this, as well as the full Holidays Act with the aim of simplifying the regulations, ensuring the act is fit for purpose for the current work environment and making it easy for both employers and employees to ensure that correct entitlements are paid.

Timing

The review commenced in August 2018 and is expected to be completed by August 2019. The terms of reference also stated that an interim report would be issued within 6 months to inform the public about the progress of the review, so we should see this released soon.

Fair Pay Agreements

A working group was established in June 2018 to consider what a Fair Pay Agreement would cover and look like, with the aim of providing recommendations on how these may work in the future.

Fair Pay Agreements, as outlined as one of the Governments election promises, would be collective agreements which cover whole industries and set out the minimum requirements for that industry. The Government  indicated that it expected Fair Pay Agreements to be used in occupations where there is already a high level of Union membership (like nursing, teaching or manufacturing), and that once a Fair Pay Agreement is in place, it would be compulsory for all employees in that industry to be covered.

There was some discussion around small employers being exempt from Fair Pay Agreements and this was part of what the working group considered. They were also tasked with looking into whether regional variations should be allowed in Fair Pay Agreements, how often they should be renegotiated and if they should apply beyond workers (for example to contractors.)

The working group delivered 46 recommendations in their report. One of the recommendations is that workers should be able to initiate a Fair Pay Agreement bargaining process if they can meet a minimum threshold of 1000 people, or 10 per cent of workers in the nominated sector or occupation.

The full report from the working group was released on the 31st January 2019 and can be found here

Timing

The Government is now taking time to consider the recommendations and comments from the report before undertaking policy consideration and consultation.

Many of these changes will require updates to your employment agreements and could also mean changes to your current practices. Positive People can help to keep you ahead of the game and make sure you remain compliant. Contact us to talk through how you can prepare for the upcoming changes.

Verbal Warnings

Verbal Warnings – Do they have a place today?

As the disciplinary process evolves, it is helpful to reflect on your own organisation’s process and make sure it is up to date, current, fair and reasonable.

A key part of a traditional disciplinary process is the verbal warning – a step Managers can take when they believe an employee’s actions are serious enough to warrant more than an outline of expectations or a coaching session, yet not serious enough to warrant a Written Warning. Frequently these warnings are given by Managers without following a full process, and Companies often then mistakenly rely on them as the first step in a progressive warning process for misconduct.

A general rule of thumb for misconduct is that the progressive disciplinary processes should allow for three formal warnings for the employee prior to dismissal being considered. It’s important to consider whether a verbal warning forms part of the progressive disciplinary process for your organisation, and if so, specify this in your Code of Conduct.

For a verbal warning to be part of a progressive disciplinary process:

  1. It must be confirmed in writing, outlining the breach of policy and procedure and future expectations, and ideally have the employee’s signature
  2. You must still conduct an investigation, allowing the employee to respond after having the opportunity to prepare, have a support person present, and have access to all the information you have gathered about the misconduct

To be utilised and considered as part of a progressive process, the process you follow before issuing a verbal warning must be the same as if a written warning is given.

If you do not follow this process, then a verbal warning may be considered as part of the investigation into further misconduct but cannot be relied upon as one of the formal steps. It is instead background information confirming that the employee was aware of the Company rules and the impact of their actions.

If you do not follow this process, details of the verbal warning should not be stored on the employee’s personal file. Instead it would be considered the same as a coaching session, a letter of expectation or a Manager’s diary note.

For many Companies this requirement for a full process has meant that verbal warnings have become a thing of the past.

A more current approach is to streamline the process, doing away with verbal warnings altogether:

  • First instance of the behaviour – Informal discussions reflecting concerns. The Manager would be advised to keep “diary notes”
  • Second instance of the behaviour- Issue a Letter of Expectation alongside conducting a Coaching session driven by a Performance Improvement Plan (if appropriate). This is an informal process which does not require a formal investigation. The Manager outlines the impact of the behaviour and uses a coaching approach to help the employee identify ways they can improve. This is documented by the Manager and kept as part of the Performance Improvement Plan
  • Third instance of the behaviour – An investigation is initiated, which can then set off the formal disciplinary process, inviting the employee to respond. It also includes the other requirements of a full process. A possible outcome could be a first written warning.
  • Continuation of the Disciplinary process

Having a process which is sound, streamlined and allows for the employee to have an opportunity to change their behaviour is critical to minimising the risk of any comebacks on the process.  

This area can be a minefield, and is not easy to get right.

Positive People are experienced in developing performance management frameworks which are legally compliant, understandable and practical for both managers and employees. Contact us today and we can help you review yours.

HR Software Systems

How HR software can make your managers better leaders

No doubt you’re already using software for your accounting and view it as essential to the success of your business. But have you considered implementing an HR information management system? HR automation isn’t new, but with cloud-based technology it’s now cost effective and feasible for small and medium-sized businesses.

Much like your financial software, an effective HR system will quickly prove itself as a tool that saves you time, money and frees you and your managers up to focus on the more important aspects of leading your people.

If you’ve been manually handling HR operations in the past, you may be wondering about how a software system will benefit your business, particularly your managers.

  1. It will help your managers make better use of their time

Time is the one thing none of us can get more of. If your managers are having to manually create, print, sign, scan, save and manually upload documents, they don’t have time for things that matter more – like coaching and mentoring their direct reports.

Sadly, HR software won’t solve all of your time management woes, but it certainly helps to save time so you can better allocate those resources.

  1. It will provide you and your team with important insights

When you’re manually handling HR records, you miss out on some valuable information. HR software collects and analyses data to provide you with accurate insights in order to make strategic decisions.

  1. It will support effective performance appraisal processes

Gone are the days where you need to purchase expensive performance appraisal software, or muck around with multiple Word documents and hard copy forms. A good HR software system will incorporate a performance appraisal system that will facilitate an efficient process and focus your managers attention where it should be – on having quality conversations with their employees about their performance.

So, what should you look for if you’re in the market for HR software?

  • It pretty much goes without saying, but a cloud platform is essential
  • You should also prioritise ‘employee self-service’ features. The more you’re able to shift responsibilities from your managers, the more useful they can be. For example, with self-service a new employee can log in and view their employment agreement, digitally sign and have this saved to their file where they can access it throughout their employment
  • Alongside affordability, scalability is also important – you only want to pay for what you need, when you need it
  • Full functionality will ensure your managers get the best out of your system. Essentially, HR software is an HR administration tool. However, along with HR document management, look for a system that incorporates:
    • Recruitment process / candidate management
    • A performance appraisal system
    • Health and safety management

This will ensure all relevant HR documentation is correctly stored and easily accessed.

Positive People partner with enableHR HR software. We’d be happy to arrange a time to show you around the system so you can get an idea of how it might work for you and your team. We think you’ll find it ticks all the boxes.

Upcoming Legislative Changes

ER Changes – What is planned and when is it happening?

With several recent announcements from the Government around employment standards and reviews it can be confusing to keep up with what is planned, when it’s planned and what this means for you.

Below is a brief outline of the proposed changes and some information on what stage they are at in the process, so you can keep ahead of the game and make sure you remain compliant.

Areas to keep an eye on are:

  • Changes to the Holidays Act
  • Fair Pay Agreements
  • Changes to the Employment Relations Act, including the 90 day trial period
  • The Minimum Wage

Changes to the Holidays Act

Workplace Relations Minister Iain Lees-Galloway has commenced a review of the Holidays Act, following several high-profile cases where employers have failed to pay their employees the correct rate for annual leave.

The current Act states that holiday pay can be calculated two ways; either on the basis of ordinary weekly pay at the beginning of the holiday period or on the average weekly earnings over the previous 12 months, and that employers must pay whichever rate is the highest. Where employees are part time, have overtime rates or have bonus or incentive payments these rates can be significantly different. The practicality of calculating this every time an employee goes on leave is very difficult and many payroll systems are not set up to do this correctly. The review will cover this, as well as the full Holidays Act with the aim of simplifying the regulations, ensuring the Act is fit for purpose for the current work environment and making it easy for both employers and employees to ensure that correct entitlements are paid. This review is expected to take one year.

Fair Pay Agreements

A working group has been established to consider what a Fair Pay Agreement would cover and look like, with the aim of providing recommendations on how these may work in the future.

Fair Pay Agreements, as outlined as one of the Governments election promises, would be collective agreements which cover whole industries and set out the minimum requirements for that industry. While little further detail has been provided on these, the Government has indicated that it expects Fair Pay Agreements to be used in occupations where there is already a high level of Union membership (like nursing, teaching or manufacturing), and that once a Fair Pay Agreement is in place, it would be compulsory for all employees in that industry to be covered. There is some discussion around small employers being exempt from Fair Pay Agreements. However this will be up to the working group to establish.

The terms of reference for the working group indicate it will also be able to look at whether regional variations should be allowed in Fair Pay Agreements, how often they should be renegotiated and if they should apply beyond workers (for example to contractors.)

Recommendations are expected to be made by this group by the end of 2018.

Changes to the Employment Relations Act 2000

Earlier this year a bill was introduced to parliament which proposed changes to the Employment Relations Act. The key proposed changes are:

  • Limiting 90-day trial periods to employers with fewer than 20 employees
  • Reinstating set rest and meal breaks, with limited exemptions
  • Restoring reinstatement as the primary remedy in unjustified dismissal disputes
  • Removing the small to medium enterprise exemption to the requirements in Subpart 1 of Part 6A of the Act when a business is sold and restructured.

This bill is still at the select committee stage, so no date has been set for the changes to come into effect. This means that for these areas the provisions still stand as in the current legislation. A report is due on 1 August 2018, so we should know more about the changes, and when and if they will come into effect, then.

Minimum Rate Increases

While a commitment has been made to raise the minimum rate to $20.00 per hour by April 2021 no further specifics have been provided on how these will be achieved, what the annual increases will be and when. Traditionally 1 April is the date when annual minimum rate increases would occur, so currently it seems we will have to wait until closer to this date to understand how the annual increases will work to achieve this target by 2021.

Keeping up to date on changes to employment legislation is critical for any employer to make sure you minimise risk and remain compliant. Positive People can help you keep up to date so if you have any questions on current or proposed legislation, please contact us.