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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.