Workplace Watch is an occasional publication tracking legislative and regulatory reform in relation to workplace law.
A lot is happening as the Labour Government seeks to deliver its employment law reform agenda. In this edition of Workplace Watch we touch on the Fair Pay Agreements Bill (which we will look to cover in more detail next week), and the momentum building behind the campaign to require large employers to prepare annual reports on the gender pay gap within their workforce.
We also cover a recent judgment clarifying the extent of a director’s knowledge to establish personal liability, the proposed income insurance scheme, the latest Workplace Wellness report showing that the COVID pandemic has changed attitudes to going to work sick and to working from home, and the Productivity Commission’s preliminary findings on how working age immigration settings can best contribute to New Zealand’s long-term economic development.
Government to pass fair pay agreements legislation this year
The Government introduced legislation to support Fair Pay Agreements on 29 March, with the intention of passing it through all stages this year. The Prime Minister had signalled the Bill’s introduction in her Statement at the opening of Parliament on 8 February.
It honours a key Labour Party commitment and one the union movement is keen to see delivered. However, despite the Government’s best efforts to develop a tripartite consensus, Business New Zealand has always held deep reservations and late last year stated that it would not act as a default bargaining agent for employers under the new fair pay system.
The price for this principle is that it will not get the $250,000 the Government was offering it (and the CTU) for the role. But CEO Kirk Hope said it would be wrong to be part of a scheme that will do more harm than good to businesses.
Chapman Tripp is preparing a detailed analysis of this legislation, which we hope to publish next week.
Campaign to require employers to publish gender gap data
The “Mind the Gap” campaign launched by the Human Rights Commission (HRC) in 2019 to legislate for “pay transparency” gained significant momentum last year after the Education and Workforce Parliamentary Committee conducted a formal discussion on the issue in October.
Subsequent statements from government committee members indicate a willingness to consider law reform.
The legislation sought by the HRC would create an independent body to which employers above a certain size (e.g., more than 100 employees) would be required to submit a report each year outlining their progress toward achieving pay equity.
Court of Appeal delivers (temporary) reprieve on Metroglass decision
The Court of Appeal has overturned a controversial Employment Court decision which found that incentive payments by Metropolitan Glass and Glazing Limited (Metroglass) conditional on meeting performance targets should be included in holiday pay calculations, even though the Metroglass scheme was expressly “discretionary”.
But the result might not hold for too much longer, as the Holidays Act taskforce has recommended that all cash payments made to employees (regardless of discretion) be factored into holiday pay entitlements.
Read our commentary.
Extent of director knowledge for personal liability clarified
In Labour Inspector v Southern Taxis Limited the Court of Appeal ruled that whether a director may be found personally liable for a breach of minimum employment law standards will turn on whether they had knowledge of the essential facts that established the breach.
The breach was created here when the Court found that the drivers’ were employees whereas Southern Taxis had been treating them as independent contractors – and therefore not entitled to sick leave, holiday pay and the other employee rights under the Employment Relations Act 2000 (ERA).
The Court held that it was irrelevant that the directors had a genuine belief that the drivers were independent contractors because ignorance of the law was not a defence.
This case is a reminder that directors must take reasonable and proper steps to ensure compliance, as required by the ERA.
View the Court of Appeal decision.
Tova O’Brien restraint of trade decision
The Tova O’Brien hearing before the Employment Relations Authority (ERA) created significant interest, not only because of O’Brien’s high profile but also because of widespread perceptions that restraint of trade (ROT) clauses in employment contracts are difficult to enforce.
The dispute arose when O’Brien left her role as political editor at Discovery (previously MediaWorks and TV3) to host a radio morning news show for MediaWorks. Discovery sought to invoke the three month ROT clause in her contract, arguing that TodayFM was a competitor because it attracted a significant proportion of Discovery’s younger media-grazing audience.
The ERA agreed and ordered O’Brien to pay $2000 for breaches of her employment agreement but reduced her restraint period by five weeks to seven weeks. We consider the right result was reached in this case given the short length and narrow scope of the restraint of trade clause.
Consultation open on proposed income insurance scheme
Consultations have opened on the proposed New Zealand Income Insurance Scheme being jointly developed by the Government, Business NZ and the Council of Trade Unions. The policy is part of the Government’s Future of Work initiative.
Key features include:
- broad coverage across different working arrangements (the scheme will be available to people who have worked or been on statutory parental leave for at least six of the last 18 months)
- coverage for job losses caused by redundancy, layoffs, health conditions and disabilities (people on multiple jobs will qualify for support if they lose a job that provides more than 20% of their income. Part-time, fixed term, seasonal and most casual workers will be eligible if the job loss is health-related. The threshold for eligibility on health grounds will be a 50% reduction in capacity to work over an expected duration of more than four weeks)
- four weeks’ notice from the employer and payment for four weeks at 80% of former earnings to a salary cap of $130,911 a year, limiting annual payouts to $104.728.80 per claimant per year (employers could apply for a full or part refund if they assist the worker to find work within the four-week period. In the event of business failure, the scheme would cover the payments and seek to recover the money from the liquidators)
- a further six months financial support at the same 80% rate from the scheme
- a case management service to support a return to work (claimants will need to demonstrate that they are looking for employment and will need to accept job offers that match their previous income and other terms and conditions. Exceptions will be if their health limits what they can do or if they are in an approved training or rehabilitation programme, in which case they may be entitled to up to 12 months financial support, where required)
- administration by ACC, with an independent dispute resolution process
- funded by a levy estimated at 1.39% on wages and salaries, paid by both the worker and the employer, with the amount to be reviewed after two years and adjusted over time, as appropriate, and
- eligibility after six months of levy contributions in the previous 18 months.
The Government would like to include those contractors and self-employed whose work circumstances are similar to employees – e.g. they rely on a small number of clients.
Submissions are due by 26 April.
View the MBIE summary booklet.
12 months to take a PG for sexual harassment
A Member’s Bill to increase the 90 day limit on lodging a personal grievance to 12 months for grievances relating to workplace sexual harassment has been drawn from the ballot.
The Bill is sponsored by Labour MP Deborah Russell so is likely to be supported through first reading by Labour and the Greens.
View the Bill.
Living wage in public service
Everyone working in the core public service is to be paid the living wage (currently $22.75 an hour) and it will be extended progressively to contractors in the catering, cleaning and security guard sectors as contracts are signed or renewed after 1 December 2021.
Meanwhile, the statutory minimum wage will be raised to $21.20 an hour at 1 April, and the youth and training wage to $16.96 (from $16).
Bringing down the COVID curtain
Jab for job requirements will now be permitted only where an employee is deemed at higher risk for catching and transmitting COVID while at work than in their private life, according to updated advice from the Ministry of Business, Innovation and Employment (MBIE).
The reasons for requiring vaccination would need to be specific to the employee’s role and circumstances, and supported by a workplace health and safety risk assessment.
The guidance, issued on 30 March, anticipated the lifting of vaccine mandates at 11.59pm, 4 April on education workers, police, defence, and those businesses operating vaccine passes. Announcing the move on 23 March, the Prime Minister said that whether or not these workforces would continue to need to be vaccinated would be a decision for their employers.
Vaccines remain mandatory for health and disability, aged care, prison and border workforces.
Workplace Wellness report shows Covid-19 a game-changer
The latest Workplace Wellness Report, a biennial publication by Southern Cross and BusinessNZ, shows Covid-19 has been a game-changer. In particular:
- 76% of businesses now have a clear ‘if you’re sick, don’t come in policy’, up from 50% in 2016, and
- 35% have changed their view on working from home since Covid began and are now providing it as an option. Asked what their experience was; 58% said their employees liked the flexibility and 73% reported that some employees were feeling socially isolated.
The survey found that New Zealand lost 4.2 days per employee in 2020 – the lowest result recorded in the survey’s 10 year history.
Previous results were: 2012, 4.5: 2014, 4.7, 2016, 4.4 and 2018, 4.7. The reduction was attributed in part to the Covid lockdowns and in part to the mask wearing and social distancing rules.
As always, absentee rates were higher among manual employees at 5.3, against 3.4 for non-manual workers.
View the Workplace Wellness report.
WorkSafe “fell short of good practice” in relation to Whakaari White Island
WorkSafe is under instruction from the Government to implement the advice of the review by David Laurenson QC which found that WorkSafe had fallen short of good practice in its management of Whakaari White Island in the five years running up to the volcanic eruption which caused 22 deaths and serious injury to most survivors.
Workplace Health and Safety Minister Michael Wood demanded an action plan on his desk by the end of October to have all the review’s recommendations in place by July 2022.
Productivity Commission on a working age immigration policy
The Productivity Commission has put out its preliminary findings and recommendations on how working age immigration settings can best contribute to New Zealand’s long-run economic growth and the wellbeing of New Zealanders.
The final report is due by 30 April 2022.
The Commission finds that the current system is “highly adaptive” and able to respond promptly to emerging labour market needs.
But policies do not consider the wider impacts on the economy in any obvious or transparent way, and decisions regarding the number of residence visas that will be issued each year “no longer bear any relationship to population growth rates or the economy’s ability to absorb new entrants”.
These gaps have allowed migration flows to grow ahead of public infrastructure, and the education and training establishment to become less responsive to generating the skills New Zealand businesses need.
While the effect on average earnings and employment has been “very minor and mostly positive”, overall outcomes can mask regional and sectoral variations. A study of data from 2000 to 2015, for example, had found that temporary migration had reduced new hires of beneficiaries outside the main urban areas by 2.3% (4.5% in horticulture).
The Commission’s principal recommendation is that the Immigration Act be amended to require the Government to give explicit consideration to the country’s ability to accommodate and settle new arrivals when determining the national interest in immigration.
Its proposed mechanism for achieving this would be to require a regular Government Policy Statement, as now applied to transport. This could be used to calibrate immigration targets to immediate and developing needs.
Examples the Commission offers are:
- targeting health workers to meet the demands posed by an ageing population
- targeting construction workers to rebuild after a natural disaster, such as the Canterbury earthquakes, and
- deepening the innovation ecosystem by refining investor and entrepreneur visa categories to attract “smart capital”, prioritising post-study work rights and residence pathways to graduates with skills required by New Zealand’s frontier firms, and facilitating easy entry for advanced research academics and high calibre managers and directors.
Read the draft report.
Speak to our experts
We can assist you in all areas of employment law, including health and safety, personal grievances, litigation, collective bargaining, disputes and mediations, redundancies, restructuring, senior executive employment, exit negotiations and post-employment arrangements. Please get in touch with one of our experts if you would like to discuss any topic in more detail.
Marie Wisker, Partner
Vonda Engles, Special Counsel
Geoff Carter, Special Counsel