Proposed Bill shakes up 90-Day trial periods, employee rights

Friday 26 January 2018

Authors: Tim Clarke, Rosemary Wooders and Charlotte Joy

​​​​​​The first details of the much anticipated Employment Relations Amendment Bill (the Bill) have emerged with the Labour-led c​​​oalition Government releasing a summary of the proposed Bill. The summary features some of the policies campaigned for and included in Labour's 100-day plan, but the changes revealed also reflect the influence of its coalition partner.

Full details of the proposed Bill are yet to be released, but, if enacted, the changes would unwind legislation introduced by successive governments over the past decade.

The Bill is expected to have its first reading in early February.

90 day trial periods

Currently, an employer has the ability to dismiss a new employee within the first 90 days of employment without any recourse to the personal grievance regime for unjustified dismissal claims. The Bill proposes that these "fire at will provisions", introduced by the previous National Government, will be restricted to employers who have less than 20 employees. The allowance for small businesses reflects the understanding that such businesses have limited resources to take the risks associated with hiring new employees, and would be discouraged from making new hires if there would be greater difficulties with termination if the 'fit' wasn't right. 

Larger employers would instead have the option of including a probationary period in their employment agreements which essentially puts new employees 'on notice' for a certain period of time. However, the employer would be required to follow full disciplinary or performance management processes before dismissing these employees in the same way as dealing with long-standing employees. Probation periods are not a new concept but have been infrequently used following the introduction of 90-day trial periods.

The Bill has taken a step back from Labour's previous indications that a dispute resolution process would be available for new employees who were dismissed under their trial period. As originally contemplated, the proposed adjudication process would not have involved lawyers, and an adjudicator would have had the power to decide an outcome or penalty. The proposed adjudication process was abandoned due to lobbying from the New Zealand First Party (NZ First) and the business community. 

Employee rights

Statutory rest and meal breaks of a specific duration will be reintroduced. There will be very limited exceptions to this right in areas of essential services where it is difficult to replace employees, for example, air traffic controllers.

Reinstatement will also be restored as the primary remedy in employment disputes. If reinstatement is ordered, the employer must treat the employee in all respects as if they have never been dismissed. However, this remedy was rarely awarded in favour of the courts granting greater monetary remedies. 

Further enhanced protections during a restructure or change in employer will be introduced for those employees classed as protected employees ("vulnerable employees"), for example, those employees in the catering and cleaning industries. Currently, only protected employees in businesses with over 20 employees have the right to transfer their employment automatically to a new employer in instances of restructuring or in the sale and purchase of a business.  The Bill proposes to remove the exemption regarding protected employees for small businesses. This proposal is arguably one of the most significant intended changes to the Employment Relations Act 2000.

Collective Bargaining strengthened

These proposed amendments largely reflect previous policies indicated by Labour in their 100-day plan, including:

  • permitting low level strike action by employees without the risk of pay deductions,

  • restoring the mutual duty (of both union and employer) to conclude collective bargaining unless there is a genuine reason not to,

  • requiring any new employees be subject to the terms and conditions of any collective agreement for the first 30 days of their employment,

  • restoring union access to workplaces following certain requirements without an employer's consent, and

  • requiring pay rates be included in collective agreements and new employees provided with information about any applicable unions.

Comment

Many of the amendments seek to amend legislation passed by the previous National Government. Most significant perhaps is the reversal and restricted use of 90 day trial periods, which were strongly contested by Labour when they were first introduced. The changes highlight Labour's overall focus on strengthening collective bargaining, increasing the number of union members, and ultimately attempting to lift wages across the board. 

The changes announced will have an impact on current employment law practices. These changes are likely to encourage employers to act more conservatively when hiring new employees and will inevitably lead to some increased employment costs.

If you or your business has any questions regarding any of the issues raised in our article, please contact one of our team or your usual Bell Gully adviser.​


Disclaimer

This publication is necessarily brief and general in nature. You should seek professional advice before taking any action in relation to the matters dealt with in this publication.

For more information
  • Tim Clarke

    Partner Auckland
  • Rachael Brown

    Partner Wellington
  • Rob Towner

    Partner Auckland
  • Rosemary Wooders

    Senior Associate Auckland
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