Update on Fair Pay Agreements

Last week the Government announced that a working group to develop a plan to introduce Fair Pay Agreements (FPAs) across entire industries and occupations has now been set up.

The group will be led by former National Prime Minister Jim Bolger.

While we still don’t know how FPAs will work in practice, what we do know is that the Government is looking to use FPAs to set minimum standards for wages and employment conditions like allowances, weekend and night rates, hours of work and leave arrangements for all workers within industries.

It is proposed that FPAs will be determined through collective bargaining between unions and employers within each sector, without the need for negotiations with each individual employer.

FPAs would not make ineffective Individual Employment Agreements or Collective Agreements. They would sit alongside these agreements.

The concept of FPAs is not new. Australia has been using them for nearly a decade now. Whether the Government is intending to replicate the Australian model is yet to be known. It is also not clear what effects they will have on businesses and their bottom lines, though it is to be hoped this will be considered by the Working Group.

The Working Group will make recommendations to Minister for Workplace and Safety, Iain Lees-Galloway by the end of 2018, which will then be considered by Cabinet. The Working Group will be seeking public submissions at some stage. If you would like assistance with or more information on submissions please contact us.

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If you have any queries in respect of Fair Pay Agreements, or any other employment law issues, please contact our Employment Law Team.

Employers need to plan for change

The Labour-led coalition Government has already moved quickly to bring change to some of those areas it campaigned on and employment law is no exception. 

Unsurprisingly, the first moves that have been made and signalled have been where both Labour and NZ First had policies that synchronised – which included 26 weeks parental leave and an increase in the minimum wage. Those announced changes are just the beginning of a wave of employment law changes – some tweaks of the National Government’s previous laws while others are more wholesale changes.

Employment Relations

A number of changes have been announced which may affect SMEs and private employers.  These include:

  •  90-day trial periods will now be limited to employers with fewer than 20 employees.
  • Reinstatement will be restored as the primary remedy to unfair dismissal.
  • Reversing a relatively recent change by the last Government, statutory rest and meal breaks will once again be a requirement.
  • The removal of the SME exemption from Part 6A of the Employment Relations Act 2000, which provides that ‘vulnerable’ employees have the right to transfer to a new employer if the work they were doing is, as a result of restructuring, to be done by another person. 

This last change is likely to be significant for SMEs.  If, for example, a small cleaning company has a contract with a local school, and it is sold to another small cleaning company, all the cleaning employees of the vendor company will have the right to transfer to the purchasing company.  It is very unlikely that there will be any way to avoid this, and it could have a sizeable impact on a business’s future plans.

Fair Pay Agreements

While we don’t know how it will work in practice, the Government is looking towards a standardisation of pay, hours and conditions by industry or sector. They intend to do this through consultation with appropriate stakeholders and the outcomes would set minimum standards for each sector or industry. As well as standard hours and pay, these would cover allowances, overtime, weekend and night rates.

Industrial Relations

In a nutshell, the Government would look to remedy what they see as an imbalance in favour of employers in the current structure of workplace negotiations. To do this, they have flagged intentions to strengthen union access to entering workplace, extend collective rights to contractors, require workers to pay a union bargaining fee, restore the requirements for the employer and union to reach agreement and for unions to be able to initiate bargaining and get rid of penalties to workers for ‘low level’ protest action.

There are other changes mooted in the area of employment law including the extension of the powers of the law to cover anyone working in New Zealand, compulsory redundancy and the abolition of youth rates to name a few.

For employers, the key is to keep yourself informed and up-to-date with what is being discussed at Cabinet level and what the timings and impacts could be on your business. None of the changes mentioned should be a surprise as the Government has been transparent around what they intend to progress. So far, the proposed changes fit within the policies campaigned on. Once you’ve armed yourself with knowledge, it’s a good strategy to plan for change and be proactive rather than wait or procrastinate and be reactive.

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Contact our Employment Law Team today to discuss how we can assist you.

FAQs on Employment

Before the Employment Relationship begins

1. Do I need to have a written Employment Agreement?

Yes, all employees must have a written Employment Agreement which must comply with the requirements of the Employment Relations Act. For example, both the hours of work and the place of work must be specified in the Employment Agreement.

2. Can I use a trial period?

The 90 day trial period can be used by all employers provided they have not employed the employee before (i.e. they must be a new employee). The wording of the trial period must be compliant with the Act and the agreement must be signed before the employment relationship begins.

3. What can I ask in an interview?

You can ask almost anything you want. However, you must be careful to not ask anything which might indicate that you will discriminate against an applicant on prohibited grounds. Such prohibited grounds of discrimination include age, gender, race, religious beliefs, and family status. You are able to confirm, however, that somebody is physically capable of performing the job.

4. Should I check references?

Short answer – Yes. In our view the most helpful question to ask in checking references is “would you employ this person again?”

During the Employment Relationship

5. What are my requirements with respect to pay?

You must pay at least the minimum wage, which is reviewed in April every year. If you provide board and lodging up to 15% of the Employee’s pay can be deducted. However, you can only deduct this if you have the correct clause in your Employment Agreement. This deductions clause stems from the Wages Protection Act 1983 and must provide for an Employee to give written consent to deduction. The deduction clause can, in some circumstances, be used if you overpay your employee by mistake.

6. What are my requirements in terms of leave?

In terms of annual leave, under statute every employee is entitled to 4 weeks annual leave per annum, although employers can naturally provide more if they so wish.

As of 2012 employees can also request to cash up one week of their annual leave, although employers have the right to refuse such a request. Employers can require employees to take their annual leave with 14 days’ notice should the parties not be able to agree on when annual leave is taken.

In terms of sick leave, employees are entitled under statute to 5 days per year having completed six months service. Of course more than the statutory minimum is sometimes provided by employers. Employees are entitled to take that leave when either they are sick, or to care for dependents who are sick. Employers may request evidence of illness after three days’ absence, or after one day’s absence should there be a good reason for requesting a medical certificate (and that proof is requested as soon as possible). Note that if an employer requires a medical certificate after one day’s absence, the employer must meet the cost of getting it.

In terms of public holidays, there are 11 per year and employees must be paid if the public holiday falls on a day which would have ordinarily been a working day. If an employee is required to work on a public holiday they must be paid time-and-a-half for any hours worked and given an alternative day off, that day to be agreed between the parties. It can be agreed between employers and employees to observe the public holiday on a different day.

7. What policies should I have in place?

It is advisable to have policies in place with respect to the following:

1. Health and Safety
2. Use of Internet and Computers
3. Smoking
4. If employees have work vehicles there should also be policies with respect to these.

8. How do I monitor my Employee’s performance?

An employee’s performance should be reviewed each year. Most Employment Agreements provide for this. Performance reviews are often, but not always, attached to pay reviews and these must be undertaken in good faith. Performance review should be meaningful and not just a box-ticking exercise.

If an employee is performing poorly they must take steps to try and lift their performance by providing them with adequate help before taking any further action. This may involve regular meetings and further training.

Ending the Employment Relationship

9. If an Employee resigns what are my obligations?

An Employee must serve out their notice period unless you choose to waive that notice. Following termination of the employment the employee must abide by any confidentiality provisions together with any restraints of trade, including non-competition and non-solicitation of clients or other employees.

10. What are the grounds on which employers may terminate the employment Relationship?

One ground is redundancy following a restructure. A restructure can only be undertaken for genuine business reason. The correct process must be followed which involves consulting with the Employee before making any decisions. Consultation must be in a meaningful way.

The employer can terminate the Employment Agreement for the employee’s breach of the Employment Agreement which generally arises from serious misconduct or sustained poor performance. Strict process must be followed and you are advised to talk to your lawyer prior to making any decisions.

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Contact our Employment Law Team today to discuss how we can assist you.

Is your drug and alcohol policy up to date?

On 2 June 2017 the Associate Health Minister Peter Dunne announced that cannabis product cannabidiol (CBD) will soon be available with a Doctor’s prescription.

Currently the therapeutic use of CBD products is an offence under the Misuse of Drugs Act unless the Ministry of Health gives their approval.

In light of this change we suggest it’s timely to review your drug and alcohol policy to ensure that it is up-to-date and addresses any potential health and safety issues arising from an employee taking prescription medications.

In particular check to make sure that your drug and alcohol policy (or your employment agreement ) requires employees to let you know if they using any medication which may impact on their ability to do the safely.

We also suggest that your drug and alcohol policy is amended to ensure that employees are required to provide you with a copy of their prescription (or information from their Doctor) if they claim a non-negative drug test result is due to taking a prescription medication.

If you would like any assistance with reviewing or amending your drug and alcohol policy and/or employment agreement please don’t hesitate to contact us.

Talk to us

Contact our Employment Law Team today to discuss how we can assist you.