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2016 Employment Law Round Up

2016 has been an eventful year and now it’s all but gone. To help you stay on top of developments and prepare you for a successful 2017 we’ve identified the most notable changes in employment law that have taken place this year.

HSWA Act bannerNew Health and Safety laws

The brand new Health and Safety at Work Act, which came into force in April 2016, has completely revamped health and safety in New Zealand. The Act has a wide scope, placing duties to ensure safety in the workplace, so far as reasonably practicable, on any person conducting a business or undertaking. Persons occupying positions that influence the management of the business or undertaking, such as chief executives, directors, partners, some senior managers, are also responsible for safety under the Act.

Unlike previous largely ineffective sanctions, this Act carries penalties that are both significant and likely to be imposed. Conduct that is reckless as to the risk of death, serious injury, or serious illness carries a fine of up to $3 million, or for an individual, a $600,000 fine and/or 5 years imprisonment. Failure to comply with a duty in the Act that does not expose anyone to death or serious injury or serious illness carries a fine of up to $500,000, or $100,000 for individuals. Failure to comply with a duty that does expose persons to a risk of death or serious injury or illness carries a fine of up to $1.5 million or $300,000 for individuals. The resignation of directors such as Peter Jackson earlier this year, arguably due to a desire to avoid liability for health and safety, shows that this Act is certainly being taken seriously.

No more zero hour contracts

Historically, a zero-hour contract is where the employer is not required to offer work, but the employee is required to be available for work. Under this arrangement staff only get paid when they are needed, which is often at short notice. Shifts can be cancelled without reimbursement for travel or other costs, and holiday pay, sick pay, and other employment rights are not guaranteed. These oppressive contacts were commonplace in companies such as McDonalds and Burger King.

Significant changes to the Employment Relations Act in 2016 mean that zero-hour contracts are largely a thing of the past. Businesses using this flexible arrangement must now guarantee certain hours of work each week, and must state in the contract when the work is to be performed and any flexibility in the time of the work. If the employer requires an employee to be available outside of the agreed hours, they must pay reasonable compensation. Additionally, employers can no longer cancel a shift without reasonable notice or compensation, or put unreasonable restrictions on employees taking on secondary employment.

Minimum entitlements penalties

When minimum entitlements owed to an employee are breached, the Employment Relations Act allows the Court or Authority to order the employer to pay a pecuniary penalty. These minimum standards include entitlements to annual holidays, public holidays, sick leave, and bereavement leave under the Holidays Act, entitlement to minimum wage under the Minimum Wage Protection Act, and the entitlement not to have your employer make undue deductions from your pay.

Previously, when these entitlements were breached, the approach towards penalties was an educative one where employers in breach were given a slap on the wrist. The penalty for a breach was up to $10,000 for individuals, or $20,000 for body corporates. Changes to the Employment Relations Act this year have upgraded the penalty to $50,000 for individuals, and for body corporates the greater of either $100,000 or 3 times the financial gain made from the breach. This embodies a significant shift in the approach to breaches in the hope that punitive penalties will be more successful in protecting extremely important minimum standards of employment than the lesser penalties. Just this month, the Employment Relations Authority ordered a horticulture labour contracting business to pay a $220,000 penalty on top of $208,184 arrears owed to its 75 employees for failing to pay minimum wage, holiday pay, or keep accurate wage or time records.

Investigating Misconduct

When allegations of misconduct such as sexual harassment, bullying, or theft, are made against an employee, the employer must “sufficiently investigate” the allegations before taking disciplinary action. There has been a common misconception that an investigation in this context must be perfect, however, in 2016 the Court of Appeal clarified the law around what constitutes a sufficient investigation.

In the case of A Ltd v H, the employee under investigation was a pilot who had entered the bedroom of a 19 year old flight attendant on her first overseas trip, uninvited, and had gotten in her bed and stroked her. He argued that the investigation was insufficient because he was interviewed “vigourously” but other interviewees were not. Also H’s interview was recorded while the other interviews were noted by hand. The Court of Appeal found that nothing turned on these factors and there was no requirement that all the witnesses be questioned in the same way. It was affirmed that the assessment for a sufficient investigation is whether there was substantive fairness and reasonableness rather than minute and pedantic scrutiny to identify any failings.

Parental leave

In 2016, changes to the Parental Leave and Employment Protection Act extended parental leave to include more workers and increased the flexibility of the scheme. Parental leave payments have been extended to workers with non-standard working arrangements, including casual, seasonal, temporary and fixed-term employees, workers with more than one employer and workers who have recently changed jobs. These workers may qualify for parental leave payments but not be entitled to primary carer leave.

The concept of “primary carer” now has the wider definition of a person who takes permanent primary responsibility for a child who is under the age of six. A biological mother can also now transfer some or all of her entitlement to parental leave payments to her spouse or partner, who then becomes the primary carer. Rather than 16 weeks, the primary carer is now entitled to 18 weeks leave with payment. If an employee qualifies for parental leave payments but not primary carer leave, they can make a request to their employer for “negotiated carer leave” which can only be refused in limited circumstances.

Also new is the option for employees to take their extended leave over more than one period. Upon agreement between the employer and employee, the employee may return to work for a time and then take the remainder of the time at some later point. Employees may also return to work for 40 hours of paid work called ‘keeping in touch’ days, during the 18 week period. These days are not compulsory and are only by mutual agreement between employer and employee.

Another new aspect is the introduction of preterm baby payments for employees who give birth before the 37th week of pregnancy. These payments cover the time between the baby’s birth until the end of the 36th week of pregnancy for a maximum of 13 weeks. After this, regular parental leave payments start.