What’s Next for Employment Law under the new Government?

The final results of the New Zealand 2023 General Election are in, and a Coalition Agreement has been reached between the New Zealand National Party (“National”), ACT New Zealand (“ACT”) and New Zealand First (“NZ First”).  

This article will explore how the new government may approach employment law issues in its first 100 days, and over the next three years (at least).

  1. 90-day Trial Periods

90-day trial periods are at the top of the political agenda, with the new government set to restore the ability for all employers to utilise 90-day trial periods, no matter how many employees they have.  Currently, only employers with 19 or fewer employees can utilise 90-day trial periods.  National has claimed it would pursue this change within its first 100 days in power. 

Provided an employee’s employment agreement contains a valid trial period, an employer may dismiss the employee within the first 90 days of their employment, and they do not need to provide a reason as to why.  An employee lawfully dismissed under a 90-day trial period is barred from raising a personal grievance claim in respect of their dismissal. 

Trial periods are a useful tool for employers and provides a perceived lower risk to hire.  However, legal issues can still arise, so employers utilising such a provision should do so with care.

While attractive to employers, there may be hesitancy from potential employees to accept employment subject to a 90-day trial period, where they feel they will not have the job security that would otherwise be provided to them in their first 90 days.

  1. Fair Pay Agreements

Both National and ACT have promised to abolish the Fair Pay Agreement Act 2022, a Labour Party initiative.  In theory, the system was designed to allow whole industries or occupations to collectively negotiate employment terms and conditions with all employers within the nominated industry or occupation. 

With several Fair Pay Agreements currently under negotiation, it appears that none of them will see the light of day before the new government abolishes this system.  ACT’s view is that the proposed abolishment will swing the power away from organised groups and back into the hands of individual parties, and that it will “support freedom to contract”.

  1. Flexible Use of Paid Parental Leave

National has stated that it would like to give more flexibility to parents to take paid parental leave as best suits them.  At present, the birth parent may transfer their paid parental leave to their partner, but parents cannot take this leave at the same time.  Similarly, they cannot stop-and-start their parental leave, it must be taken together.

While National’s proposal will not increase parental leave available to new parents, it instead proposes to modernise New Zealand’s rules around using it, by:

  • allowing employees to enter into alternate leave arrangements (such as one month on and one month off each)
  • entitling couples to take leave at the same time, or
  • to take parental leave one after the other.
  1. Contractor Status

ACT has proposed to amend the law so that independent contractors cannot legally challenge their status as an independent contractor if they have explicitly signed up for a contracting arrangement, noting it creates uncertainty for companies who use contractors. 

ACT noted a recent Employment Court decision (E Tu Inc v Rasier Operations BV [1]) which determined that some Uber drivers, typically considered independent contractors, should instead be classified as employees.

ACT has shown concern with the potential effects of this case, if upheld, stating that “basically any sector that engages contractors would face uncertainty”.

  1. Simplifying Personal Grievances

The Coalition Agreement between National and ACT states that the Government will consider simplifying personal grievances, and in particular, remove the eligibility for remedies if the employee is at fault, and setting an income threshold above which a personal grievance could not be pursued.

It remains to be seen how the personal grievance process may be simplified, and what that might entail. 

  1. Minimum Wage

The Coalition Agreement between National and NZ First provides for a commitment to moderate increases to minimum wage every year. 

  1. Migrant Workers

During NZ First’s election campaign, it promised changes for migrant workers and proposed replacing the Accredited Employer Worker Visa with the ‘critical skill shortage’ and the ‘critical labour shortage’ visas.  The party wishes to “minimise reliance on imported skilled workers” by ensuring there is more financial support for national apprenticeships for New Zealanders and ensure a strong supply of skilled workers from New Zealand.[2]

NZ First’s Coalition Agreement with National provides a commitment to:

  • improve the Accredited Employer Work Visa to focus the immigration system on attracting the workers and skills New Zealand needs
  • ensure Immigration New Zealand is engaged in proper risk management and verification to ensure migrants are filling “genuine workforce needs”, and
  • investigate the establishment of an “Essential Worker” workplace planning mechanism to better plan for skill or labour shortages in the long term.

With a change in government, there will be some interesting developments in the employment law landscape in the coming months, which will have an effect on your business and employees.  

Make sure to subscribe to the Edwards Law newsletter for future updates on changes your business needs to know about.

[1] E TŪ Inc v Rasier Operations BV [2022] NZEmpC 192

[2] The New Zealand First Party 2023 Election Planks & Key Announcements https://www.nzfirst.nz/2023_policies

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