What to Expect in the Employment Standards Bill
In March 2015 the Government announced that it would look to strengthen the enforcement of minimum employment standards. As a result there will be an Employment Standards Bill, which is to be introduced into Parliament later this year.
Tougher Sanctions
Maximum penalties for not providing the required employment standards will be increased, such as $50,000 for an individual instead of $10,000, and the greater of $100,000 or three times the financial gain for a company, instead of $20,000 for a company. Serious or persistent breaches may result in an individual being banned from being an employer. Others, such as directors, senior managers and legal advisors can also be held accountable if they knowingly and intentionally involved when an employer breaks the law. It is also noted that employers will be publicly named if the Employment Relations Authority or Employment Court finds they have breached minimum standards.
Employment Relations Authority Approach
Of concern, the Bill will propose that more serious and systemic/intentional breaches of employment standards will be resolved at the Employment Relations Authority or Court, rather than being automatically directed to mediation services in the first instance as is now the case. The Authority will be able to send parties to mediation if it wishes, but will not have to in the first instance. Also, employees will be able to seek penalties at the Employment Relations Authority for any minimum entitlement breach, whereas currently this is only possible for breaches of the Wages Protection Act.
Record Keeping
We have recently seen an increase in the number of audits and potential prosecutions related to record keeping, and record keeping is an area also being addressed in the Bill.
The current requirements can be a bit unclear, with some inconsistencies between legislation. The Bill aims to address that and provide consistency of approach. It is also attempting to provide some flexibility with regards to the format for records, so long as the content meets the requirements.
Employers must keep detailed wage, time, holiday and leave records to show they are compliant with legislation. Clear-cut breaches of these obligations may in future result in an infringement notice with a penalty of up to $1,000 per breach, and a maximum of $20,000 for multiple breaches; a new tool available to Labour Inspectors being included in the Bill.
Zero Hour Employment Agreements
There has been much interest by the media and Unions about zero hour’s employment agreements and in July 2015 the Government announced this would also be addressed in the Bill. The Bill will retain the ability for employers to offer zero hour employment agreements but will require there to be some increased certainty, through additional requirements. One such requirement it will propose is employers being prohibited from requiring an employee to be available for more than their contracted hours unless they compensate the employee for that availability. Also, employees would be able to decline work that fell above their agreed number of contracted hours.
Employers would also need to give sufficient notice before sending an employee home or cancelling work, or they would otherwise need to compensate the employee for late notice of that change.
Another change that would impact many of our clients, is that the Bill will propose that an employer be prevented from restricting their employees in regards to secondary employment, unless they have a genuine reason, based on reasonable grounds, to do so. These grounds will not be detailed but will be related to the risk of loss of the employer of knowledge, property (including IP) or competitive advantage.
Deductions from Pay
The Bill will also propose that employers can no longer make deductions from their employee’s pay in relation to losses which the employee had no control over and no contribution to through negligence, including deductions from an employee for theft by customers. This will not affect other types of deductions such as for the provision of accommodation, where these have been agreed in writing, and other deductions in accordance with the Wages Protection Act 1982.
Do let us know if you would like assistance reviewing your employment arrangements, ahead of any possible upcoming changes.