Key Changes to Employment Relations Act 2000

Tuesday November 18, 2014

Key Changes to the Employment Relations Act 2000

The Employment Relations Amendment Bill (“the Bill”) was passed on 30 October 2014.

The Bill, which is the first piece of legislation passed by the new Parliament, amends various parts of the Employment Relations Act 2000 (“the ERA”).  The amendments will come into effect on 6 March 2015.  The material changes are as follows.

Rests and meal breaks

The new law removes guaranteed meal breaks if restrictions are deemed reasonable and necessary having regard to the nature of the work.

The current law states that employees are entitled to the following breaks:

One paid 10-minute rest break if the work period is between two and four hours;
One paid 10-minute rest break and one unpaid 30-minute meal break if the work period is between four and six hours;
Two paid 10-minute rest breaks and one unpaid 30-minute meal break if the work period is between six and eight hours.

The Bill removes the strict and formulaic approach to when breaks must be taken.  The new law will say that employers are required to give employees rest and meal breaks or provide compensatory measures where meal breaks are not provided, such as time in lieu.  The parties are required to negotiate in good faith and in the event that agreement cannot be reached, the employer may dictate when the break will be taken.  Employees and employers cannot contract out of the right to take rest and meal breaks.  The changes now mean an employee either gets a break or a compensatory measure.

Labour Minister Michael Woodhouse said the move is aimed at providing flexibility, not taking away the rights of employees.  The changes are purported to be an attempt to balance the importance of rest and meal breaks with the need for breaks to be practical for each workplace.

It is worth highlighting that under the new legislation, any other law that requires an employee to take rest and meal breaks takes priority over the Bill (this will include the new Health and Safety legislation when it becomes law).

Flexible work hours

The existing law allows employees who have been employed for over 6 months and who are responsible for the care of any person to request flexible work arrangements every 12 months. The law requires the employer to respond within three months.  Currently, employers are not obligated to agree to such a request and there is a wide discretion for employers to refuse flexible working requests .

The right to flexible working arrangements is no longer confined to those with caring obligations.  Any employee may now make a request of their employer.  There will be no limit on requests and the employer is obliged to respond within a month.

Collective bargaining

The Bill allows collective bargaining to end with no agreement between the parties rather than going on indefinitely for fear of breaching the requirement of “good faith”.  Once the amendments come into force, and if one of the parties believes negotiations are getting nowhere, it can seek a declaration from the Employment Relations Authority (“the Authority”) that bargaining has concluded.  Industrial action, or new bargaining, initiated by either party then becomes lawful.  In our view, this amendment should encourage agreement between the parties.

Multi-Employer Collective agreements

At present if a workforce votes to be covered under a multi-employer collective agreement (“MECA”), the employer must join the negotiations.  The Bill will allow employers to opt out of a MECA at the start of negotiations notwithstanding that the workforce may have voted to be part of one.

30-day protection

The Bill removes the current 30-day obligation that entitles new employees at least the same terms and conditions from a collective agreement as those employees doing the same work who are covered by a union, even if the new employee does not belong to a union.

Strikes and lockouts

The Bill ends open-ended strikes or lock-outs and ensures they cannot continue indefinitely.  It does so by providing that any employer, group of employees or union must give advanced written notice of their industrial action as well as a start and finish date.  Although it is argued that by notifying a finish date, the effect of a strike (and lockout) is somewhat lessened, it can still be effective and allows the action to end without either side conceding defeat. 

The new law also gives employers the power to deduct 10 per cent of an employee's pay as a response to a partial strike.

Continuity of Employment: Part 6A of the Employment Relations Act

Part 6A of the ERA has the objective of providing continuity of employment for employees in specific industries (such as cleaning, catering, orderly and laundry) when a business is restructured or sold.  These employees are protected and have the right to transfer to the new entity taking over their work, to bargain for redundancy or have the Employment Relations Authority set it.

Under the new law, any company with less than 20 employees will be exempt from Part 6A.  The Bill introduces (among other timeframes) a timeframe for employees to choose to move to a new employer.  The Bill also requires a former employer to provide a new employer detailed information on each employee that is transferring.  The new employer is also better protected from an increase in employees costs or changes to terms and conditions of employment that are unsubstantiated.

The current law allows classes of employees with the Part 6A protections to be changed by regulation however the new law removes such flexibility and any alteration must be made by Parliament through amendments to the ERA.

In our view, the Bill aims to give more certainty and clarity to employers while keeping these key benefits for those employees who could be affected.

Employment Relations Authority

The Bill introduces requirements for when and how the Employment Relations Authority ("the Authority") must give determinations.

At the conclusion of an Investigation Meeting, the Authority Member must (where practical):

Give an oral determination, and a written record of that determination within 1 month; or
Give an oral indication of the Authority’s preliminary findings to the parties (unless extra evidence is provided) and deliver a written determination within 3 months of the investigation meeting or when extra evidence is provided, whichever is later.

The Authority can reserve its determination if there are good reasons why it is not practical to give either an oral determination or indication of preliminary findings.  However, a reserved determination must still be delivered within 3 months of either the Investigation Meeting or any extra evidence being provided (whichever is later).

Good faith

Under the current legislation, parties are required to deal with each other in good faith.  The duty of good faith is wide and includes the requirement for employers to allow employees to have access to information to any decision that may have an adverse effect on the continuation of their employment (except if there is a good reason otherwise).

Good reasons not to disclose information currently include, complying with statutory requirements to maintain confidentiality, protecting the privacy of natural persons and protecting the commercial position of an employer form being unreasonably prejudiced.

The Bill extends the circumstances under which an employer may refuse to disclose information.  This is in response to a recent Employment Court decision.   The Bill aims to clarify what information employees are entitled to during situations where their employment may be at risk.

An employer must now give the affected employee relevant confidential information that their employer holds about that particular employee.  However, the employer may decline to disclose if the information is:

About an identifiable individual other than the affected employee;
Is evaluative or opinion material for the purpose of making a decision;
About the identity of the person who supplied the material;
Subject to any statutory requirement to maintain confidentiality;
Where necessary, for any other good reason, to maintain confidentiality.

Employees are still entitled to know the identity of their accuser or the nature of allegations made against them unless there is good reason to keep this information confidential.

We also note that none of the current or proposed legislation reduces any obligations of an employer obligations under the Official Information Act 1982 or the Privacy Act 1993.

Concluding comments

Any employer (or employee) who has any concerns with these amendments should seek legal advice before making any decisions on what steps they should take.

This article was written by Jeremy Sparrow

The information contained in this article is general information only, and does not constitute specific legal or other professional advice and should not be relied on as such. Readers should obtain specific advice before making any decisions or taking any action based upon information contained in this document.

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