Jeremy Sparrow

Earlier this week the Workplace Relations and Safety Minister Brooke Van Velden gave a speech to the Auckland Business Chamber, reiterating her priorities following the conclusion of the Government’s 100-day plan in which Fair Pay Agreements were abolished, and the availability of 90 day trial periods extended to all new employees. The Minister has confirmed that delivering changes to the Holidays Act (“Act”) is one of her top priorities, which is likely to be welcome news to both employers and employees. Compliance with the Act has been difficult and costly for employers and payroll providers. The Labour Government put together a taskforce in 2018 to address the many issues being experienced by employers when calculating leave and holiday entitlements. The taskforce made a number of recommendations, all of which were accepted (for further details on these changes see our previous article here). A draft Leave Entitlements Bill was prepared, however was not introduced prior to last year’s election. The overarching issue with the Act is that there are multiple ways to calculate an employee’s holiday pay, and the Act has struggled to keep up with working arrangements outside of a normal five day a week salaried employee. Payments such as bonuses, commission, or if an employee works variable hours mean that the calculations are not straight forward and are often done incorrectly. The changes proposed were an attempt to simplify these calculations. The Minister has now confirmed that the changes recommended by the taskforce and the draft Bill will not be “simply rubberstamped” and will be subject to scrutiny as well as consultation with key stakeholders. She went on to say “if the policy is difficult to draft, chances are businesses would have a tough time implementing it too”. This indicates a major reset of the Act, and the changes which we had expected, could be on the way. Other indicated changes to employment law include a change to the rules surrounding contractors (with the Court of Appeal due to hear the Uber case this month (see here for our previous advice regarding this), we are likely to also have further developments in this area from the Courts later in the year) and changes to personal grievances. The Minister has asked for advice on whether an income threshold for raising a personal grievance can be set and removing eligibility for any remedies when an employee is at fault. The Minister has been very clear that she would like to receive feedback from the stakeholders who will eventually have to work with the Act and it is important that businesses use this opportunity to have a say on the Act. The majority of employers have struggled to achieve strict compliance with the Act due to its many complexities. Putting forward issues which regularly impact your business will ensure these can be given consideration. Our team will be closely monitoring this and will provide specific information on how feedback can be given when this information is available. If you require assistance with your current obligations under the Act, or would like to discuss providing feedback then please feel free to get in touch with a member of our specialist employment team.

On Monday 11 December 2023, the new three-party Coalition Government confirmed that the Fair Pay Agreements Act 2022 would be repealed, and that the use of 90 day trial provisions will be extended beyond small businesses. It is the Government’s intention that these changes will be implemented through a Member’s Bill which will be passed under urgency before Christmas. There are also other proposed changes to employment law that have been signalled by the new Government. 90 day trials Currently the use of 90 day trial periods, which allow an employer to dismiss an employee without being required to provide any reasons for the dismissal, is limited to businesses with 19 or fewer employees. The change will mean trial periods are available to all employers when taking on a new employee regardless of the number of employees. If done correctly, dismissal pursuant to a trial period clause means an employee is unable to raise a personal grievance for unjustified dismissal. The change restores the position as it was under the previous National Government. The new Government considers that this change will allow greater opportunities for employees as employers could then take a risk on someone who “might not tick all the boxes in terms of skills and experience but who has the right attitude, without the risk of a costly dismissal process”. It is important to note that employers will still be required to comply with the existing provisions under the Employment Relations Act 2000 which relate to trial periods, such as ensuring the trial period is limited to new employees, and agreed to in writing before the employee starts work. We suggest employers wanting to utilise 90 day trial periods touch base with our employment team to ensure that these clauses are correctly drafted for inclusion in employment agreements and meet all requirements to allow them to be used as intended. Fair Pay Agreements Fair Pay Agreements were introduced by the previous Labour Government to try and improve the collective working conditions and wages of particular sectors. It allowed workers to negotiate collectively, in an attempt to increase their negotiation and bargaining power. The Government has now confirmed that this will be repealed. Currently six sectors have successfully applied to start negotiations (including security, hospitality and cleaning) but none have yet received a Fair Pay Agreement so it appears these will not advance any further. It is important to note that even with the change, collective bargaining will still continue under Part 5 of the Employment Relations Act, just without the formal process provided by the Fair Pay Agreements Act. Other signalled changes The Coalition Agreement entered into by the new Government also signals its intention to progress several key changes to personal grievances. This would include removing eligibility for an employee to claim remedies, including financial compensation, for a personal grievance where the employee is at fault. Additionally, the Government plans to put in place income thresholds for personal grievance claims. If an employee earns over a certain amount then they will be statutorily barred from raising a personal grievance claim. The specifics of this are still to be confirmed, however may take a similar form to a Bill introduced by the National party while in opposition (the Employment Relations (Allowing Higher Earners to Contract Out of Personal Grievance Provisions) Amendment Bill) which included a provision allowing employment agreements to contain a clause preventing an employee from raising a personal grievance if that employee earnt over the set threshold. It is unclear at this stage what the Government intends to set the income threshold at. Independent contractors are another area of employment law which the Government has indicated it wishes to reform. Under the Coalition Agreement “contractors who have explicitly signed up for a contracting relationship can’t challenge their employment status”. This would be a big shift away from the current legal position which allows the Courts to look beyond the written agreement and at the true nature of the relationship between the parties. This will mean that those wishing to enter into an independent contractor arrangement will need to be careful as to how this is documented to ensure it accurately reflects the parties intentions. Other smaller changes indicated by the new Government include stopping work on the income insurance scheme, allowing for moderate increases to minimum wage, a commitment to providing greater protections against migrant worker exploitation, reforming health and safety law, and increasing the annual cap on workers under the Recognised Seasonal Employer scheme (likely a welcome announcement to the horticulture industry). If you would like further information regarding the upcoming changes, or to amend your employment agreements to include trial periods, please do not hesitate to get in touch with a member of our specialist employment law team.

Given the current economic conditions facing employers in New Zealand, it is predicted that pay rises for employees will be at far lower levels than those seen during the past two years. However, employees are also aware of the relatively tight labour market and are themselves facing increased living costs, which may mean they are willing to look for other employment opportunities if their expectations are not met. This can provide a difficult situation for an employer. The need to keep pay increases to a minimum will need to be balanced against the need to retain valued employees and limit the costs of recruitment and training for new employees. So, is there anything an employer can offer that won’t negatively impact the bottom line but might keep employees motivated and committed? Well, one possible solution could be the introduction of “Summertime Hours”. Put simply, Summertime Hours represent a set period of time during those (hopefully) warm, sunny months when employees are able to end their working day a few hours earlier to make the most of the (fingers crossed) great weather. For example, Summertime Hours could be specified as being a 3.00pm finishing time on Friday afternoons during the months of January and February. The upside to Summertime Hours? Firstly, your employees will be even further convinced that they are working for the right employer, meaning that more employees will choose to stay in your employment and will not be tempted to look elsewhere for alternative roles. Secondly, it will boost staff morale on the whole, and a happy workplace leads to better results all round. Furthermore, this initiative is unlikely to cost you anything. It is very possible there will be little impact on productivity levels because employees will show their gratitude by ensuring they put in extra effort throughout the rest of their week as a show of appreciation (and to ensure the Summertime Hours happen again next year). As was seen with the introduction by some employers of four day weeks, employees continued to have the same level of output even when working within the condensed time frame. Finally, it is a great way to boost your public reputation as a good employer, meaning you may be first choice for potential employees looking to be hired. There may of course be reasons Summertime Hours would not work. For example, it may be difficult for some businesses to implement Summertime Hours if there are certain employees whose roles necessitate them remaining in the workplace until the usual close of business time (while everyone else is flying out the door with their beach towel slung over one shoulder). You don’t want to create division as this may lead to frustration and feelings of unfairness, but workarounds might be found (ie. those particular employees take the time off at a different time or day of the week). Another reason Summertime Hours may not work is if they become an administrative hassle to organise (ie. if employees want to take advantage of the early finish, but request for it to occur on a different day to the one you were willing to offer). This may mean that more time and effort goes into the implementation of the policy than was initially expected. Overall, Summertime Hours do seem able to provide a real benefit to employees that will boost the morale of the whole workplace, while not adding to wage and salary costs and having no detrimental impact on productivity. As such, it may be an idea worth serious consideration. The key to successful implementation of a Summertime Hours Policy is to ensure that the terms of the policy are clear and workable. The first step might be to raise the idea with your managers and/or employees and get feedback as to whether it would be something they think is a good idea (note: we predict they will say “yes”), how they see it working in your workplace (ie. the most appropriate day, how they will plan their time to ensure all required work is completed as usual), and to get ideas about what the parameters should be (for example, it will only happen on a Friday afternoon, and only until the end of February). If you want to discuss a possible policy for your employees, or any other employment related policy ideas that you might have, we are happy to help and will ensure you have a clear and well-drafted document for everyone in your workplace to follow. If you have any general employment related queries or topics of interest that you would like us to cover in our upcoming articles, please let us know!

Chief Judge Inglis of the Employment Court has delivered her anticipated decision declaring six Gloriavale women as employees for their time at the remote Westland Christian community. Facts Serenity Pilgrim, Pearl Valor, Rose Standtrue, Virginia Courage, Anna Courage, and Crystal Loyal referred to as the “Gloriavale Six” by the media, were all born into Gloriavale and remained there until leaving between 2017 and 2021. From the age of about 6 years’ old they helped in the communities’ kitchen, laundry, and sewing facilities. By the age of 15, they had all left school to work full time in groups called “Teams” which fulfilled the domestic needs of the community. For example, in 2018, the Teams produced on average 11,000 meals and washed 17,000 items of laundry per week. The evidence showed that the working environment was “unrelenting, grinding, hard, and physically and psychologically demanding”. After leaving the Community the women made a complaint to the Labour Inspector regarding the working conditions they had faced. Two investigations were completed in 2017 and then in 2020/2021 but did not result in a finding that the Gloriavale women were employees. This led to the women escalating matters to the Employment Court. They are also simultaneously suing the Labour Inspectorate for breaching their statutory duties which will be heard separately. Volunteers? The Employment Relations Act 2000 excludes certain workers, such as volunteers, from being categorised as employees. Volunteers are defined as workers who do not expect to be rewarded for their work do not receive any reward for their work. Gloriavale argued that the women were volunteers. Despite not earning wages, the women received food, shelter, clothing, religious support and guidance, and the promise of spiritual redemption against the threat of eternal damnation. The evidenced showed that high value was placed on these factors, likewise with Gloriavale’s reliance on the Teams for their work in the communities facilities. The Chief Judge was satisfied that the women were not volunteers as they did expect to be rewarded for their work and they did in fact receive reward for this work. However, the women were not automatically declared employees because they were not volunteers. Employees? In determining whether an employment relationship existed between the women and Gloriavale, the Chief Judge was required to examine all relevant factors when considering the real nature of the relationship. The Chief Judge considered the following factors demonstrated that an employment relationship did exist with the six women: While many current residents of Gloriavale demonstrated a strong willingness to work, in reality the women had little choice about whether they work or not. If they refused to work they would be required to leave the community and lose their family, friends, and everything they had known in life. The evidence recorded the women’s subservience to the Overseeing Shepherd and male leadership group in all things including their work. Working was an expectation, and they were rostered on the Teams from 16 years old. At work they could not freely move between Teams or areas ie. from the kitchen to the laundry without asking for approval. The Chief Judge compared the working condition to that of a large scale hostile. There were commercial sized kitchens and industrial scale equipment. Both current and former residents provided evidence that the work of the Teams was essential to the operation of the community. The Chief Judge recognised that this type of work would be generally paid for if outside of the community. The Court rejected Gloriavale’s argument that the women were merely doing work “domestic” in nature. Nor was it accepted that the work was done for each of the women’s family or some kind of notional family. Relatedly, the Chief Judge recognised that the community’s way of life and religious tenets were relevant in determining the employment status of the women, but it was ultimately not decisive. Overall, the Court determined that the women were subject to strict direction and control akin to an employment relationship. Implications This decision only applies to the six women and not all current Gloriavale members. The women will be entitled to minimum employment entitlements, including minimum wage, annual leave, and sick pay. However, the Court still needs to determine which entity or person was the employer of the women and therefore liable to pay the minimum entitlements. Due to the complex organisation structure, the Court adjourned to allow for further evidence and arguments to be raised in this respect. This decision shows that the Employment Relations Authority and Employment Courts will look past the labels used by parties to determine the real nature of the relationship. In conjunction with the recent Uber decision, it illustrates an increasing focus on ensuring that groups of workers are not being exploited and are receiving the minimum employment entitlements. The decision also highlights that rewarding a worker in means other than money does not preclude them from being classed as an employee. This is especially relevant for not-for-profit organisations who have volunteers and workers who exchange their time for services. Gloriavale has stated that they will be appealing the decision, claiming “that the decision will have a significant effect on how faith-based communities, iwi, and whanau choose to live and structure their household responsibilities”. This was recognised in the decision where the Chief Judge said: “The Court’s role is confined to determining employment status and whether workers are able to access minimum entitlements and protections, not spiritual issues or matters of religious dogma.” How can we help? If you would like further information regarding the decision and the impact that this decision may have on your business and your staff, please contact a member of our employment law team.

Amendments to the Employment Relations Act 2000 means that from 13 June 2023, employees will have 12 months to raise a personal grievance related to sexual harassment. Employers should be aware of changes that will be required for all new employment agreements. The new law extends the timeframe for employees to raise a personal grievance with their employer for sexual harassment claims from 90 days to 12 months. The timeframe commences from the date on which the action alleged to amount to a personal grievance occurred or the date the employee became aware of the action, whichever is later. The new law will not allow for any retrospective/backdated sexual harassment personal grievance claims. The extended timeframe will only apply to cases where the sexual harassment occurred or came to the employee’s attention on or after 13 June 2023. The previous 90-day period will continue to apply to any sexual harassment that occurred before the new law came into force. What steps are employers required to take? Employment Agreements Employment agreements entered into on or after 13 June 2023 will need to reflect the new law. It is a legal requirement for employment agreements to contain information on how to resolve employment disputes, as well currently including a specific reference to the 90-day time limit period for raising personal grievances. Employers will now need to refer to the extended 12-month timeframe for sexual harassment claims for all new employment agreements finalised on or after 13 June 2023. Failure to do so may result in the employer being liable for a penalty, and could provide a defence to an employee if they failed to raise a personal grievance claim within the new 12-month period. We recommend that employment agreement templates are updated accordingly. Employment agreements are not required to be updated for current employees (employed prior to 13 June 2023). Policies Employers should carefully review company policies that refer to time periods for raising personal grievance claims, and update these to reflect the new 12-month period for sexual harassment claims. How can we help? Please let us know if you would like any assistance in updating your employment agreement templates and policies to reflect this change. It may also be a good opportunity for employers to also undertake a more general review of their employment documentation to ensure compliance and best practice.