The Employment Relations Amendment Bill introduces significant changes to New Zealand’s employment laws, particularly affecting high-income earners. These changes aim to enhance business competitiveness, especially for small to medium-sized enterprises (SMEs). However, the practical impact on balancing employer and employee interests remains a subject of debate.
Key Reforms Introduced
- Definitive Contractor Classification
A new ‘four-factor’ test will help distinguish between employees and contractors, providing clearer guidelines and reducing the risk of misclassification claims.
- Personal Grievance Eligibility Adjustments
Employees whose own serious misconduct contributes to a grievance will not be entitled to remedies for hurt and humiliation or lost benefits, though they can still claim lost wages.
- Income Threshold for Personal Grievances
A major change is that employees earning $180,000 or more annually will no longer be eligible to pursue a personal grievance for unjustified dismissal. Key details include:
- Application to New Agreements: The restriction applies to new employment agreements entered into after the law comes into effect.
- Transitional Period for Existing Employees: Employees already earning above $180,000 have a 12-month window to renegotiate their termination provisions if they wish to opt out of the personal grievance restrictions.
- Opt-Out Option: High earners can formally agree to opt out of the $180,000 threshold, preserving their right to pursue a personal grievance. This requires mutual consent between employer and employee, ensuring flexibility while still providing certainty for employers.
- Impact on Employers: For businesses, this change simplifies the management of high-income roles but also requires careful handling during the transition period to ensure agreements are updated correctly.
- Removal of the ’30-Day Rule’
The requirement for new employees to be employed on the same terms as a collective agreement for the first 30 days will be eliminated.
Anticipated Outcomes
- Contractor Classification: The new contractor class provides flexibility and reduces the risk of misclassification disputes.
- Personal Grievance Claims: While some claims may be reduced, employers must still navigate potential disputes carefully.
- High-Income Employees: The $180,000 threshold offers clarity for managing senior roles but requires proactive renegotiation to address existing agreements and allow opt-out choices.
Next Steps & Support
While the Employment Relations Amendment Bill introduces several changes aimed at increasing business flexibility, its effectiveness in rebalancing employer and employee interests, especially for SMEs, remains to be seen.
If your business or you as an employee are impacted by these changes – particularly the removal of personal grievance eligibility or the $180,000 threshold – we’re happy to help. Our team can assist with renegotiating agreements, guiding employees on their opt-out options, and ensuring compliance with the amended legislation.
Disclaimer: This update provides commentary on employment law, health and safety and immigration topics, it should not be used as a substitute for legal or professional advice for specific situations. Please seek legal advice from your lawyer for any questions specific to your workplace.