On 14 October 2023, New Zealanders will take to the polls to choose a new government, but many people, especially business owners and employers, remain divided and unsure about who they’ll be voting for. In this blog, we’ll explore the changes that could occur after the election, and how they might affect, change, or support your HR operations as an employer.
The influence of politics on business
In an economy with shortages of skill and labour, it’s shaping up to be a busy and disrupted year in the employment law space, and this is expected to continue into the new year.
This can have a big impact on employers when setting remuneration and benefits to attract and retain staff, staying on top of your obligations when it comes to immigration and visa requirements, meeting minimum employment standards, and looking after the health and well-being of your team members.
In addition, with the continuous increase in the cost of living and potential redundancies, we keep reading news articles telling us to get ready for an economic downturn. As expenses, employee wages, and regulatory requirements increase, employers might find themselves in the challenging position of having to make difficult choices for their businesses.
Trying to strike a balance between the aspiration to attract and keep top-notch talent and the practical challenges posed by rising expenses is difficult when trying to remain financially stable.
In this election year, we think you can expect proposed employment law changes from various political parties.
The major parties: what can we expect?
Note, the information available to us tends to be more on expected changes in employment law from the current Labour government, while information from other parties is currently unavailable or less specific in this space.
A Labour Government
The current labour government introduced Fair Pay Agreements, and this is one of the biggest changes to employment law we’ve seen since the introduction of the Employment Relations Act 2000.
We’re also awaiting the government’s proposed Income Insurance Scheme, designed to support workers facing health issues, disabilities, or job loss by providing recovery time and financial security. Funding, like ACC, would involve contributions from employers and employees, but there’s no set timeline yet.
The current labour government is moving forward with amendments to the Holidays Act 2003, e.g. making sick leave, bereavement leave, and family violence leave available from day one of employment. Sick leave accrual will begin immediately, and this is expected to be rolled out this year.
This area of law has created confusion in several areas, specifically with the calculation of leave entitlements. Following public consultation and the usual reading stages in Parliament before being passed into law, we could further expect the following:
- Removal of ‘pay as you go’ provisions for fixed-term agreements, streamlining the leave process for employees.
- Employees returning from parental leave could be eligible for the accumulation of 4 weeks of Annual Leave based on the previous 12 months, regardless of their absence period.
- Expansion of bereavement leave entitlements to cover a wider range of family members.
A National Government
Whereas, a National-led government brings a different perspective about rebuilding New Zealand’s economy and supporting profitable business strategies. E.g. The National Party plans to repeal Fair Pay Agreements and potentially reintroduce trial periods for employers with more than 20 employees, which at present is legislatively only enforceable for businesses with 19 or fewer employees on the day on which the employment agreement is entered into.
The reintroduction of trial periods for employers with more than 20 employees will be a gamer changer for Kiwi businesses. National had brought in trial periods when it was last in government and tested the scheme in small businesses for some industries in 2009, before rolling it out nationwide in 2011.
This may be one of the biggest shifts in the employment space for small and medium sized businesses. National’s view is that implementing a trial period for employers with more than 20 employees is a good way for an employer to engage an employee, particularly when we have 55,000 more New Zealanders on unemployment benefits today, at a time of record law unemployment and increasing worker shortages.
In addition, National could:
- Introduce a childcare tax rebate for families earning less than $180,000 per year.
- Change parental leave rules to allow parents to take paid leave at the same time and to have more flexibility in alternative leave arrangements, giving parents the choice to take paid parental leave at the same time, one after the other, or in overlapping instalments.
- Adjust income tax brackets for inflation.
- Increase the cap on seasonal workers.
- Relax rules for agricultural workers on the Accredited Employer Work Visa.
- Increase powers for Labour inspectors.
This last point is particularly interesting considering the law firm Lane Neave recently brought out an article that INZ has increased its workplace site visits by 32%, and the Labour inspectorate increased its workplace investigations by 120% in the six months up to 31 July 2023, compared with the six months prior. And, that 90% of investigated businesses were found non-compliant with workplace law regulations.
It's likely that under a National led government businesses are going to need to put compliance of Employment Law at their forefront when engaging new staff.
Relax rules for agricultural workers on the Accredited Employer Work Visa.
What are the smaller parties proposing?
ACT Party coalition
ACT plans to also repeal Fair Pay Agreements, because it's their view that this is an attack on freedom of association and will hurt the economy to the point that Labour won’t work.
Their vision for New Zealand is that firms and workers have the right to make their own agreements and that there is flexibility and innovation within the economy which New Zealanders can create new opportunities through freedom.
The ACT Party is proposing an amendment to the Employment Relations Act 2000 with a more clear definition of what contractors are, so they can't challenge their employment status in court. This was followed by a landmark decision in the Employment Court in 2022, deeming Uber drivers as employees, not contractors and should be subject to the same rights and protections - including minimum wage, sick leave and holiday pay.
This particular policy would mean:
- Contractors would have their status as a contractor - without employee rights - specified in a written agreement.
- Workers would be given sufficient information and an adequate opportunity to seek advice before entering a contract.
- Agreements must not restrict workers from performing services or work for other businesses, including competitors except during the period of their contract.
- Businesses would be unable to terminate contractors for not accepting a specific risk.
- Businesses must keep detailed records to show compliance with minimum entitlement provisions.
Green Party Coalition
The Green Party aims to reduce inequality, safeguard working conditions, and enhance the well-being and rights of working individuals in New Zealand. They have expressed that they're committed to providing strong workplace protections and supporting unions in their efforts to negotiate better conditions for their members and strive for a better working life for everyone.
In particular, with their strategy for strong rights and fair pay, they plan to:
- Ensure that the minimum wage increases are at least in line with inflation.
- Guarantee the right to redundancy pay for all workers and prioritise income insurance with a focus on equitable benefits for low-wage and insecure workers.
- Introduce default union membership, making it automatic for new employees, with an option to opt-out.
- Enact legislation to establish the right to engage in solidarity strikes and political strikes.
- Provide stronger protections for contractors, allowing them to be covered by Fair Pay Agreements and participate in industry-specific collective bargaining, while also strengthening collective bargaining mechanisms for employees.
- Allocate additional resources to the Labour Inspectorate, WorkSafe, and the Employment Relations Authority to ensure workers can effectively uphold their workplace rights.
- Ratify the International Labour Organisation’s Violence and Harassment Convention to address workplace violence and harassment, and implement reforms to prevent and respond to bullying, harassment, and sexual harassment in workplaces.
- Phase in five weeks of annual leave for employees, implement recommendations from the Holidays Act Taskforce, make bereavement leave entitlements culturally appropriate for all New Zealanders, and recognise the cultural significance of tangihanga for Maori.
Get in touch with us
Economic and employment law uncertainties often prompt businesses to consider restructuring and potential layoffs. Legal advice and reviewing employment agreements are crucial in this process, which MyHR can help with, so don’t hesitate to reach out to our team of HR experts.
*We hope this article has provided some helpful information. It is not intended as a complete guide. The views expressed in this blog is solely that of the author and does not necessarily reflect the views of the company.
