Wednesday 23 December 2020

Much has happened during 2020.  We have seen a Government which is able to self-govern for the first time since MMP was introduced, we have seen a number of tragedies from the Christchurch terror attacks to the White Island eruptions, and we have seen New Zealand come together in order to combat a pandemic which is unparalleled by anything seen in recent history.  With New Zealand now formally out of a recession, signs are pointing to a more positive 2021.

In the employment law sphere, we have seen a number of changes and events as well.  We are expecting more changes to come from a Labour-led Government, which is supported by the Green party through a Co-operation Agreement.  This article sets out some key changes which occurred throughout 2020, and looks forward to what we are expecting in 2021.

Workplace relations and safety

Labour’s policies are not intended to be wide ranging, instead, the Party made it clear that their priority is the COVID-19 Recovery.  This seems appropriate given the instability caused by COVID-19.  That said, we can expect Labour to add to their existing policies to increase protection for workers and unions.  At the same time, these changes will increase compliance costs for many New Zealand businesses.

Minimum Wage Increase

Under the Labour-led Government, minimum wage will increase to $20 per hour from 1 April 2021.  This marks an increase from the current $18.90 per hour rate.  The increase represents an increase minimum labour cost of $1.10 per hour, and will significantly increase labour costs for employers all over New Zealand.  The increase has been particularly controversial for employers who may continue to struggle following the impact of COVID-19.

Equal Pay

Through the Equal Pay Amendment Act, passed earlier this year, the Government is committed to further facilitating pay equity for women.

Although there is not a significant amount of detail as to how the Government will achieve this objective, this is certainly a space to keep watching.

Holidays Act 2003: Review and Entitlements

Another notable policy for Labour is to strengthen and simplify the Holidays Act.  Labour will also increase the age requirement for those performing hazardous work, as well as increase the minimum sick leave entitlement to 10 days, doubling the current minimum entitlement of five.

On this last point, the Government recently introduced the Holidays (Increasing Sick Leave) Amendment Bill to Parliament, which seeks to implement its controversial sick leave campaign promise.  The Bill increases a qualifying employee’s entitlement from 5 to 10 days’ sick leave per entitlement year.

Despite the increase, it will retain the maximum amount of sick days an employee may accrue (currently 20).  Any changes will come into force 2 months after the Bill receives royal assent.  It is expected to be passed sometime around the middle of next year, so we can reasonably expect any changes to come into force in the last third of 2021.

We also await the recommendations of the Holidays Act Taskforce, which was established in May 2018 to review the Holidays Act 2003.  Moreover, we await the Court of Appeal’s decision in the recent Metropolitan Glass case.

Labour’s pledge to simplify the Holidays Act 2003 is undoubtedly positive for employers, and we expect that changes will be forthcoming.  Of course, the recommendations of the Taskforce will be the starting point, and we anticipate that the outcome, and ensuing implementation of the relevant recommendations will greatly assist employers’ understanding of, and compliance with their obligations under the Act.

Collective Bargaining

Back in 2018, several amendments were made to the Employment Relations Act, which reversed many of the changes previously introduced by the National Government.  Many of these amendments related to the collective bargaining process.  For example, pay deductions for partial strikes are now outlawed, and unions can initiate bargaining 20 days before an employer.

It is expected that potential changes would strengthen the Employment Relations Act and make collective agreements more difficult to undermine.  It will be interesting to see just how much the Act can be strengthened without adding excessively burdensome obligations on businesses.

Fair Pay Agreements

Last year, it became clear that Labour’s Fair Pay Agreement policy would not be implemented before the 2020 Election.  This was primarily due to COVID-19, which necessarily hijacked the Government’s focus.

A Fair Pay Agreement would establish sector-specific minimum employment standards.  A worker who is party to such an agreement would have secured minimum employment terms and conditions (such as rates of pay, and hours of work), developed via sector-level bargaining.  This would require a sector-level bargaining system to be designed, in respect of which recommendations were sought from the Fair Pay Agreement Working Group (set up in June 2018).  In December 2019, the Working Group provided its recommendations to the then Minister for Workplace Relations and Safety, Iain Lees-Galloway.  You can read the full report here.

With Labour being granted a new term in Government, we may reasonably expect such legislation to be passed in the next three years.

Impact of these changes?

The question to consider is whether the policies outlined above would really benefit businesses, particularly those businesses that have been detrimentally impacted by COVID-19.

The increase in minimum wage, together with increased compliance costs will certainly see an increase in business operating costs.    This is an area of concern for many businesses around New Zealand.

In regard to the minimum wage increase, Business NZ noted – in its Annual Review of the Minimum Wage 2020 – that the minimum wage increases in 2019 and 2020, and that proposed for 2021 is approximately double that in previous years.  It has also recommended that “a moratorium be placed on increases to the minimum wage at least until such time as COVID-19 related restrictions are removed from international travel and trade and preferably until NZ is out of recession”.  We agree.  Whilst increased wages will initially increase the standard of living for the worker, it will inevitably cause flow on effects all over New Zealand.

Business NZ also notes that many employers are discouraged from providing “other enhancements” to conditions of employment, such as well-being related benefits and subsidised health care, due to the compulsory increases.  Nevertheless, come 21 April 2021, the current expectation is that minimum wage will be increased.

Other Relevant Legislation

Privacy Act 2020

On 3 June, the House sat under urgency and passed the Privacy Bill through the Committee of the Whole House stage.  The new Act came into force on 1 December 2020, and introduces a number of amendments to the old Privacy Act 1993.

One of the key changes introduced by the Privacy Act 2020 is the introduction of a privacy breach notification regime.  This requires a business or organisation to notify the Office of the Commissioner and the affected individual(s) as soon as practicable after becoming aware that a notifiable privacy breach has occurred, unless certain exceptions apply.  The Act deems it an offence to fail to notify the Commissioner of a notifiable privacy breach – an agency that commits such an offence is liable on conviction to a fine not exceeding $10,000.

Under the new Act, the Privacy Commissioner also has the ability to issue businesses with compliance notices.

Further, the Act now has clear application to overseas agencies, if those agencies are in the course of carrying on business in New Zealand.  Therefore, overseas businesses will have to carefully consider whether they are complying with the relevant requirements, regardless of whether they have a physical presence here.  Moreover, New Zealand businesses which disclose personal information to foreign agencies will be required to ensure that the foreign agency is required to protect the disclosed information in a way which provides comparable safeguards to those in the Privacy Act 2020.

The Office of the Privacy Commissioner has recently released its Compliance and Regulatory Action Framework, which provides detailed information about how the Office will approach the Privacy Act 2020.  Among other things, the Framework details the Office’s approach to compliance, guiding principles, decision factors and the confidential process involved.

It is important that employers are aware of these recent changes, and how it may affect their business.

Whistleblowers’ Protection Bill

Back in June 2020, the Minister of State Services, Chris Hipkins introduced the Protected Disclosures (Protection of Whistleblowers) Bill, which will replace the Protected Disclosures Act 2000.  The explanatory note to the Bill explains that it continues the purpose of the Act, which is to promote the public interest by facilitating the disclosure and investigation of serious wrongdoing in the workplace, and by providing protection for employees and other workers who report concerns.

The Bill is intended to address four broad problems that current guidance and standards cannot address without change, namely:

  • both organisations and disclosers are confused about when to use the Act;
  • disclosers are unclear about how to make a disclosure internally, and some organisations are also unclear about how to respond;
  • it is hard for disclosers to navigate the system for reporting concerns externally; and
  • disclosers fear speaking up because they lack confidence in the protections available to them.

The Bill proposes to address these problems via a number of methods, including:

  • clarifying the definition of serious wrongdoing;
  • strengthening protections for disclosers by specifying what a receiver of a disclosure should do; and
  • clarifying the potential forms of adverse conduct disclosers may face.

Currently at the Select Committee stage, this is certainly another piece of legislation to be mindful of.

Concluding remarks

2020 has seen a number of changes to the employment landscape and governing legislation.  We expect the introduction of new legislation moving forward and it seems apparent that employers’ compliance costs are set to increase.