Posted on December 17, 2024
The Government has recently signalled that we can expect an Employment Relations Act Amendment Bill in 2025, incorporating some significant changes to employment laws.
Below is a roundup of changes in the wind, to keep you informed and on the front foot.
Banning unjustified dismissal PGs for employees who earn $180k+
- The proposal is that employees earning a base salary above $180,000 a year would be barred from bringing unjustified dismissal PG claims. The threshold would exclude other benefits like bonuses, allowances, work vehicles.
- High earners could still bring PGs of unjustified disadvantage, discrimination and breach of contract actions.
- We expect such a law would give rise to more negotiation of employment agreements for high earners potentially for longer notice periods, “no fault” termination payments, other benefits outside of base salary or salary increases, or to contract out of the ban.
Introducing a new contractor status ‘Gateway Test’
- The proposal is to include an exclusion test that can be used to classify a person as a contractor.
- The test criteria are; there is a written agreement that records the person is an independent contractor, they are not restricted from working for others, they are not required to be available to work at certain times, days or for a minimum period/ they can sub-contract the work, and the business does not terminate the contract where the person refuses to accept “an additional task”.
- If the person does not meet the Gateway Test, the Authority will still consider whether the person is a contractor or employee under the existing section 6 test i.e. the real nature of the relationship between the parties considering all relevant matters.
More focus on employee contribution when assessing remedies
- The proposal is that employees dismissed for serious misconduct would be banned from receiving any remedies, even if a PG was successful on procedural grounds.
- Reinstatement and compensation remedies would also be banned where an employee’s behaviour contributed to the dismissal grounds.
- Where an employer’s actions were deemed “fair” overall, it would not be held to strict processes.
- We anticipate drafting issues around subjectivity and believe push back is likely in the Authority’s and Court’s application of any such laws.
More work to do on Holidays Act reform
- The Government will likely go back to the drawing board after feedback on a draft Bill was that it wouldn’t solve issues in the existing law, and in some areas would add more complexity.
- The Minister has said the round two draft should include an hours-based accrual for annual holidays.
Other changes in process
Some employment law Bills are already drafted and before Parliament. If passed:
- Employers would again be able to make pay deductions for partial strikes, where employees go to work but refuse to do certain aspects of the job.
- Intentionally failing to pay wages would become a criminal offence. Companies would face increased fines and individuals could be liable for up to one year imprisonment.
- Exit discussions could be had without risk of evidence about such discussions being produced in the Authority or Court and constructive dismissal claims arising out of them would be banned.
- Pay secrecy would be outlawed and a PG could be raised if any employee was adversely impacted by discussing pay.
