Proposed changes to employment law

by The Findlaw Team

At the last election, the Government committed to making changes to employment law. Its proposals were published in June 2013, in the form of the Employment Relations Amendment Bill. This article summarises the main changes proposed by the Bill.

The Bill passed its first reading on 5 June 2013 and has been referred to the select committee, which is due to report back by 5 December 2013. Submissions on the proposals can be made before 25 July 2013.

The Bill proposes to amend the Employment Relations Act 2000 in the following areas:
  • Collective bargaining, including removing the requirement to conclude a collective agreement and introducing an ability for employers to reduce employees' pay in response to partial strikes;
  • Flexible working arrangements, to extend the right to make a request to all employees;
  • Part 6A of the Act, in particular, introducing an exemption from certain requirements for small to medium enterprises;
  • Good faith, to clarify the requirements for disclosure of information;
  • Rest break and meal break provisions, to allow for flexibility, including compensatory measures where there is a failure to provide a break; and
  • The Employment Relations Authority, to set time frames for release of determinations.

Collective bargaining

The Bill will allow the parties to collective bargaining to apply for a declaration from the Employment Relations Authority on whether bargaining has concluded. If the Authority determines that bargaining has concluded, there will be a 60-day grace period before bargaining can be re-initiated, unless the parties agree otherwise.

If the Authority determines that bargaining has not concluded and does not make any recommendation about the process the parties should follow, it will be 60 days before parties can return to the Authority for another determination on whether bargaining has concluded.

Other changes to collective bargaining include:
  • Allowing employers cited in an initiation notice for multi-employer collective bargaining to opt out of being a party to that bargaining;
  • Where an employee's work is covered by a collective agreement and the employee is not a member of the relevant union, employers will no longer have to offer the collective agreement's terms and conditions to new employees (for the first 30 days of employment) who are not union members;
  • Unions and employers will have the same timeframes within which they can initiate collective bargaining; and
  • When an employer or a union has initiated bargaining to replace a collective agreement before the collective agreement has expired, the collective agreement will remain in force for up to 12 months after it expires, provided that bargaining is still under way (previously this only occurred where the union initiated bargaining).

The Bill provides employers with two options for reducing the pay of employees who are party to a partial strike:
  • A proportionate pay deduction made by using the calculation method set out in the Bill; or
  • A fixed deduction of 10 percent.

If the employer decides to make pay deductions in response to a partial strike, the Bill requires the employer to provide written notification about the deduction to employees before the deduction is made.

Failure to provide the required notice of a strike or lockout will mean that the strike or lockout will be unlawful.

Flexible working arrangements

The Bill extends the right to request flexible working arrangements to all employees (not just those with caring responsibilities) from the beginning of their employment. The limit on the number of requests an employee may make for flexible working arrangements will be removed and the timeframe within which the employer must consider a request will be reduced from 3 months to 1 month.

Part 6A (continuity of employment)

The main changes that the Bill makes to Part 6A are:

  • Employees who will be affected by restructuring will have to notify their current employer in writing of their decision to transfer within 5 working days (or whatever longer timeframe is agreed between the two employers) of being advised of their right to elect to transfer to the new employer and provided with the required information.
  • The outgoing employer will have to provide the incoming employer with detailed information on the transferring employees as soon as practicable, and at least before the restructuring takes effect. This information includes employment agreements, wages and time records, holiday and leave records, gross earnings, and personnel files (where they exist).
  • Employers will be able to negotiate an agreement regarding the apportionment of liabilities for transferring employees' service-related entitlements, and there will be a default apportionment formula for cases where agreement is not reached.
  • Additional categories of employees who have the right to elect to transfer to the new employer will no longer be able to be added by an Order in Council, so that only Parliament can change the categories.
  • There will be an implied warranty from the outgoing employer to the incoming employer that the outgoing employer has not changed the arrangements of work or the employee's employment conditions to adversely affect the incoming employer. Breaches of this implied warranty may lead to damages being awarded in the District Court or the High Court.
  • Small to medium-sized enterprises who are the incoming employer will be exempt from certain requirements of Part 6A, including the ability for employees to elect to transfer to the incoming employer. To prevent large employers from exploiting this exemption, the number of employees employed by associated persons such as subsidiaries, parent companies, subcontractors, and franchises, will be taken into account when determining the size of a business.

Disclosure of information and duty of good faith

The Bill clarifies which types of information an employer is required to provide in order to comply with the duty of good faith in situations where an employer is proposing to make a decision that could have an adverse effect on the continuation of an employee's employment. The main change is to amend the duty of good faith so that the employer is not required to provide an affected employee with access to confidential information if that information is:

  • About an identifiable individual other than the affected employee;
  • Evaluative or opinion material compiled for the purpose of making a decision that may affect an employee's continued employment; or 
  • About the identity of the person who supplied the evaluative or opinion material.
  • This aim of this change is to balance the good faith requirements in the Employment Relations Act 2000 with the privacy principles in the Privacy Act 1993 and the Official Information Act 1982.

The impetus behind this change is the Employment Court's judgment in Vice-Chancellor of Massey University v Wrigley, which highlighted differences between the disclosure of information under the good faith requirements of the Employment Relations Act 2000 and the disclosure of personal information under the Privacy Act 1993 in situations where an employer is proposing to make a decision that could have an adverse effect on the continuation of an employee's employment.

Rest break and meal break provisions

The Bill will allow employers to provide compensatory measures where employees are not provided with the required meal breaks and paid rest breaks. If the timing of rest breaks and meal breaks cannot be agreed between the parties, the employer will be able to determine the timing. The Bill also makes it clear that rest breaks must be paid.

Time frames for Employment Relations Authority determinations

The Bill introduces requirements about the timeliness and mode of delivery of Authority determinations. At the conclusion of an investigation meeting, the Authority will be required to provide either an oral determination, which must be followed (within 3 months) by a written record of that determination, or an oral indication of the Authority's findings to the parties, subject to any additional evidence, which must be followed by a written determination within 3 months.

Health and safety taskforce recommendations

Labour minister Simon Bridges has signalled that the Bill may be extended to incorporate the recommendations made by the Independent Taskforce on Health and Safety, so far as they relate to employment relations.

"I want to signal my intention that, where desirable and practicable, this Bill will be the vehicle to implement any changes that need to be made to the employment relations regime as a result of the Government's response to the Taskforce," said Bridges on 5 June 2013.


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