90% of investigated businesses found non-compliant with workplace law regulations

New Zealand’s Ministry of Business, Innovation and Employment (MBIE) recently confirmed to us under the Official Information Act 1982 that INZ 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. While much of this compliance work is still ongoing, of the completed Labour Inspectorate investigations, almost 90% of the employers were found to be non-compliant.

These numbers are in line with what we have seen in the industry and we expect these numbers to climb as MBIE’s enhanced compliance function ‘beds down’.

Migrant Worker Exploitation Programme

This sharp increase in investigations of New Zealand workplaces is the product of the New Zealand Government’s commitment to reducing a perceived overreliance on migrant labour and stopping migrant exploitation. It has:

  • tightened key pieces of workplace (immigration, employment and corporate) law to make it easier to penalise non-compliant employers;
  • introduced a dedicated 0800 number so allegations of non-compliance can be reported easily; and
  • ringfenced $50 million of funding, plus publicly committed to putting more resources into investigating allegations of workplace non-compliance.

These changes make it easier for MBIE to find out about and investigate non-compliance in the workplace. Importantly, it also makes the penalties more severe for employers if even ‘low-level’ non-compliance is discovered.

What’s changing

From 6 January 2024, tougher workplace law policies will mean that employers who allow a migrant to work in a way that is inconsistent with the conditions on their visa (eg, in a different role or location) can be stung with a $3,000 fine per relevant employee, even if this was a genuine mistake or the employer took reasonable steps to try to be compliant. They can also be put on a published register of non-compliant employers and may be barred from hiring migrants for a certain period of time. If they are an accredited employer, their accreditation status may not be renewed, which will effectively prevent them from hiring most migrant workers for the foreseeable future.

This is a big change; even if an employer has undertaken reasonable due diligence (the current defence to unlawful employment), a fine can still be rendered and the employer’s name published. We are moving to a strict liability position, with significant implications for non-compliance.

What the future looks like

While almost all kiwi employers agree that no one wants to see migrant workers being exploited, we fear that the pendulum has now swung too far in the other direction. We expect to see a number of “good” employers being targeted and punished under this new regime for relatively low-level breaches. Random workplace investigations may take place as a matter of course, during an employer accreditation renewal application, or they may arise following a “tip-off” from a disgruntled employee, related union or customer (this happens more often than you think). Either way, this current landscape makes workplace investigations a matter of when not if.

In our experience, mistakes happen easily. Many large, reputable employers in New Zealand do not have workplace compliance systems that are fit for an organisation of their size and many of their key personnel, such as HR staff, do not understand what their obligations as an employer are, at least to the standard required. It only takes one or two “tip-offs” to alert MBIE to a possible breach, and a site visit will follow.

How we can help

It is always much better to invest in making sure your workplace is compliant, rather than waiting until something happens and having to call us to be the ambulance at the bottom of the cliff.  No matter which stage of the compliance journey you are at, we have significant experience providing comprehensive compliance support and can offer a range of services to suit your size and budget.

For a full summary of Lane Neave’s workplace compliance services, Workplace Law Compliance team – Lane Neave.

We would also like to offer you a free site visit briefing note, that guides you and your team on ‘what to expect’ if the Labour Inspectorate or INZ investigates your workplace. If you would like us to email you the briefing note, click here.

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