Employment Law reform: what’s changed and what’s on the horizon?

2021 is shaping up to be a big year for changes to employment law. This article recaps the legal changes so far and provides a heads up about the changes on the horizon.

March 2021: Bereavement leave extension

On 30 March 2021, employees who experience a miscarriage or stillbirth, their partner, or people planning to have a child through surrogacy, adoption or whangai arrangement became eligible for 3 days’ bereavement leave if the pregnancy ends by miscarriage or stillbirth.

April 2021: Minimum wage increase

On 1 May 2021, the minimum wage increased from $18.90 to $20 per hour. While this has obvious implications for employees paid hourly, it is important to think about how this affects salaried employees too. An employee working 40 hours a week, for $41,600 a year, will be earning at the minimum wage. However, as soon as that employee’s working hours tip over 40 per week, without additional pay, their wage will fall below minimum wage triggering a breach of the law.

May 2021: Fair Pay Agreements

While the Government has been discussing Fair Pay Agreements (FPAs) since 2018, on 7 May 2021 it announced the proposed design of the FPA system. An FPA is a legally binding agreement that sets out minimum pay and conditions between employers and employees across an entire sector. FPAs are similar to collective employment agreements, but they cover all employees in a sector, not just the employees of one employer. FPAs will be decided through bargaining between employers and affected employees. A draft version of the bill outlining the FPA system will be released later this year, with the finalised bill set to be enacted in 2022.

July 2021: Increased sick leave entitlement

From 24 July 2021, minimum sick leave entitlement will increase from 5 days to 10 days per year. When the change comes into effect, employees won’t immediately be entitled to additional sick leave. Instead, current employees will become entitled to 10 days’ sick leave upon their next sick leave entitlement date, which is 12 months after they were last entitled to sick leave. New employees will become entitled to 10 days’ sick leave after 6 months of continuous employment. The maximum amount of unused sick leave an employee can accrue will still be 20 days.

September 2021: Living wage increase

On 1 September 2021, the living wage will increase from $22.10 to $22.75 per hour. While this wage isn’t compulsory, it is calculated by the Family Centre Social Policy Unit as the amount a worker needs to earn to pay for the necessities of life. The Government has signalled that increasingly more companies contracted to public sector agencies will be required to pay the Living Wage as a part of these contracts.

June 2022: Matariki

New Zealand will recognise Matariki with a public holiday for the first time on 24 June 2022. Matariki will not fall on the same date every year. Māori astronomers in the newly established Matariki Advisory Group will use the positioning of the stars and moon to set the date of the public holiday each year. The holiday will either fall on a Monday or a Friday.

2022: Dependent contractor protections

Dependant contractors are workers who operate in a grey zone between employee and contractor status. While they operate their own businesses, they depend on one company for most of their income and have little control over their daily work. Examples include rideshare drivers and courier drivers. Because dependant contractors do not receive the same legal protections afforded to employees, the Government is looking at ways to extend basic employment rights to these workers, such as sick leave. While we don’t expect to see these changes until at least 2022, they are likely to have a significant effect on dependant contractors and the companies contracting them.

2022: Holidays Act reform

The Government has officially accepted the recommendation of the Holidays Act Taskforce to reform the Holidays Act 2003. This means that the following changes are likely to be seen in 2022:

  • Bereavement/family/sick leave from day one: Employees will be entitled to bereavement leave, family violence leave and one day of sick leave from their first day of work. An additional day of sick leave will be given per month until the minimum entitlement of 10 days is reached. 
  • Incremental leave: Employees will be able to take sick leave and family violence leave in units of less than one day, on a pro-rata basis. The minimum amount able to be taken will be a quarter of a day. 
  • Annual leave after parental leave: Employees who return to work after taking parental leave will be paid at their full rate of pay for annual leave taken. 
  • Expanding bereavement leave: Bereavement leave will be expanded to include step relatives, siblings in law, children in law, whanau relations, aunts, uncles, nieces and nephews.
  • Annual leave in advance: Employees will be able to take annual leave in advance on a pro-rata basis, rather than having to wait 12 months before being entitled to take leave. 
  • Calculating leave entitlements: The way leave entitlements are calculated will be simplified. This will provide greater clarity, particularly to employees who work variable hours. 
  • Payslips: Employers will be required to provide payslips to their employees every pay period.

Concluding remarks

These enacted and upcoming changes have a number of implications for employees and employers alike. It is important to update your employment agreements and polices to reflect these changes. It is equally important to ensure your payroll system remains updated to reflect these changes. Employers should also consider how they will communicate these changes to their employees. This involves ensuring managers have a good understanding of what these new enactments will entail.

If you have any questions about these changes or any other employment law matters, please do not hesitate to get in touch with the Lane Neave Employment Law team.

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