After several weeks of waiting since the 14 October election, on 24 November 2023 the coalition government between the National, ACT and New Zealand First parties was announced. Now, looking to National’s respective coalition agreements with ACT and New Zealand First, we can see which of the various policies campaigned for have been solidified into cross-party commitments.
This article provides our comment on these commitments. It also follows on from our earlier predictions on the post-election status of 90-day trial provisions and fair pay agreements, which (as predicted) are on the out. Specifically, the new government has pledged that by Christmas:
- A bill to extend 90-day trial periods to all businesses, regardless of the number of employees, will be before a Select Committee for consideration.
- The Fair Pay Agreements Act 2022 will be repealed.
While each of these policy changes were campaigned on by all three government parties, they only appear in the National and ACT coalition agreement.
The ACT/National Employment Policies
In addition to the Labour policies already written about above, the National and ACT coalition seeks to:
- “Reform health and safety law and regulations.”
No further detail is given in the coalition agreement, and it is unclear what aspects of the Health and Safety at Work Act 2015 the Government seeks to reform.
- “Consider simplifying personal grievances and in particular removing the eligibility for remedies if the employee is at fault, and setting an income threshold above which a personal grievance could not be pursued.”
The language here is not one of commitment, but simply providing that the Government must turn its’ mind to the issue. It is unclear whether the Government will pass legislation on this issue, and what this legislation will look like.
Removing the ability for employees to obtain remedies where the employee is at fault
Currently remedies for employees are reduced where, by their conduct, the employee is deemed to have contributed to their grievance. The proposal to remove the ability for remedies altogether takes this a step further. We note it is not clear whether at fault employees would not have access to any remedies under section 123, or whether they would only be barred from claiming compensation for distress and humiliation under section 123(1)(c)(i) of the Employment Relations Act 2000 (the ER Act).
ACT campaigned on the issue. In the Policy Document Reducing the Costs of Personal Grievances, it is recorded that “even in situations where the reason the employee got fired is squarely the employee’s fault, the door is open to them to receive some remedies if the employer did not follow the correct process”.
ACT has described their policy as “simply rebalanc[ing] the playing field so that both employer and employee behaviour are treated equally”.
Key behind ACT’s concern here appears to be that our law currently places too greater weight on process, as opposed to substance.
The requirement that employer decisions are both substantively justifiably and procedurally fair is deeply embedded into the ER Act—as is evident in the test for justification at section 103A of the ER Act, and the requirement that both employers and employees act towards one another in good faith (section 4).
Given the close relationship between substantive justification and procedural fairness, we would suggest that any attempt to disentangle the two, and define a situation where the employee’s fault outweighs that of the employer, such that the employee is not entitled to remedies, will be very difficult for the Government.
Setting an income threshold
If an income threshold was set for personal grievances, well-remunerated employees would be statute-barred from raising a personal grievance. National’s Brett Hudson sponsored an unsuccessful Member’s bill in 2017 which would have allowed for employers and potential employees negotiating individual employment agreements involving an annual gross salary of more than $150,000 to contract out of the personal grievance provisions in the ER Act. If such changes are introduced, it is unclear how high the income threshold would be.
- “Maintain the status quo that contractors who have explicitly signed up for a contracting arrangement can’t challenge their employment status in the Employment Court.”
The current ‘status quo’ is that under section 6 of the ER Act the Employment Relations Authority (Authority) and the Employment Court (Court) have the ability to consider whether a person meets the definition of an employee. In determining whether a person is an employee, or not, the Authority looks to the “real nature of the relationship” between the parties. The finding of employment status is crucial for unlocking a suite of legislative minimum entitlements under the ER Act and the Holidays Act 2003, including the ability to bring a personal grievance.
The ability of individuals to challenge their employment status has been highlighted in a number of high-profile cases including, the recent Uber decision of the employment court. You can find our article on the Employment Court decision here, and our ruminations on the upcoming Court of Appeal case here.
Those in favor of the Authority’s ability to assess an individual’s employment status based on the real nature of the relationship point to the protection section 6 offers workers from exploitation in signing up to contracts where they have little bargaining power, are working as employees but are not afforded legislative minimum entitlements and other good faith benefits.
ACT campaigned on reforming the ER Act so that independent contractors who have signed contracts, cannot later challenge their status. The rationale for the change appears to be ACT’s belief that contracting affords individuals greater flexibility in the ever-growing gig-economy and provides greater certainty for business owners.
Where an independent contracting arrangement is entered into, ER Act has proposed the following criteria must be followed:
- a written agreement where the person is specified as an independent contractor and will not have access to full employee rights;
- the person was given sufficient information and an adequate opportunity to seek advice before entering into a contract;
- the agreement does not restrict the person from performing services or work for other businesses or undertakings, including competitors, or engaging in any other lawful occupation or work, except during the time from which the person commences a specified task provided by the business or undertaking until that task is completed;
- the business or undertaking cannot terminate the contract of the person for not accepting a specific task; and
- the business or undertaking has kept records in sufficient detail to demonstrate that the employer has complied with minimum entitlement provisions.
It is yet to be seen whether the proposed protective measures above will form part of any amendments to the ER Act.
The NZ First/National Employment Policies
In contrast, the NZ First and National coalition appears to contain less targeted employment policy reform, as agreement between the parties is focused on the interplay between employment and immigration policy. Given NZ First has campaigned on (as their name suggests) putting New Zealand first, this comes as little surprise.
Amongst these policy commitments, National and NZ First record they will:
- “Commit to moderate increases to the minimum wage every year”
Please see our article on this issue, “A moderate minimum wage?“.
- “Commit to enforcement and action to ensure those found responsible for the abuse of migrant workers face appropriate consequences”
Migrant worker exploitation is a known issue in New Zealand, and there is cross-party consensus that this matter should be taken seriously. It remains unknown how this Government intends to address the issue, and whether this will result in legislative change.
While the exact shape of the potential reforms are unclear, we will continue to watch these matters with interest and will keep you updated.