K3 Insights

What should we do when employment law updates are released? Whilst legislative changes may seem to be few and far between, the New Zealand Employment Relations Authority (ERA) and Employment Court are adjudicating on Cases on a weekly basis. In 2023, the Employment Court alone cleared 200 cases, and we would expect the ERA to be seeing significantly more cases (based on 1,170 matters being referred to mediation in 2022). Their determinations shape the assessment of what a fair and reasonable employer could do.  This means that the case law of New Zealand is constantly moving, and we cannot always rely on past practices to assess future risks to our organisation.

Applying the broader view

A good example of this has come off the back of a legislative change that came into effective late in December 2023. Trial periods were reinstated as an option for employers of 20 or more employees. Several organisations we work with reached out to share previous wording that they had in their employment agreements. Knowing how important it is to clear and robust clauses in their employment agreements, they sought advice on any updates or inclusions from those clauses being tested in case law, which required their wording to be reviewed. Most of the clauses we saw, did result in recommended changes for clarity and robustness.

In addition, whilst trial periods were not available to these employers, other adjacent employment changes have occurred, such as the introduction of Accredited Employer Work Visa scheme. These adjacent changes, impact on the ability to use trial periods, and have significant negative implications for organisations if used incorrectly.

Overlooked implications

In addition, there are often overlooked implications of employment law changes. The adult minimum wage will be rising to $23.15 per hour from 1 April 2024. This seems simple, and usually is for waged employee i.e. those paid for every hour worked. For salaried employees, we need to divide their annual salary by the number of hours they are expected to work in that year, to determine what hourly rate their will receive. This means taking into account expected overtime, including ad-hoc extra days, such as the 29th of February on a leap year. If we cannot accurately predict these extra hours/days, resulting in an underpayment to an employee, then a top-up payment must be made, or other compensation (e.g. sales commission) should cover the additional hours at a rate of at least minimum wage per hour worked.

The other area that can be overlooked is employment policies and procedures. Where an employment agreement template is updated, associated policies also need to be reviewed. In 2023, the timeline for personal grievances being raised for alleged sexual harassment was extended from 90 days to 12 months. Employment Agreement templates should have been updated accordingly. Likewise, all supporting documentation should be updated, and where policies are updated, for legislative changes, this needs to be communicated to team members. Noting that where policies are updated for other reasons, there needs to be a consultative process, if an organisation wants to rely on those policies to address non-compliance with the expectations set out within them.

Get an annual health-check

Outside of reactively making updates due to legislative changes, conducting a proactive annual employment documentation health-check of your employment agreement templates, and employment-related policies and procedures is recommended. It allows refinement as a result of employment-case precedent, inhouse learning and external best practice. This process can be quick and easy, when you have a trained eye looking for the relevant areas to update.

If this sounds like you, get in touch with Karyn@k3.co.nz , we can help.