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Employment Relations Amendment Act 2016

What is the Employment Relations Amendment Act 2016?

The Employment Relations Amendment Act 2016 came into effect on 1 April 2016, and outlines a significant number of measures, designed to ensure the prevention of unfair employment practices in New Zealand. The main purpose of the Amendment Act is to address concerns focused on “zero-hour contracts”, and to ensure certainty for both employers and employees.

What do these changes mean?

These changes will enforce the written statement of hours of work in an employment agreement (if hours have been agreed upon). Similarly, they forbid these practices:

  • employers requiring employees to be available to work for more than the agreed hours without having a genuine reason/s based on reasonable grounds,
  • employers requiring employees to be available to work for more than the agreed hours without paying reasonable compensation for the number of hours the employee is required to be available,
  • employers cancelling a shift without the provision for reasonable notice or reasonable compensation,
  • employers putting unreasonable restrictions on secondary employment of employees,
  • and employers making unreasonable deductions from employees’ wages.

 Taken from the official MBIE address of the Employment Relations Amendment Act 2016,:

Written employment agreements must state the agreed hours of work, if hours were agreed upon. These include the number of guaranteed hoursthe start and finish timesthe days of the week the employee will workand any flexibility in these arrangements.

If there are no agreed hours, there must be some form of written indication of arrangements relating to the employee’s working times included on the agreement.

The new legislation will also forbid employers from demanding additional hours of the employee without warning or consultation. Employers are not obliged to offer additional hours and employees are free to decline extra work unless they agreed to an availability provision and are compensated for that availability.

Availability requirements and compensation rates must be included in an agreement, and importantly, cannot be included unless there are some guaranteed hours per week included in the agreement. Employment agreements should state the amount of availability the employers requests, and the employer will need to have a genuine reason, based on reasonable grounds, to include this requirement. Employers will need to consider how much availability they’ll require compared with the number of guaranteed hours – the ratio should not be unreasonable.

Reasonable notice and/or reasonable compensation will need to be provided and specified in the agreement. Reasonable notice includes consideration for:

  • the particular nature of the business,
  • the ability of the employer to control or foresee cancellations,
  • the possible effects a cancellation could have on an employee,
  • and whether there are guaranteed hours (if so, the number of guaranteed hours).

Reasonable compensation must be provided if sufficient notice was not provided to the employee before the shift was cancelled.

Employers will be prevented from restricting secondary employment, unless the employer has genuine grounds to do so, such as loss of important knowledge, property or competitive reputation, or to prevent a real and unmanageable conflict of interest.

Employers can no longer make unreasonable deductions from employees’ wages without consulting the employee each time a deduction is made, even if it was agreed in the employment agreement that the employee consents to lawful deductions.

There have also been amendments made to the Parental Leave and Employment Protection Act, effective 1 April 2016.

Paid parental leave has increased from 14 weeks to 18 weeks, which includes those people in non-standard work arrangements such as casual or fixed term arrangements. The term “maternity leave” has now been replaced with “primary carer leave”. A primary carer is someone who takes permanent primary responsibility for the care and well-being of a child under six years of age. This does not include someone with temporary care of a child, such as foster parents. All primary carers must meet the six-month or 12-month test to be eligible for parental leave.

An employee meets the six-month employment test if they:

  • have worked for the employer for at least an average of 10 hours a week
  • in the six months immediately before
    • the expected date of delivery or
    • assuming responsibility for the care of the child

An employee meets the 12-month employment test if they:

  • have worked for the employer for at least an average of 10 hours a week
  • in the 12 months immediately before
    • the expected date of delivery or
    • assuming responsibility for the care of the child

If an employee would normally be at work but they’ve been absent because they were:

  • absent on leave with pay,
  • on leave without pay (other than parental leave) with the employer’s agreement,
  • pregnant and on primary carer leave prior to the expected date of delivery,
  • entitled to an ACC payment for that period of absence,
  • on volunteers leave,
  • or absent for any other reason a Labour Inspector considers doesn’t disrupt the normal pattern of the employee’s employment,

this time is still counted towards the 10-hour-per-week test criteria. The amount of leave an employee may take depends on whether they meet the six -/12- month test criteria. If an employee has worked for the same employer for more than 12 months, but not for an average of 10 hours per week for the full 12 months, they may still be able to take parental leave under the six-month test criteria.

Payments are now available for those with more than one employer. Under the current law, if a person has multiple employments each employment is treated separately for the purpose of establishing entitlement to parental leave and parental leave payments. The new changes allow these separate employments to be added together, for the purpose of determining the person’s entitlement to the parental leave payment. This means there will be an entitlement to the payment if the person meets the six-month or 12-months tests that are mentioned above.

Keeping in Touch Hours

A person on parental leave is allowed to work up to 40 hours during the 18 weeks of paid leave to keep up with training/development and to help ease them back into work towards the end of their leave. An employee can only use these “Keeping in Touch” hours if both the employer and employee have agreed.