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An update – trial periods and payments in lieu of notice

An interesting trial period case has been considered by the Court of Appeal recently with surprisingly positive results for employers!  Making payments in lieu of notice when terminating an employment agreement under the trial period has always been risky.  The law surrounding this practise has been unclear, and we have always advised against it.

However, in the case of Loan v Scott Technology NZ Ltd, the Employment Court examined the unique circumstances of this trial period dismissal and found that the payment made in lieu of notice satisfied the requirements of ‘giving notice’ for the purposes of section 67B(1) of the Employment Relations Act.  The Court of Appeal agreed.

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New ‘triangular’ personal grievance law passed

The Employment Relations (Triangular Employment) Amendment Act 2019 has been passed into legislation, making changes which may cause significant implications for the labour hire/temp industry as we know it.

From 27 June 2020, the new law will allow a labour hire worker (commonly referred to as a “temp”) to potentially add a host company to a personal grievance proceeding which the labour hire worker takes against their employer (the “labour hire agency” or “temp agency”). This is enabled by the newly introduced concept of a “controlling third party”, which has been defined in the Act as a person:

  • who has a contract or other arrangement with an employer under which an employee of the employer performs work for the benefit of the person, and
  • who exercises, or is entitled to exercise, control or direction over the employee that is similar or substantially similar to the control or direction that an employer exercises, or is entitled to exercise, in relation to the employee.

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Equal Pay Bill making progress

The Education and Workforce Committee has reported back on the Equal Pay Amendment Bill, recommending that the Bill be passed with some amendments.  The long-awaited Bill aims to address gender pay equity arising from the historical and systemic undervaluation of ‘women’s work’ in our society.

Key changes to the Bill recommended by the Select Committee include the following:

  • Providing a benchmark for determining a “predominantly female” workforce as being one that is, or historically was, approximately 60% or more female.
  • Removing the requirement to undergo facilitation before seeking a determination in disputes, to maintain a low threshold to commence bargaining and provide the Courts with greater discretion.

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What you need to know about the Domestic Violence—Victims’ Protection Act

The Domestic Violence—Victims’ Protection Act 2018 came into effect on 1 April this year.  This enactment makes a number of amendments to the legislation that governs our workplaces including the Employment Relations Act, Holidays Act and Human Rights Act.

The key changes to be aware of are:

  • Employees with over 6 months’ continuous employment are entitled to 10 days per year paid family violence leave
    • Any untaken leave is not carried forward
    • Untaken leave is not paid out on termination of employment
    • The domestic violence does not have to occurred during the term of the employment

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KiwiSaver contributions and the minimum wage

Some employers adopt a “total remuneration” approach to compulsory KiwiSaver contributions, meaning the employee is paid a set rate of pay that includes the employer’s compulsory contributions to their KiwiSaver account.  As such, if the employee joins KiwiSaver then their pay is adjusted down to offset the compulsory employer contribution (this is in addition to the deduction for their own personal KiwiSaver contribution).  If they don’t join KiwiSaver, then they get their rate full pay without any deductions for KiwiSaver.

This sort of arrangement does comply with the KiwiSaver Act 2006, but it must be agreed to and adequately specified in the employment agreement.

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90 day trial periods are tricky – see our checklist!

When employment is subject to a trial period and the employee is dismissed during the trial period, they are prevented from taking a personal grievance for unjustified dismissal.  However, employees can still take a personal grievance on other grounds, such as disadvantage, discrimination and more.  There’s also a high chance that the trial period may be invalidated, leaving employers in a very tricky situation.

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New rules for rest and meal breaks from 6 May 2019

As a result of the Employment Relations Amendment Act 2018 and from 6 May 2019, there are new rules employers need to follow for providing employees with rest and meal breaks.

Previously, the legislation allowed employers to determine the times employees were able to take breaks and for how long (within reason).  Under the new legislation, employees will be entitled to prescribed breaks based on the length of their work period such as:

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Careful considerations for employment agreements

Whether you’re hiring someone new or an employee considering a new job offer, there are a few key clauses of the employment agreement that need careful thought and consideration.  Obviously, the rate of pay will be very important but there’s more to it than that.  We recommend you pay particular attention to the following key provisions: Hours of Work, Restraint of Trade and Trial periods.

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