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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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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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