Kia ora and welcome to our May edition of Employment Bytes.
Unlike the rapid pace of 2022, there  hasn’t been a huge amount of change in the employment law space thus far this year. Likely, this is due to the October General Election.  That said, there are a few key aspects of note, particularly in the immigration space.  Read on to ensure that your business is up-to-speed with everything happening in New Zealand law right now.

Minimum wage increase

On 1 April 2023, the adult minimum wage was increased by $1.50, to $22.70 per hour in response to the 7.2% rate of CPI inflation in the year ended December 2022.

The starting-out and training minimum wage also went up to $18.16 per hour to match 80% of the adult minimum wage. The changes have affected 222,900 workers in New Zealand.

For employees working 40 hours per week and earning minimum wage, this rise will mean an extra $60 before tax per week, which will provide some short-term financial relief for lower paid employees. This additional rise equates to a 20% overall increase in the adult minimum wage since 2020. While beneficial for those employed at this level, it of course also puts small to medium sized businesses under additional pressure.

Immigration Update

Accreditation Extension

If you haven’t yet applied for employer accreditation, we recommend you consider doing so before 4 July 2023. Accreditation applications which are made before this date, and which are approved, will be valid for 24 months accreditation. After 4 July 2023, it will be 12 months accreditation.

Working Holiday Scheme changes

To help address New Zealand’s labour shortage, INZ announced an automatic extension of six months to WHS holders who currently live in New Zealand and hold visas due to expire between 4 April and 30 September 2023. The holders will have open work rights. Further, the annual cap of the Spain Working Holiday Scheme will increase significantly, from 200 to 2,000. The visa holders will have 12 months of open work rights. These changes came into effect on 13 April 2023.

New Roles added to the Green List  

On 11 April 2023, INZ announced that 32 new health roles including counsellors, dentists, and nurse practitioners, were added to the Green List, and that all Green List health roles will be moved to the Straight to Residence pathway. Eligible applicants can start applying from 29 May 2023. The following roles will also be added to the ‘Work to Residence’ Green List pathway on 29 May:

  • Civil construction supervisors
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  • Gasfitters
  • Drainlayers
  • Skilled crane operators
  • Skilled civil machine operators
  • Halal slaughterers
  • Skilled motor mechanics
  • Skilled telecommunications technicians
  • All teachers

Eligible applicants will need to have worked in a Green List occupation and met the specified requirements of that occupation for 24 months. It will be available for people to apply for from 29 September 2023.

Transport Sector Agreement changes

To provide more certainty to New Zealanders who rely on buses and ferries as public transport options, and business that rely on freight movement, eligible bus drivers, truck drivers, skippers and deck hands who have completed two years of working, will from 29 September this year be able to apply for residence.  

Modern slavery legislation

Modern slavery includes forced labour, debt bondage, forced marriage, slavery and human trafficking. It’s easy to think it’s just an overseas issue, but we spend an average of $34 a week on products linked to modern slavery, here in Aotearoa.

Countries like Australia and the UK already have modern slavery laws in place, and the New Zealand Government followed suit last year when it launched a consultation process on legislation that aims to achieve freedom, fairness and dignity in the operations and supply chains of entities to address modern slavery and worker exploitation. If the legislation goes ahead, it will create new obligations for organisations, such as:

  • The requirement to take action if an organisation becomes aware of modern slavery or worker exploitation.
  • Medium to larger organisations would need to formally disclose the steps they are taking to prevent modern slavery, particularly through their supply chains.
  • Large organisations and those with control over New Zealand employers would be obligated to undertake active due diligence of their supply chains to ensure they are not working with another entity where modern slavery is occurring.

The consultation appeal attracted 5,614 submissions, of which the majority were in favour of the proposed legislative changes. We may start seeing some steps made towards tackling modern slavery this year.

Income insurance scheme

Last year, the government proposed a scheme which would support workers with 80% of their income for up to seven months if they lose their job through no fault of their own. It would give people the time and financial security to find a good job that matches their skills, needs and aspirations, or take part in training or rehabilitation for a new, fulfilling career.

Like ACC, the scheme would be funded by levies on wages and salaries, with both workers and employers contributing. So far, the scheme has only gone through the consultation phase and it will be interesting to see if a tighter economy this year will help kick the legislation into motion or whether it falls into the category of the work that Prime Minister Chris Hipkins announced would be delayed until the election in October.

FPA status update

At the end of March, the first Fair Pay Agreement (FPA) application was approved for bargaining, following the law coming into force at the end of last year. The application covers bus and coach drivers as well as cleaners working in the interurban, rural and urban transport industry. The initiating union, First Union, will now work with other industry unions and bargain for minimum standards of pay and conditions for these workers, and it will be very interesting to see the result of this. We will keep you posted of the progress.

Disciplinary turned Medical Incapacity process

A recent determination of the Employment Relations Authority has shown that depending on the circumstances of the case, it is possible to move from a disciplinary process to a medical incapacity process.  

This case involved a highly complex factual matrix involving a Senior Medical Officer (VXO) was alleged to have “displayed unprofessional conduct in his capacity as a senior doctor”, breaching the employer’s Code of Conduct and Values and Policies. The preliminary view was that this unprofessional conduct met the threshold of bullying and harassment, was likely to meet the threshold of sexual harassment, and as a result, they proposed termination of employment. Shortly after receiving this preliminary decision, VXO became ill with chest pain and subsequently the disciplinary process was put on hold while the Officer was on sick leave.

The employer wanted to complete the disciplinary process however this could only occur upon VXO’s return to work. After a three-month absence from work, pursuant to the collective employment agreement, the employer wrote to VXO instigating a medical incapacity process. Medical evidence provided included a report which explained that VXO “expressed significant reservations about his ability to return to working duties if his name is not cleared through the process of resolving the complaints”. It had been 8 months since VXO had gone on sick leave, more than 11 months since he had been at work, and this extended absence was starting to negatively impact service delivery. The employer’s decision was that termination of VXO’s employment on the grounds of medical incapacity was appropriate.

VXO raised a personal grievance for unjustified dismissal, unjustified disadvantage, and a breach of good faith. The employer re-considered all the evidence and determined that the termination of VXO’s employment was appropriate in all of the circumstances, and that the investigation process was fair and reasonable.

Applying the framework for medical incapacity, outlined in Lal v The Warehouse Group Lt [2017], the Employment Relations Authority found that:

  • VXO was given a reasonable opportunity to recover. In addition, as per the collective employment agreement, the employer waited until three months after his absence to commence a medical incapacity process.
  • The employer undertook a fair and reasonable inquiry into the prognosis for returning to work, including obtaining additional relevant medical information.
  • The employer was responsive and communicative, and actively sought VXO’s engagement in the process prior to terminating his employment.
  • The employer is entitled to have regard to its’ business needs, and VXO’s absence was having a detrimental impact on the employer, financially, and on the wellbeing of staff and patients.

The Authority deemed that the employer’s investigation process and decision to terminate VXO’s employment was justified. VXO’s termination on the grounds of medical incapacity did not give rise to a personal grievance for unjustified dismissal, unjustified disadvantage, or a breach of good faith. Furthermore, it was deemed that the employer had acted fairly and reasonably in the circumstances.

Although a very complex factual matrix, this case highlighted that it is possible to shift from a disciplinary process to a medical incapacity process.

Employer found to unlawfully deduct for unpaid breaks

A ‘park and ride’ shuttle bus worker has been awarded compensation after their employer recently was found to have unlawfully deducted 7.5 minutes off every hour the employee worked as an unpaid “health and safety” break.

The employer claimed that the employee requested the unpaid break time, in order to ensure the health and safety of the employee and her passengers while she was driving, and they paid her wages on that basis.

The Employment Relations Authority (ERA) found that the employer was not entitled to deduct 7.5 minutes per hour from the employee’s wages, even with her agreement, as it was not a break of the type the Act provides for i.e., a paid rest break or unpaid meal break. If the driving work required a break for health and safety reasons, that time was part of the hours the employee was attending the workplace for work purposes and when she was able and willing to work, and she was therefore entitled to be paid for that time.

The ERA ordered the employer to pay the arrears resulting from the unpaid breaks with interest.

This case is a good reminder for employers that gaining agreement from an employee regarding an employment condition isn’t enough, and that it pays to check legal requirements first.

Ref: Zhuang v Drapac Ltd [2023] NZERA 57

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As always, if you have queries or need help with aspects of the employment law changes outlined above, give us a call. We can talk you through what support, if any, you might need and can provide you with practical advice and guidance.

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Photo by Mediocre Studio on Unsplash