This will be our second to last Employment Bytes of 2023, think of it as our Spring edition! Wherever you are in Aotearoa, we hope you are enjoying a little bit of sunshine along with successful business activity; we’re glad to see economic indicators looking a little more promising in recent weeks.
The final edition for the year is currently scheduled for early December, though of course, with the election in mid-October, there may be some changes that we need to highlight prior to this—watch this space and we’ll be sure to keep you updated with anything you need to know in relation to employment in your business.
In September, our key updates are centered around the protection of workers, restraint of trade, KiwiSaver, gender equity reporting, and the Trial Amendments Bill. Read on for more, and as always, reach out if you have questions.
The Worker Protection (Migrant and Other Employees) Bill becomes Law
No doubt you will have seen recent new coverage of the mistreatment of migrants. A new law will come into effect on 6 January 2024, with its primary purpose being to prevent migrant exploitation, and expand Labour Inspector and Immigration New Zealand powers in relation to compliance and enforcement.
The new law will amend the Immigration Act 2009, the Employment Relations Act 2000 and the Companies Act 1993. Employers will be required to comply with a notice to produce records as soon as is practicable, or within 10 working days, and failure to do so could result in a penalty.
This law change will empower the High Court to disqualify a person from being a director of a New Zealand company if they are convicted of exploitation of unlawful employees and temporary workers. It is the final piece of the Migrant Worker Exploitation programme package, which includes a dedicated 0800 reporting line and webform, joint compliance approach by the Labour Inspectorate and Immigration New Zealand, liaison service to support exploited migrant workers, and proactive information and education to prevent exploitation.
Restraint of Trade Amendment Bill Update
In our first Employment Bytes this year we mentioned the introduction of a new Bill that proposed to limit employers’ ability to enforce restraint of trade clauses on departing employees. It was introduced by Labour MP Helen White following the public Tova O’Brien restraint of trade case, with Helen stating: “It is in the public interest that lower paid employees should be free to take a job with a competitor for more money or better conditions, or to use their skills to start their own business.” The impact of restraint of trade clauses “depresses wages and stifles innovation because people can’t negotiate for better paying conditions, and they can’t move on.”
The Bill is intended to amend the Employment Relations Act 2000 by:
- Preventing the use of restraint of trade clauses for employees who earn less than three times the minimum wage (which would currently equate to $68.10 per hour);
- Restricting restraint of trade clauses to situations where an employer has a proprietary interest to protect (which must be described in the employment agreement);
- Requiring employers to pay those employees subject to a restraint of trade ‘reasonable compensation’, which is at minimum an amount equal to half the employee’s weekly earnings for each week that the restraint of trade is in effect; and
- Preventing a restraint of trade clause to be longer than six months.
The Bill is now at the Select Committee stage, with submissions recently closing. We’ll continue to keep a close eye on this one and predict that it will not be passed pre-election—, and that it’s very unlikely a National-led government would pass the Bill in its current form.
Protection for KiwiSaver Members Amendment Bill Update
Further to our July update, progress has been made on this Bill which has passed its first reading and is now at the Select Committee stage. To recap, this Bill seeks to restore protections afforded to KiwiSaver members by the Employment Relations Act 2000 before it was amended by the Employment Relations Amendment Act 2008. It aims to ensure that workers cannot be discriminated against because they are members of a KiwiSaver scheme or a complying superannuation fund.
If the Bill is passed, it would mean that employers would be unable to adopt a “salary sacrifice” or “total remuneration model” (TRM) for their compulsory employer contributions. TRMs are fairly common, but have been criticised for disincentivising employee contributions, undermining the intentions behind KiwiSaver and lacking transparency where employees have not meaningfully agreed to their use.
In practice, the removal of TRMs would mean that employers would be required to make KiwiSaver contributions on top of pay, which would result in increased costs for those who currently use a TRM model. If employers fail to comply with this, KiwiSaver members could argue that they have been adversely affected and raise a personal grievance.
The future of this Bill will likely depend on the outcome of the election and whether Labour remains in charge.
Trial Periods Amendment Bill
A new Bill was introduced on 31 August with the aim to amend the Employment Relations Act 2000 to enable businesses that have 20 or more employees to be able to include a 90-day trial period in a new employee’s employment agreement. This is currently only allowed for employers with 19 or fewer employees.
The driving force behind this proposed change is ACT MP James McDowall who states:
“Businesses have taken a hammering over the past few years. Running a business and employing people has never been tougher. Whether it was the lockdowns, an additional public holiday, continuous increases to the minimum wage, more sick leave entitlements or the so-called ‘Fair Pay Agreements.’”
“ACT believes we should empower business owners to be successful so that they can employ more people.”
“Good, hardworking, productive employees will be the winners with this policy, as business owners take a chance on people they might not have otherwise.”
Another Bill which progression is contingent on the election, we say.
Gender Pay Gap Reporting
On 11 August 2023, the Government decided to move forward with developing a gender pay gap reporting system, in the belief that having pay gap information publicly available can help incentivise employers to take action to investigate and address any gender pay issues that exist in their workplaces.
It is proposed that the pay gap reporting system will require organisations with over 250 employees to report their gender pay gaps. Within four years, it is expected that the legislation will require companies with over 100 employees to report on their gender pay gap. This will form part of other Government initiatives that have been introduced to address pay equity, such as the Fair Pay Agreements and amending the Equal Pay Act in 2020.
New Median Wage from February 2024:
Many work and skilled residence visa categories have wage thresholds or criteria that are based on the median wage. Immigration New Zealand (INZ) recently announced that a new median wage of NZD $31.61 an hour will be adopted into the immigration system in February 2024. Most wage thresholds indexed to the median wage will be updated. This includes the Accredited Employer Visa (AEWV), the Skilled Migrant Category, and some occupations covered by Sector Agreements and the Green List. Parent category wage thresholds are updated separately, and the tourism and hospitality wage threshold will also be updated separately in April 2024.
Accredited Employer Work Visas (AEWV):
INZ has announced that the maximum duration of an AEWV will be extended from three to five years from 27 November 2023, after which the holder must leave NZ (unless on a recognised pathway to residence) for 12 months, if they are paid at or above median wage, and for the duration provided by INZ in the relevant Sector Agreement otherwise.
INZ has also stated it will carry out more reviews on Accredited Employer Work Visas (AEWV) due to recent reports on migrant exploitation, and fraudulent activities.
All Covid-19 Requirements Removed
The last of the Government's Covid-19 public health requirements were removed on 15 August, including the seven-day mandatory isolation period for people who contract Covid-19 and the requirement to wear a face mask for visitors to healthcare facilities. This change also meant that the Covid-19 Leave Support Scheme has ended.
That brings us to the end of the September spring-time Employment Bytes. We’ll be bursting with election-related news next time!
As mentioned, our team can answer any questions you have, particularly around action required by small to mid-sized Kiwi businesses, in relation to some of these updates. We stay connected with what’s going on in employment law, so you can check back here for the latest, but to ensure you don’t miss any emerging updates, we recommend that you subscribe to our Editions newsletter.