The cogs of New Zealand’s employment law continue to turn, despite the Omicron wave currently hitting Aotearoa. Case numbers are at levels we couldn’t have contemplated back in 2020 (though falling, phew), the daily headlines continually ask ‘Have we hit the peak?’ and a decent percentage of the population are likely in isolation. However for the most part, Kiwis businesses are getting on with it. Moving forwards, adapting and making do. With a not insignificant sweep of  changes coming into play in upcoming months, we know our clients will be keen to get familiar with latest updates.

Minimum wage change—are you ready?

The adult minimum wage rate increases on Friday 1 April 2022. Here are the details you need to know:
  • The adult minimum wage will increase from $20.00 to $21.20 per hour.
  • The minimum wage for starting-out and training will go up from $16.00 to $16.96 per hour.

You are required to ensure that your arrangements comply with these rates at a minimum. However the increase to the minimum may also create wage pressure from employees who are already at or near the new minimum wage. It’s worthwhile considering both the direct and indirect implications of these changes for your business.

That big, ugly topic: COVID19

The latest on Government Vaccine Mandates:

  1. At 11.59pm on 4 April, vaccine passes will no longer be needed to get into shops and venues, and vaccine mandates will be dropped for workers in education, police, hospitality and the defence force. Those working in health, corrections, aged care and at the border will still need to be vaccinated to work.
  2. In practical terms, it means that as from 5 April, unvaccinated individuals can perform work in these sectors where the mandates have been lifted.
  3. It is timely that employers also reassess their own approaches to vaccination and COVID-19 generally, but workplace policies remain lawful even if there are no longer vaccination mandates covering certain work. This means that employers do not have to hire unvaccinated individuals providing they have a policy in place (that was implemented following due process) and does not discriminate on the grounds of disability or religion
  4. The Covid protection framework, the traffic-light system, will stay in place but will remain flexible to change, including if new variants of the virus emerge. Mask-use will also remain, at this time, to keep vulnerable communities safe.

A note on Rapid Antigen Testing (RAT) – organisations are starting to introduce testing. Be mindful that there needs to be a justifiable health and safety reason for regular use of RAT tests in the workplace, if their usage is unrelated to symptoms. A valid reason could be there is a higher risk of contracting the virus in the workplace.

Any introduction of a testing regime will require consultation with employees, in line with your usual health and safety obligations

NZ Income Insurance scheme

Every year, more than 100,000 New Zealanders are made redundant and laid off, or have to stop working because of a health condition or disability.

The Government, Business New Zealand and the New Zealand Council of Trade Unions are proposing a new way to better protect workers and the economy: a New Zealand Income Insurance Scheme

The proposed scheme will support workers with 80% of their income for up to seven months if they lose their job through no fault of their own. Under the scheme, people will have the time and financial security to find a good job that matches their skills, needs and aspirations, or retrain for a new career.

  • The key features of the proposed New Zealand Income Insurance Scheme are:
  • Broad coverage for different working arrangements
  • Coverage for job losses due to redundancy, layoffs and health conditions and disabilities
  • A 4-week notice period and 4-week payment, at 80% of salary, from employers
  • A further 6 months of financial support from the scheme, at 80% of wages or a salary
  • Option to extend support for up to 12 months for training and rehabilitation
  • A case management service to support people’s return to work
  • Administered by ACC
  • Funded by levies on wages and salaries, with both workers and employers paying an estimated 1.39% each
  • Workers will be eligible after 6 months of levy contributions in the previous 18 months.
The scheme is now open for public comment to MBIE, with submissions closing on April 26 2022.
Restraint of Trade clauses in employment agreements

A recent determination from the Employment Relations Authority (Authority) regarding journalist Tova O’Brien, resulted in her being restrained from starting her new position at MediaWorks, until 15 March 2022, due to a restraint of trade (ROT) clause in her employment agreement with Discovery.

There’s some key learnings to take away from this determination. If you are considering the enforceability of a ROT clause, the key principles to bear in mind are as follow:

  1. The party seeking to enforce the ROT must prove the provision is reasonable, taking into account specific legal tests.
  2. A ROT should be no wider than is necessary to protect the party it was designed to protect. It is important to consider these points: Is the ROT of an appropriate duration, i.e not too long? Does it cover a geographical space that is too wide? Does it restrict the employee from working for only the necessary competitors?
  3. A ROT cannot protect an employer from ‘mere competition’ i.e. the regular skills and experience an employee gains from employment is generally not subject to a ROT. The employer must be able to point to “trade secrets” that can be regarded as the employer’s property and, therefore, must be protected by the ROT.

If you use Restraints of Trade in your Employment Agreements, it would be worthwhile taking a look and reviewing whether or not they are likely to be enforceable, based on the specific terms of the ROT and whether those are reasonable given your business and the employee’s role.

Ready, willing and able to work

In December 2021, The Court of Appeal overturned the Employment Court’s ruling regarding employees of in-flight catering business (an essential service), who did not work during the Alert Level 4 lockdown and were not entitled to be paid minimum wage under the Minimum Wage Act. Ultimately, the Court of Appeal found employees were entitled to be paid minimum wage for the hours of work they had agreed to, regardless of whether or not the work was performed.  As an essential service, the company remained open throughout COVID-19 lockdowns. However, due to the lack of demand for in-flight catering brought on by limited air travel, the company had little work to offer its employees.

Key takeaways for employers:
  • Generally, all employees aged 16 years or older must be paid at least minimum wage for every hour of work.
  • Under the Minimum Wage Act, employers must pay an employee the minimum wage unless the employee did not perform work due to their own default or illness.
  • If an employee is ready and able to work, but the employer cancels their shift without notice, the employer typically cannot deduct from wages.
  • Employers should consider obtaining legal advice before making changes to an employee’s wages due to COVID-19 shutdowns.
Fair Pay agreements

The Fair Pay Agreement system will bring together employers and unions within a sector to bargain for minimum terms and conditions for all employees in that industry or occupation. The Agreement would then apply to all workers in that sector, regardless of whether they are members of the union or not.

A Fair Pay Agreement wouldn’t replace the Individual and/or Collective Agreements in a workplace, but employers must comply with the terms of the FPA at a minimum.

This is a key priority for the Government this year.  There is an expectation that the Bill will be introduced for consultation early April 2022

Employees V Contractors

There is ongoing uncertainty regarding the classification of employees versus contractors. In 2019,  a report was released regarding Better Protections for Contractors following extensive public consultation with contractor groups, employers, and representatives. A working group is currently established to create a formal discussion paper which is to be released in the next few months for feedback.

This is one to watch if you are in a business that engages large numbers of contractors.

Holidays Act

This is the first overall review of the Act since 2003. The Government accepted the recommendations made by the Holidays Act Taskforce, and the changes will affect all employers.

The recommendations revise the system for determining, calculating and paying employees’ statutory leave entitlements. The recommendations also include some changes to employees’ leave entitlements and introduce greater transparency to ensure employees are fully informed about their leave entitlements.

Some of the recommendations include:

  • The ability for employees to take holidays in advance on a pro rata basis referenced to the length of service.
  • Bereavement leave, sick leave and family violence leave to be made available from the first day of employment.
  • The inclusion of discretionary payments such as bonuses and commissions to be clarified to ensure that the holidays you take are based on what you have been paid.
  • The government expects to introduce legislation-based on the recommendations into parliament later in 2022. The process will provide an opportunity for employers to have their say through the select committee stages of the bill.  It is expected that the new Act will come into force in early 2024.

This is definitely one to watch as your business will likely experience some impact from this Act and preparing early will be of benefit.  

If you have any questions about anything mentioned in this latest Employment Law update, please do reach out to your regular Consultant, or alternatively feel free to drop us a line at