The Government has indicated an intention to implement some interesting changes to employment-related legislation in 2025, so let’s dive in to see what this could mean for you and your business. One key thing to note is that the are not yet law. While they appear to have sufficient support from the coalition, the changes will not be law until they have gone through the relevant parliamentary process.
Incoming income threshold to raise a personal grievance (PG) for unjustified dismissal
On Friday 29 November 2024, the Government announced it would introduce an income threshold of NZD $180,000 per annum for unjustified dismissal personal grievances.
The ins and outs? So far, the Government has indicated that the income threshold of $180,000 per annum refers to a regular base salary – i.e., it excludes other income (for example, bonuses or incentive payments) or benefits (such as vehicle use or travel allowances). If implemented, this would prevent those earning above $180,000 per annum in terms of base salary from raising unjustified dismissal claims. If implemented as proposed, these employees would still be able to raise other types of claims (such as unjustified disadvantage, discrimination and/or harassment).
We understand from the Workplace Relations and Safety Minister (‘the Minister’) that the rationale for introducing this policy is to provide greater labour market flexibility – and the intention is to offer both employees and employers more choice when negotiating and signing up to contracts. For example, by giving parties the ability to opt back in to unjustified dismissal protection if both parties agree or negotiate their own tailored dismissal procedures that work for them. We can imagine a rise of “no fault termination” provisions being negotiated by senior employees prior to employment, and others seeking bonuses arrangements rather than hitting the $180,000 base salary threshold.
Poor employee behaviour to remove remedies
The Minister has also proposed policy changes to employee remedies to help “strike a better balance” and “increase certainty” for employers. If implemented, the intention is that there would be more consideration given to an employee’s behaviour in the context of remedies for a successful PG.
Let’s say a business dismisses an employee for engaging in serious misconduct, after they were found to have stolen tools. Currently, if that employee pursued a successful claim, the employer could still be ordered to pay the employee financial remedies (or even to reinstate them into their role) if the dismissal was found to be unjustified by the Authority. That can be the case even if there was a reasonable basis to dismiss, but the process was considered flawed.
The Minister has suggested that employee accountability needs to be strengthened and more consideration should be given to an employee’s behaviour when awarding remedies because of a PG. What could this look like? If implemented as indicated, this could include reducing or even in some situations removing remedies depending on the level of contribution by the employee. Contribution is already a factor that the Employment Relations Authority is required to consider, however it looks like it is to become more of a focus.
Reintroduction of pay deductions for partial strikes
Heads up for anyone in the collective bargaining space, the Employment Relations (Pay Deductions for Partial Strikes) Amendment Bill has sought to reintroduce the ability for employers to deduct pay from employees who are involved in partial strikes.
Partial strike action is industrial action which normally involves employees turning up for work but refusing to partake in key duties or parts of their job (rather than simply refusing to work). The Minister has said the Government has proposed this change to try combat the disruption that partial strikes can cause to the public and employers, with deducting pay seen as “an ‘incentive’ for parties to return to the bargaining table and reach agreement sooner, while also minimising community impacts.” The Bill sets out two different ways to calculate pay deductions and requires employers who decide to deduct pay to provide written notification about the deduction.
Holidays Act 2003: Finally fixed, or not quite?
Following a serious of consultations on a proposed Holidays Act reform Bill, the Government is going back to the drawing board. The Bill, which looked to build on work that had started under the previous Government, has scope for further simplification according to the Minister (and those groups that were consulted). The Minister explained that she wanted to get this legislation right, even if it meant it took a little bit longer to do so.
The Minister asked officials to begin work on an hours-based accrual model for annual leave which has the potential to achieve a much greater focus on simplicity. We understand this will likely mean another Bill would need to be drafted, increasing the time, energy and resources for this process. The Minister has stated that the aim is to have a new Act passed by the end of term, seeking a decision from Cabinet in 2025.
For more information
It will be interesting to see when, if and/or exactly how the changes as currently proposed come into law (or not). Watch this space… we certainly will be!
If you would like any further information or advice about any employment matters, please contact Tess von Dadelszen, Partner of JB Morrison Lawyer’s employment law team, on 027 233 3895. Don’t forget to mention you are a SARNZ member for a free 30 minute initial consultation.
