What does a majority Labour government mean for employment law? – November 2020

Before the election, Labour made a raft of promises to reform employment law.

Many of these promises were the results of working groups (and their recommendations) that predated the election. Now, as a majority government, it is likely that at least the lion’s share of Labour’s proposed changes will be made a reality, and potentially soon.

We set out below what Labour’s pre-election promises were and recommend that if you think you are going to be impacted, you speak to us about how you can prepare.

More money

Increasing minimum wage

The current minimum wage rate is $18.90 per hour. Labour promised to lift the minimum wage to $20 per hour by 2021. No specific date for that increase has yet been proposed, although this could  be from 1 April.

Beyond 2021, Labour has said that it will take a “balanced” approach to further minimum wage increases, and that it will signal any increases well in advance.

Living wage for public sector contractors

The “living wage” is currently $22.10 per hour. This is calculated independently each year by the New Zealand Family Centre Social Policy Unit.  The living wage has no legal foundation, and various definitions exist about what a living wage is intended to be (eg sole earner supporting a family of four, or a single individual having a modest quality of life.  Interplay with benefits and subsidies are another factor).

Labour promised that as current government contracts, for example for cleaning, security or catering, end, public service agencies will be required to include the payment of a living wage as part of the negotiations for new contracts.

Labour further committed to expanding this to cover those workers who fall under government service contracts in the wider state service, including DHBs, though it has not indicated a timeframe on this.

More leave

Reviewing the Holidays Act 2003

Long derided as unworkable, Labour promised to simplify the Holidays Act 2003.

A taskforce was created to make recommendations for changes to the Act in May 2018, and an interim report from this taskforce was submitted to then Workplace Relations Minister Ian Lees-Galloway later that year. No further progress has been announced on this issue.

Labour has said that broadly there is a lack of guidance about how the Act works, poor implementation by payroll systems, and a lack of transparency around holiday pay calculations, all of which increase compliance costs. How a simplification will look is yet to be determined, as there has been no further report from the taskforce, or government action announced following the earlier report. Watch this space.

Doubling sick leave and increasing bereavement and family violence leave

Sick leave, currently 5 days per year (after 6 months’ continuous employment), will be doubled to 10 days per year. It is unclear at what point in the employment that entitlement will arise, that is, after 6 months in employment or on commencement of employment. In this regard, Labour has said for example that it will amend the Holidays Act to allow employees to take bereavement leave and family violence leave as needed, and before they have been in employment for 6 months. It could therefore take the same approach with the promised additional sick leave.

As to when these changes are to be made, at least in respect of sick leave, Labour promised that in light of COVID and a greater awareness about taking time off when unwell, legislation to extend sick leave entitlement will be introduced within the first 100 days of its second term. 

Matariki on June 6 as a public holiday

The last public holiday to be introduced was Waitangi Day – around 50 years ago.

Labour promised to introduce what would become New Zealand’s 12^th public holiday – Matariki, to fall sometime in the winter period. Matariki is the start of the Māori New Year.

The exact date of the public holiday has yet to be proposed, but it is likely to be June.

More Changes

‘Dependent contractors’

Labour proposes to fill the ‘gap’ between the categories of independent contractor and employee by creating a “dependent contractor” category. Workers in this category are said to be effectively under the control of an employer, but do not currently receive the legal protections and minimum entitlements that employees receive.

To determine whether someone is a “dependent contractor,” Labour proposes looking at such relevant factors as who assigns work to them, whether they need permission to take time off, or how they are paid.

The implications for all parties are not yet clear, but at a minimum Labour proposes to extend to dependent contractors the right to collectively bargain and statutory minimum entitlements, such as sick leave.

Fair pay agreements (FPAs)

FPAs would be agreements as to minimum terms and conditions of employment across an entire industry or occupation.

An FPA working group was set up in June 2018 to make recommendations on the design of such a sector-level bargaining system. It provided a report with recommendations to then Minister Lees-Galloway, found here: https://www.mbie.govt.nz/assets/695e21c9c3/working-group-report.pdf

Broadly, the working group proposed that an FPA would provide a collective bargaining mechanism which would complement the current employment relations and employment standards regulatory system.

It appears this mechanism would also allow the Employment Relations Authority to make a binding determination if parties were unable to conclude an FPA.

Now a majority government, it is reasonable to assume that Labour intends to implement the recommendations (or a form of those) provided by the working group.  

In addition, Labour plans to amend the Employment Relations Act 2000 in terms of what could comprise conduct that undermines a collective agreement.

Pay equity

Labour promised, though with a lack of specificity, to address pay equity for women, aged workers and all ethnic groups.

Broadly, Labour stated it would improve transparency for women by ensuring that there are better records of pay equity across New Zealand, including by age and ethnicity, as well as gender. These measures are in addition to the Equal Pay Amendment Act which just came into force and which provides for negotiated pay equity outcomes.

Security guards

There are around 5,500 security guards in New Zealand. Labour promised to add security guards to Schedule 1A of the Employment Relations Act 2000 so that they would be classified as “vulnerable” workers covered by sub-part 1 of Part 6A of the Act. This would mean security guards would have the same automatic ability to transfer to a new employer in a contracting in or out situation as cleaners and other existing listed workers enjoy now.

Seafarer welfare centres

Under the Maritime Labour Convention, New Zealand has an obligation to provide for crews who come ashore here, but this is currently funded largely through charitable sources. In many cases, the facilities are not considered adequate.

Labour promised to amend the Maritime Transport Act 1994, enabling the maritime levy to fund the services required for seafarers’ wellbeing.

Raising the age for workers allowed to perform hazardous work, and reintroducing the right to elect health and safety representatives

Health and safety representatives are part of the Health and Safety at Work 2015 framework. The previous National government removed the right of workers in businesses with fewer than 20 staff to elect their own health and safety representative. Labour promised to reinstate this ability.

Also in this area, Labour promised to raise the entry into hazardous work age from 15 to 16, which will align with the school leaving age, and is consistent with the International Labour Organisation’s recommendation 190 on the Worst Forms of Child Labour.

New Privacy Act 2020

As a final note, we remind you that in less than a month (1 December), the new Privacy Act 2020 comes into force. This Act has sharper teeth; penalty provisions are applicable, as are positive duties to report breaches to the Office of the Privacy Commissioner and affected individuals in certain circumstances. We recommend that you seek advice if you are unsure of the implications of this new Act.

For advice from our employment law specialists, either call us on 04 801 5427, or contact us via email:

Paul McBride (Partner) – paul@mdjlaw.co.nz

Guido Ballara (Partner) – guido@mdjlaw.co.nz

Frances Lear (Senior Associate) – frances@mdjlaw.co.nz

Saadi Radcliffe (Solicitor) – saadi@mdjlaw.co.nz

Emma Rose Luxton (Solicitor) – emmarose@mdjlaw.co.nz

Disclaimer – this newsletter is necessarily brief and general in nature.  You should therefore seek professional legal advice before taking any action in relation to any matter addressed above.  © McBride Davenport James