2019 Litigation Forecast - Employment – back to the future?

As anticipated by our 2018 Litigation Forecast, a raft of legislative change has come through from the current Labour-led Government. The Employment Relations Amendment Bill (Bill) passed in December 2018, adopting a “back to the future” approach by rolling back a large number of changes brought in by the former National-led Government. A number of these changes bolster union powers, including, among other things, reinstating the 30-day rule, giving unions the opportunity to initiate bargaining before the employer and reintroducing the duty on the parties to conclude a collective agreement. Coupled with the significant ramping up of union activities this year, as evidenced by the recent significant spike in strike action, we are likely to see a continuing increase in industrial action and in the number of cases brought before the Employment Relations Authority or Employment Court regarding such matters.

Employers will have reduced availability of trial periods and increased settlement costs

One of the most controversial aspects of the changes is the rolling back of the availability of trial periods and the restoration of reinstatement as the primary remedy in employment disputes. From 6 May 2019, only employers that employ fewer than 20 employees may use a trial period, meaning that only approximately 30% of employers will be able to utilise the provision going forward. Additionally, reinstatement “must” now be ordered by the Employment Relations Authority when it is requested by the employee and it is reasonable and practicable to do so. As a result, we foresee reinstatement returning to the personal grievance claims books as employees use this remedy as leverage for greater compensation when negotiating settlements. This, in turn, brings a possible increase to the cost in settlements for employers.

Pay equity legislation to come into force and claims will rise

In 2018, legislative developments to address recent scrutiny regarding “equal pay” and “pay equity” flip-flopped heavily, resulting in a significant back-log of cases concerning this matter. However, we expect to see legislation addressing equal pay/pay equity come into force in 2019, and foresee an increase in equal pay/pay equity claims. This may also have a flow-on effect during collective and individual bargaining for increased pay for unaffected roles.

Fair Pay Agreements will be brought in

We are expecting to see further direction on a new concept referred to as “Fair Pay Agreements”. Fair Pay Agreements will set minimum terms and conditions (including but not limited to ‘pay’) for all workers in an entire industry or occupation (and may be expanded under statute to include contractors, not just employees). They are not currently used in New Zealand, but they are a similar concept to the industrial national awards which existed in New Zealand under legislation prior to 2000 and which exist in Australia. The Government established the Fair Pay Agreement Working Group in June 2018, chaired by Rt Hon Jim Bolger ONZ, to make recommendations on the design of the system. The Working Group report has been released to the Minister for Workplace Relations and Safety, Ian Lees-Galloway.

“Fair Pay Agreements will set minimum terms and conditions for all workers in an entire industry or occupation.”

#metoo2019 – WorkSafe will focus on bullying and harassment

There is no question that 2018 brought bullying, harassment, and appropriate corporate conduct into the spotlight. The impacts of the #metoo movement will continue to unfold in 2019, in both the health and safety and employment space. WorkSafe NZ has committed to building its capability to meet public expectations around sexual harassment and bullying. We expect to see WorkSafe NZ strengthen its attention in this area, as well as other work-related health risks through 2019. In the employment space, we expect the focus on harassment to continue in 2019, and foresee it becoming part of a greater shift towards employers becoming proactive in changing workplace culture.

Adoption of innovative ways to work will increase

High employment levels will result in employers competing to retain employees and offering increased flexibility and innovative work practices. The introduction of the Employment Relations (Triangular Employment) Amendment Bill and the Film Industry Working Group’s report (both in 2018) demonstrate that the conversation about the future of the workforce and the suitability of existing employment frameworks is ongoing. We expect to see businesses continuing to implement innovative ways of working in 2019 to reflect the modern work environment and customer demands (including an increase in automation). As we continue to move away from a Monday-Friday 9-to-5 work pattern, and employers seek to enable worker requests for more flexible work arrangements, we foresee further litigation on the employee/contractor distinction. This is particularly in light of developments overseas concerning workers in the ‘gig economy’ and challenges to the current employment law framework which was built around more traditional work patterns.

Holidays Act will change to keep up

A review of the Holidays Act 2003 is also underway and it is likely that the working group convened to address the problems with this legislation will need to address the significant changes needed to provide clarity on minimum leave entitlements within a framework that accommodates non- traditional and future work models.

New ‘Dependent Contractor’ worker classification

We expect to see developments in 2019 that will indicate whether New Zealand will follow in the footsteps of the UK by introducing a third category of worker (currently referred to by the Government as a “dependent contractor”), which sits in-between an employee and an independent contractor. There has been a lot of conversation around flexible working this year, including media coverage of private employers introducing a 4 day work week on a permanent basis and employee surveys indicating that pay rises are less important than flexibility to employees.

Privacy Act changes will impact workplace obligations

Finally, employers will need to keep a careful eye on the changes to New Zealand’s Privacy Act (refer to page 17) as these changes will also impact on workplace obligations between employers and their employees.

Read the full Litigation Forecast

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