2020 Litigation Forecast - Employment: Is a re-shaping on the cards in 2020?

With 2020 as an election year, we may not
see as much of the legislative reform in the
employment arena that has been promised,
or as we had anticipated this time last year.

However, with an increasing awareness of minimum
entitlements we are expecting an uptick in litigation
from unions to test new areas of law, such as availability
provisions and triangular employment relationships.
Another area to watch is the proposal to introduce
‘dependant contractor’ legislation and ‘fair pay
agreements’. These proposals would fundamentally reshape
New Zealand’s employment law framework and
labour market for 2020 and beyond.

Areas to watch in 2020

‘Dependent contractor’ – a new category of worker?

The use of contractors is standard for most organisations
seeking flexible resourcing solutions, along with less
‘traditional’ work arrangements becoming more
common. Against this context, the Government is
considering whether a new, third category of worker
should be established under New Zealand’s industrial
relations framework. This category would be somewhere
between that of ‘employee’ and ‘independent contractor’.

Under New Zealand’s current legislative framework,
employees receive minimum employment-related
entitlements, rights, and protections. In contrast,
contractors largely rely on the contractual terms
they negotiate with their principal. These contractors
often operate their own businesses and use their own
equipment but depend on one entity for most of their
income and have little control over their daily work.

The Government has released its special discussion
paper on the topic of ‘dependant contractors’ for public
feedback. Depending on the outcome of the Government’s
review and the 2020 election, organisations might need to
reconsider their use of contractors. This may include
creating a framework that, under the current proposals,
provides certain contractors who would be considered
‘dependant contractors’ with entitlements and
protections such as holiday pay and minimum wage
(currently only available to employees). From a litigation
perspective, this could mean more status disputes.

Complexity of availability provisions to be felt by employers

Employers will continue to grapple with the complexities
and ‘grey areas’ associated with availability provisions.
Availability provisions were introduced in 2016 to protect
employees required to be available to work beyond their
normal guaranteed hours of work (as agreed with the
employer and set out in their employment agreement).
Employers are required to have genuine reasons based
on reasonable grounds for requiring employees to be
available outside the guaranteed hours of work and
must provide employees with reasonable compensation
in some circumstances. However, employers still have
little guidance on what constitutes ‘guaranteed hours’,
‘genuine reasons’, ‘reasonable compensation’ and the
circumstances where compensation must be paid, for
the purposes of drafting availability provisions. Further
complexity is also added when considering nontraditional
work arrangements.

We expect to see further litigation on availability
provisions in 2020, likely driven by unions seeking to
bring claims on behalf of a number of employees. In
the absence of legislative amendments, further case
law should provide some much needed clarity on the
availability provision.

Triangular employment laws to be implemented

From June 2020, new triangular employment laws will
be implemented enabling an employee or an employer,
in certain circumstances, to join ‘a controlling third party’
to a personal grievance proceeding. We expect businesses
that regularly engage labour-hire companies and ‘temp’
agencies to feel the effects of this new law the most.

Pay equity and fair pay agreements

We are seeing developments in the pay equity and fair
pay agreements spaces. The Equal Pay Amendment Bill
is awaiting its second reading, having now been reported
on by the Education and Workforce Committee. The
Committee shared its views on the Bill and provided its
proposed amendments, many of which relate to the pay
equity claims section of the Bill. We think this legislation
may have significant implications for some employers in
target industries.

In the fair pay agreement space, following the Working
Group’s report, the Government has released another
discussion paper obtaining further feedback. Unions are
wanting the Government to be more active in progressing
this – but given the wide ranging and significant implications
for all businesses and other organisations, we can expect
this to be a hotly debated issue for election year.

Hurt and humiliation compensation (increases in awards and employees’ expectations)

In line with the Chief Employment Court Judge’s
2018 decision in Richora Group Limited v Wai Ying (Melody) Cheng, the banding approach taken to hurt
and humiliation payments under s 123(1)(c)(i) of the
Employment Relations Act 2000 has been informing
mediated settlements, and awards in the Employment
Relations Authority and Employment Court. Depending
on the severity of the harm suffered by an employee
and the consequent band they fall into, an employee
may expect to be awarded between $0-$10,000 (band 1);
$10,000-$40,000 (band 2); or more than $40,000 (band 3).
Consequently, employees bringing personal grievances
against their employees are often pitching the level of
hurt and humiliation they are claiming to have suffered
in band two as a starting point and the general trend has
been higher awards compared to previous years.

In 2019, we saw individuals pitching their settlement and
remedy expectations significantly higher than previous
years, and we expect this to continue in 2020.

Holidays Act reform will continue to take shape

A Taskforce was established in May 2018 to review and
provide recommendations to improve the Holidays Act 2003. This included providing clarity on minimum leave
entitlements in the context non-traditional and future
work models. The Taskforce has now reported back to the
Minister for Workplace Relations and Safety, who is now
considering the recommendations.

While a new regime is likely to be 12–18 months away
from implementation, it is likely that any legislative
changes will not provide a retrospective fix for past
non-compliance with the Holidays Act. Businesses
with historical non-compliance issues will still have an
obligation to address these with employees separate to
any new regime.

INZ framework changes

Immigration news has frequently been making headlines
throughout 2019. This has been accompanied by
Immigration New Zealand (INZ) reviewing its internal
procedures and visa frameworks and announcing
significant changes to take effect in the near future.
Most notable are the changes in the employer-assisted
visa space. Key changes include a move to an employer-led
visa application process, streamlining a number of
existing visa types into a new ‘Temporary Work Visa’, and
using pay (relative to New Zealand median wages), rather
than the current ANZSCO skill bands, to categorise jobs.

Employers need keep on top of INZ’s announcements, to
ensure they are complying with visa requirements and
immigration laws as and when they change. This will be
crucial to ensure that business can continue to attract top
talent and get individuals on-board early.

Read the full Litigation Forecast

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