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 theEmployment 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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