2021 Litigation Forecast - Employment: A year of challenges for employers and employees

2020 was a year full of challenges for employers and employees alike. We expect 2021 to be no different. We anticipate increased litigation in a number of key areas with workplace issues arising out of the COVID-19 pandemic, the shifting labour market, and changes in working arrangements continuing to lead to status disputes before the courts. We also expect further changes to employment legislation.

Litigation arising out of COVID-19

As workplaces continue to feel the economic effects of the pandemic – and as the long-term impacts are starting to set in – we expect employment related litigation to increase in the coming year. We think much of this litigation will come about from restructurings leading to redundancies. Employers have strict obligations under the Employment Relations Act 2000 that require them to observe good faith consultation processes when proposing to disestablish roles. Businesses that attempt to take shortcuts in this process open themselves up to legal risk. We also anticipate that disputes about employee pay entitlements will continue to roll out before the courts. In particular, we expect to see more test cases addressing the intersection between the wage subsidy, employment law, and the wage work bargain.

Status disputes and the dependent contractor

As our labour market trends closer towards a gig economy, and as the traditional master-servant distinction loses relevance in today’s working arrangements, we predict status disputes will come to the fore of employment litigation. Businesses that shun the employment relationship and engage workers through labour-hire and contracting arrangements will need to follow developments closely as workers seek greater protections and better working conditions.

Given evolving work arrangements, the Government has flagged introducing a statutory regime for dependent contractors in 2021. This new category of worker, which sits between employment status and independent contractor status, may prove to be a watershed in status litigation. Under the current law, employees have statutory employment rights such as minimum wage protections, leave, and rest and meal breaks. Contractors, on the other hand, are protected only by the terms they negotiate in their agreements. The Government’s proposal would create room for certain contractors, deemed to be dependent contractors, to demand certain rights which are similar to those in employment relationships

Employment legislation

Overlapping with status disputes, we anticipate 2021 will see litigation under the new triangular employment laws. These laws enable employees, in certain circumstances, to join a “controlling third party” to a personal grievance claim. The triangular employment regime came into force in early 2020 and is yet to be tested by the courts. However, we expect claims against third party businesses to arise in the coming year.

Following the introduction of the Equal Pay Amendment Act 2020, we expect to see an increase in litigation on pay equity issues. The Act lowers the bar for workers to raise pay equity claims and provides a streamlined process for progressing them. We think that this legislation will have significant implications for employers in traditionally female-dominated industries. In addition, the current backlog of equal pay cases may be repleaded as pay equity claims to be advanced under the new Act.

Though 2020 saw little movement around Labour’s Fair Pay Agreement (FPA) policy, a likely consequence of the party’s re-election is that a framework for FPAs will be introduced in the next year. FPAs are agreements that set industrywide minimum standards. We expect that the implementation of FPAs will see an upsurge in union activity.

We also believe that changes to the holiday framework is on the cards. In 2018, the Government established a taskforce to review and provide recommendations to improve the Holidays Act. The taskforce has reported back to the Minister for Workplace Relations who is now considering its recommendations.

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