Biggest labour law changes in generation

Next year is likely to bring the most significant changes in employment policy in 25 years. In particular, protections for contract and casual workers will be under the spotlight. Teuila Fuatai reports.

Numerous studies have linked improvement in working conditions and pay to better productivity and less staff turnover. A major barrier to achieving that continues to be the cost to business for implementing those systems.

Next year, as the Labour-led Government gets stuck into its meatier policy promises, the process initiating a fundamental shift in employment policy - last seen with the implementation of the 1991 Employment Contracts Act - will begin.

However, unlike the ECA, these policy changes have been promised to address the absence of minimum standards for those who work in contract and casual employment.

Industries with large numbers of self-employed contractors - including construction and transport - will likely undergo big changes.

Essentially, implementation of minimum workers’ standards for contractors will result in the requirement to pay those individuals - often classed as self-employed contractors - minimum wage rates, as well as meeting obligations like holiday pay and sick leave.

AUT work and employment professor Erling Rasmussen, a former policy adviser at the since-renamed Department of Labour, points to one of the fundamental challenges in the area.

“The reality is nobody’s quite sure how many contractors are not actually currently meeting the minimum standards as they’re set out for employees,” he says.

“Starting to put in minimum regulations for contractors that are similar to employees is in principle a big change, but just how much impact it will have, and how much it will cost - we don’t know.”

Businesses not currently meeting minimum standards for all workers - permanent and contract - should already be assessing what is wrong with their operating model, he says.

“When we talk about minimum wage, and things like holidays - that should be what everybody gets in the labour market. If businesses can’t run without fulfilling those obligations, then there is something wrong with the business,” Rasmussen says. 

Massey University school of management lecturer Barry Foster points to gig economy companies like Uber - currently fighting to avoid minimum employer obligations for drivers in the UK - as a major area of change and debate in the next few years.

“They are in New Zealand, and it’s a question of whether drivers are employed by Uber, or whether they are self-employed.

“In the UK, the Appeal Court have said Uber drivers are employees of the Uber company, and Uber are now going to the Supreme Court in the UK [because] they still believe drivers are self-employed.”

Often people who sign up with companies like Uber enjoy the freedom of working as a contractor, Foster says, but that has to be considered against the absence of any real rights and ability for redress for those workers.

For casual workers, Rasmussen points to the development of industry-wide agreements - which span multiple employers and set standard rates and conditions across companies - as an area to watch.

Improving job security for precarious workers focuses on the increasing amount of casual labour and short-term employment in New Zealand’s labour market, he says.

Meanwhile, proposed changes to the 90-day-trial framework - which make it possible for workers to lodge a complaint of unjustified dismissal within those first three months - will likely impact the tourism and hospitality employers the most.

Under the proposed system, the 90-day-trial period will remain, with unjustified dismissal complaints being handled by “referees”. Lawyers are not involved.

“What is interesting there is that Labour previously wanted to abolish that completely,” Rasmussen says.

“They are now going to keep that and put in some safeguards so people don’t get too unfairly treated.”

In the hospitality and tourism sectors, inclusion of the 90-day-trial period in employment contracts is becoming more common. And while Rasmussen understands the Government’s compromise on the issue, he does not believe it can be permanent.

A legislated trial period accommodates employers with “low employment standards” and poor screening and selection processes, he says.

The proposed model should be assessed for effectiveness a year or two after it is implemented, Rasmussen says.

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