We’re almost halfway through 2019. The volatile world of workplace legislation continues to change due to the labour-led government stepping into power in 2017. In the last six months we’ve seen several significant amendments to employment laws with the passing of the Employment Relations Act 2018. It’s certainly been keeping us busy at HR Assured, and we’ve included a checklist of the changes at the end of this article (in case you’ve missed something).
For Small and Medium Businesses, the fast pace of change can increase the chance of making a mistake
Fast-paced change increases risk, particularly for SMEs. As an SME, you might not have a dedicated team or resources to keep up with changing legislation. The Labour Inspectorate are fully aware of the tumult engulfing New Zealand businesses right now and have a keen focus on maintaining employment standards. They’ve got the backing of the Minister for Workplace Relations and Safety, Iain Lees-Galloway who, in 2018, announced an additional $8.8 Million to help the Labour Inspectorate crack down on workplace violations.
Now’s the time to understand what’s changing and who the labour inspectorate may target next so you can be prepared. It’s easy to ignore issues with so many things happening, and if you have limited resources blissful ignorance can be an attractive option. But breaching employment legislation, whether wilfully or not, could be a disaster for your business. One example is the recent decision from The Employment Relations Authority (ERA) in which former company directors of a Dunedin taxi company were found wilfully blind and personally liable for employment breaches.
What happens if you get caught?
There are three main areas where offending businesses suffer: Financial, Reputational and Recruitment. Let’s take a closer look at each if these areas.
It was Benjamin Franklin who said, “Money never made a man happy yet, nor will it”. While I agree on a personal level, when it comes to business no money equals many problems, unhappiness the least of them. Workplace violations can take a serious financial toll on a business in multiple ways.
The labour inspectorate leaves a visible trail of evidence, doling out enforcement actions and financial penalties to business owners for being complicit in workplace violations. From businesses like Shalini Limited, that operated liquor stores and a dairy in Auckland, being fined $100,000 in penalties, to pharmacies paying $92,500 in fines for not paying staff correctly, to the Auckland restaurant owner facing penalties of $5,000 for failure to comply with the Labour Inspectorate’s instructions in relation to record keeping and public holiday entitlements.
A breach of law often requires a business to give-up something or rectify practises that were in violation. In both cases your productivity would suffer until any ban had been lifted or you’d made adequate changes. This would slow your output and have a direct impact on your revenue.
Having the name of your business (and possibly your own name) splashed all over the news would have repercussions that could haunt your business for years, if not end it altogether. To illustrate the point, what’s the first thing that comes to mind (besides the actual product or service of the brand) when you read these brand names?
(Click on the company name if you can’t recall exactly what brought each brands reputation into the firing line!).
Damage to your brand’s reputation will cost you customers. Depending on your business, it could also cost you referrals, sponsorship deals, current and prospective employees, business partnerships and future investors. In some cases the damage is irreparable, resulting in the shutdown of business. I avoid spending my money with businesses that are unethical or exploit workers, and I’m not alone in this. This 2016 study found that brand attitudes and purchase intention of respondents decreased after receiving negative information about a brand’s corporate reputation. While reputation is essentially an “intangible asset”, a negative reputation deters consumers and investors alike.
If brands with a positive reputation add greater satisfaction and loyalty for workers and customers, it makes sense that the opposite would also be true. Attraction and retention of top talent correlates with your employment practises. You’ll have trouble attracting and keeping good workers if your business is seen as an unfair or untrustworthy place to work. In contrast, there are many advantages to having a positive corporate reputation. You’ll be recognised as an ethical and attractive work place that will have talent knocking on your door, wanting to be a part of your team. Your clients and customers will see this and feel great about working or spending with you. Besides the warm glow of satisfaction you’ll get from running a reputable business, you’ll make more money. Period.
Three things you can do to mitigate risk when the law changes
Just to be clear (because I realise this all sounds a bit negative), most business owners and HR teams are doing the right thing, prioritising workers’ rights and making whatever changes they need, to comply with employment and health and safety regulation.
The real issue goes back to what I was saying in the beginning of this article, about how quickly the law is changing and how hard it is to keep up. The real issue affecting compliance is TIME. If you’re a business owner, HR or Operations Manager, the working day is already busy enough without adding compliance to your list of worries.
With that in mind, the three best things I recommend any small or medium business owner can do to protect their business are:
- Find a way to stay informed of any changes in the law. Subscribe to a workplace relations blog or newsletter and to Employment New Zealand, for regular and informative updates on New Zealand employment and workplace safety changes.
- Have audit processes in place to make sure you can adjust accordingly when the laws change. “AUDIT PROCESSES? I don’t have the time!” I hear you say. But there are ways to create the time you need by working smarter and using technology. A good payroll or HR system allows you to run reports and quickly gather data to check compliance or identify gaps before they become problems.
- Have a dedicated resource or trusted workplace relations partner where you can get timely advice, like an HR telephone advisory service. It can be a cost-effective way to stay informed and get the latest advice on workplace legislation relevant to your unique situation. Look for someone who has the expertise and time to conduct regular audits across your business.
These days you don’t need to be an expert
Fortunately, you don’t have to be an expert across all areas of HR and employment law. As technology and innovative solutions break into the HR Space, there are many ways to access support without breaking the bank, and we offer such services here at HR Assured.
Finally, I thought I’d share with you this comprehensive list of the employment law changes introduced so far this year through the Employment Relations Amendment Act 2018. We’ve highlighted the most important changes for you. It’s a handy resource you can pass on to your team, your colleagues, or your friends.
The Employment Relations Amendment Act 2018 passed into law in December 2018 and brings many changes to New Zealand employment law. (We’ve placed in bold the changes we think require your specific attention, as they’re likely to have the biggest impact.)
Changes that took immediate effect on 11 December 2018:
- Reinstatement is the primary remedy wherever practicable and reasonable.
- A union representative is entitled to enter a workplace to assist any employee on the premises who is not a union member with health and safety matters (if requested by the employee).
- A union representative does not need to obtain consent to enter a workplace where there is a collective agreement in force (or bargaining for a new collective agreement has been initiated) and the coverage clause (or intended coverage clause) covers work done at the workplace.
- A new penalty has been introduced for refusing to permit a union representative who is entitled to enter a workplace to enter.
- Unions will be able to initiate collective bargaining 20 days before employers (where a collective agreement is already in place).
- The Authority will not be able to determine that bargaining has concluded.
- Employers will not be able to opt-out of multi-employer collective bargaining once initiated.
- Pay deductions for partial strikes is not permitted.
- Minor and technical errors and omissions in strike notices will not affect the validity of the notice.
Changes that took effect from 1 April 2019:
- Domestic Leave was implemented as a new leave type for victims of domestic violence or people caring for victims of domestic violence
- Minimum wage increase (adult) from $16.50 to $17.70 per hour and from $13.20 to $14.16 (starting out/training).
Changes that took effect from 6 May 2019:
- Trial periods will only be available for a “small-to-medium-sized employer”, which is defined as having fewer than 20 employees (i.e. maximum 19!). The change applies to written employment agreements agreed to on or after 6 May 2019.
- Vulnerable employees will be entitled to transfer to new employers in a restructuring situation (even where the employer has fewer than 20 employees) and will be given notice of, and specified information about, the right to elect to transfer to the new employer.
- Employees will be entitled to prescribed rest and meal breaks (with a presumption on duration and timing of breaks based on two-hour increments), but an exemption is available for employers in essential services, and for the protection of New Zealand’s national security where compensatory measures are available.
- Union delegates will be entitled to reasonable paid time during working hours to perform union duties. Such time must be paid at the same rate as if the employee was performing their ordinary employment duties.
- The duty of good faith will require parties to conclude a collective agreement unless there is a genuine reason, based on reasonable grounds, not to.
- Opposition to concluding a multi-employer collective agreement is a genuine reason not to conclude a multi-employer collective agreement if based on reasonable grounds.
- Collective agreements will be required to specify wage rates and salaries, minimum rates, or methods for calculating minimum rates, and how the rates may increase during its term. “Wages” is defined to include amounts payable for piece work or by way of commission.
- Unions may require that employers pass on to new employees specified information about union roles and functions.
- An employer can refuse to provide union information to prospective employees if the information is about the employer, would (or is likely to) mislead or deceive the prospective employees, and would significantly undermine bargaining.
- Employers must disclose to unions new employees’ names and whether they want to join the union (unless the employee objects, and if a collective agreement covers the work done by the employee).
- New employees who start work or sign an employment agreement on or after 6 May 2019 will be afforded the same terms and conditions as the applicable collective agreement for the first 30 days of their employment.
Changes that took effect on 11 June 2019:
- Unlawful discrimination will include discrimination on the grounds of union membership
What Areas of Your HR Are Most Likely to be impacted?
Your Individual Employment Agreements (IEAs), regarding:
- Domestic violence leave
- Rest and meal break requirements
- New trial period requirements
- 30-day rule for new employees covered by collective agreement
Leave and Grievance Policy, regarding:
- Domestic violence leave
Fixed Term IEAs, regarding:
- Ensuring the length of a fixed term works with how entitlements for certain types of leave entitlements (annual leave, sick leave and domestic violence leave) are handled
Your processes for conducting a trial period and terminating during a trial period
- Ensure you are still eligible to use the trial period, and that you are doing so within the current stated requirements
Your Equal Employment Opportunity (EEO), Discrimination, Bullying and Harassment Policy and Handbook, regarding:
- The current union discrimination laws
Your Pre-Employment processes regarding:
- Please ensure, if relevant, that you are following the updated Children’s (Requirements for Safety Checks of Children’s Workers) Regulations 2015
This resource was pulled together with the help of our friends LangtonHudsonButcher, who share updates and news around New Zealand employment law with us regularly.
If you have any questions or need advice on any of the legal changes being raised in this article, please get in touch with us to discuss or for a referral.