By Vaughan Granier
There are some incredibly complex changes shaking up New Zealand’s employment law framework this year and many are bound to sharpen the focus on workplace compliance in the franchise sector. These changes range from the expected minimum wage increase and employer accreditation for hiring migrants to new rules for leave entitlements under the Holidays Act 2003. While some of these changes are not yet law, the Government assures us they will be, so it’s wise to plan for their impact on your system.
Let’s have a look at the four changes your franchise business network should prepare for in 2021.
1. Minimum wage increase
On 1 April 2021, the adult minimum wage increased from $18.90 to $20.00 per hour and the starting out or training minimum wage rose from $15.12 to $16.00.
By now, your franchisees should have sent all employees on a minimum wage a letter or email – known as a variation to their agreement – advising them of their new wage rate. If any of your sites have weekend workers, they’ll also need to factor the new minimum pay rates into their employees’ overtime calculations.
One thing to watch for here, is the knock-on effect of a minimum pay rise resulting in new or unskilled employees taking home the same income as more skilled colleagues. Now, there’s no legal requirement to increase the wage of anyone who already earns at least the new minimum pay rate, but your franchisees may experience a negative impact on employee morale, culture, and team dynamics if they don’t know how to manage this area carefully.
For a more in-depth look at pay-relativity and strategies to consider, should issues arise, read our blog on preparing for a minimum wage increase.
2. Employer accreditation for hiring workers on temporary work visas
Mid-this year, Immigration New Zealand (INZ) will release a new accreditation process for employers who hire workers on temporary work visas. Previously, temporary visas were granted based on applicant suitability first and foremost. Now, the primary basis for granting a visa will be your employer accreditation. Under the new process your franchisees must meet set requirements around HR practices including learning and development pathways. It’s unlikely a franchisee will be able to support an employee’s visa application if they have breached employment laws in the past.
INZ has identified franchise employers as higher risk, alongside labour-hire companies and may expect to see proof of compliance with employment and immigration law if your franchisees seek accreditation. From timesheets and payroll files to employment documents and training records, the evidence you may be asked for is wide-ranging.
Accreditation is not an overnight process. This law change will significantly impact any franchise business that hires a large proportion of migrant workers. To have the best chance of a smooth accreditation process, building up your track record and getting your record-keeping in order starts now.
If you’d like a deeper breakdown of each step in INZ’s employer accreditation process, here is the first article in our six-part blog series on becoming an Accredited Employer.
3. Sick leave entitlements
Mid-2021, sick leave entitlements will double to ten days per year. Despite the increase in sick leave available, the total number of sick days an employee may accumulate remains unchanged at twenty days.
Doubling the sick leave entitlement could conceivably result in the need for managers and business owners to be more proactive around absenteeism. If you suspect a pattern of excessive or unusual sick leave in your franchise – also known as a “sickie culture” – it’s strategic to address this sooner rather than later. By making fair and reasonable changes early, your employees may be less likely to perceive your actions as a callous knee-jerk reaction to this law change.
If you need some practical tips on managing inappropriate uses of sick leave, I share some advice on this blog: Sick leave: what can you do to minimise absenteeism?
4. New progressive entitlements for certain leave types
In more leave-related news: all leave that currently has an initial six month waiting period before an employee can access the entitlement – such as sick, bereavement and family violence leave – will become a progressive entitlement from day one of employment. This means, for sick leave and family violence leave, an employee will gain one leave per month of service until they reach the full 10-day entitlement for each leave type.
A further connected change is that these leave types can be taken piecemeal, in less than full-day amounts, with a minimum of one quarter-day at a time.
Essentially, what has always been discretionary and known as advance leave – taking leave against an accrual before an employee’s first 12 months are up – will soon become the norm. To avoid any payroll miscalculations, it’s a good idea to speak to your payroll provider early about how they intend to address the new leave rules.
We’ll have to see exactly how this plays out as the changes are still to be adapted into law as part of a suite of amendments to the Holidays Act 2003. It would be wise to keep a close watch on the progress of this Bill through Parliament. By keeping on top of the pending Holidays Act recommendations, you’ll be in the best position to help your franchise plan ahead and avoid costly HR mistakes.
What does the future of HR in the franchise sector look like?
If the Australian market is a good indicator, the franchise sector in New Zealand will become a minefield of compliance and regulation; owners and directors who fail to ensure compliance may face harsher penalties.
The Labour Inspectorate is actively working to ensure that employers are not exploiting vulnerable and lower-paid employees; many such employees are working in franchised businesses. That’s why it’s highly likely the Labour Inspectorate will have more than a passing interest in what is happening in franchise systems. An issue in one location may well turn into an investigation across an entire franchise network!
To add to this pressure on franchise systems to keep on top of HR compliance, is the fact the Labour Inspectorate has a name and shame list: a publicly available online register where they publish the identities of companies and business owners that breach minimum employment obligations. No one – not you, not a single franchisee – wants their name on that list.
Franchisors have a duty of care over their network and the public’s perception of it, through the media. Brand reputation sustains significant damage with every reported breach of employment law.
To protect the franchise brand, two objectives should be a very high priority for every franchisor: firstly, to ensure each franchisee is aware of their employer obligations; second, to support them with the appropriate systems and tools to comply with those obligations.
The power of an HR system
A short-lived approach is one where you let your franchisees’ reputation fall to chance. As a franchisor, you’re able to take action both to protect your entire franchise system from non-compliance and to equip your franchisees to run their businesses properly (and profitably). One of the best ways to achieve a unified approach to best-practice workplace compliance in your franchise is by prioritising your HR system. Every franchisee can manage their people and face any workplace issue with confidence if they have access to the right tools and ongoing support. On top of this, the right HR system should give you visibility over HR and health and safety management within each site. So, you can identify high-risk behaviours and ensure every franchisee is getting their HR right – all the time!
Curious about how HR Assured can help your franchise reduce the time spent on HR admin, so you and every franchisee can focus on growing your business? Get in touch with our team of workplace relations experts for a no-obligation chat today.
Vaughan Granier is the National Workplace Relations Manager for HR Assured NZ. He has over 24 years of experience in international human resources, health and safety, and workplace relations management. With over 10 years working in New Zealand and Australian companies, he provides in-depth support to leadership teams across all areas of HR, Health and Safety, and employee management.