Change to the Employment Relations Act will affect your business

22 April 2018

The Labour led Government, seeking to deliver on the promise of changes to employment relations, has introduced a bill that will make major changes to the Employment Relations Act 2000, the law that governs the relationship between employers and employees.

The Employment Relations Amendment Bill 2018 is currently before Parliament and its stated goal is to restore key minimum standards and protections for employees and focus on strengthening collective bargaining and union rights in the workplace. The Government considers that these changes will lead to greater fairness in the workplace and promote productive employment relationships.

Trial Periods

In 2009 the (then) National led government introduced 90-day trial periods. This gave employers the right to dismiss workers without cause during a 90-day trial period. The theory behind this was that it provided a way for employers to take on new employees in a more risk free environment. National was seeking to encourage all businesses to grow their workforces and take a chance on new workers. There was some evidence for this approach. A Department of Labour Evaluation carried out in 2010 showed that 40% of employers who had hired someone on a 90-day trial period said it was unlikely they would have taken on new employees without it.

However, responding to concerns about limited employee rights and protection under the Act, Labour’s Bill will limit 90-day trial periods to employers with fewer than 20 employees. In comparison, larger employers will need to provide fair reason for dismissal, even during a probationary period.  Employees will also be able to challenge their dismissal.

In light of this, employers of more than 20 people need to be aware that there will be greater risk of employees bringing unfair dismissal claims. Employers also must keep track of how many “employees” they have in the workplace to make sure they are adhering to the new modifications of the Act.

Collective Bargaining

The Bill will also implement changes to collective bargaining. Intended to “strengthen the role of collective bargaining in the workplace to ensure fair wages and conditions”, it will remove the ability for employers to opt out of multi-employer collective agreements. There will also be a requirement to include pay rates in collective agreements, and a requirement for employers to pass on information about unions to prospective employees.

Rest and Meal Breaks

Another change will be to restore guaranteed rest and meal breaks for employees. Currently, employers and employees are encouraged to bargain in good faith for the timing and length of rest and meal breaks. The Bill seeks to return a more rigid approach to rest and meal breaks.

The Bill is ultimately designed to give unions more power and take away some of the negotiating power employers have had with their employees in the past.

Minimum Wage and Paid Parental Leave

Workplace policies which Labour campaigned on, such as increasing the minimum wage to $16.50 per hour by April 2018 and extending paid parental leave to 26 weeks by 2020, have already been passed into legislation.

Additional Changes

There are also a raft of other changes, including:

  • Reinstatement restored as the primary remedy to an unfair dismissal;

  • Greater protection for “vulnerable employees”. This will give them guaranteed pay and conditions if their employer changes;

  • Union access without prior employer consent;

  • Duty to conclude bargaining;

  • A proposed “30 day” rule which will require new employees to be employed under terms consistent with the applicable collective agreement and after 30 days, the parties can negotiate changes to their individual employment agreement; and

  • Where workers take partial strike action, there will no longer be potential for pay penalties.

While this shake up will change the balance of power between employers and employees, many of these changes may prove difficult for employers. Common pitfalls will be not adhering to the new changes as they have not been made aware to you.

This is why it is vital for employers to be aware of any implications the Bill may have on their own business.

If you would like to discuss how any of the proposed or already implemented changes may affect your business, please contact a member of our employment team.


Emma Thomson is a Law Clerk in the Court & Disputes/Employment Team at Norris Ward McKinnon. You can contact Emma at [email protected]