NZ Employment Law Updates in Store for 2021

The article focuses on rapidly changing employment law reforms. Keep reading for more highlights.

In the past three years, the government of NZ has made numerous changes that will be incorporated from 2021. As employment laws are constantly changing, there is a great need to effectively adapt to all these changes. With the end of the 2020 election in New Zealand, the government has already announced the legislature to increase the sick leave privilege. The labor government of NZ has prepared a detailed report of changes to be introduced in the employment law.

The revisions to the labor laws aim to enhance the NZ citizens’ condition, comprising indigenous and migrant populations. The government has declared that the indigenous population is its priority. Since a significant portion of the indigenous population lost their jobs due to the COVID-19 pandemic, the government wishes to restore them to the country’s professional ecosystem.

Another motivation for introducing the reforms is establishing the country’s image as an oft-preferred nation for immigration. The labor reforms aim to cut down the migrant laborer exploitation at workplaces and ensure a fair wage. They are also aimed at improving the working conditions for the migrant laborers in NZ.

What Are the Employment Law Revisions in Store for 2021?

The following Employment Law reforms will preserve NZ’s image as a nation that has guaranteed its citizens’ well-being. Let’s take a look.

1. Minimum Wage

The country noticed an overall increase in the minimum wage to $18.90 in the first term, but the government has decided to increase the wages to $20 per hour from 2021. Although a timeframe specification is not mentioned, this change is likely to come into force from April 1, 2021.

2. Living Wage

Based on the New Zealand Family Centre Social Policy Unit’s annual calculation, the NZ government has decided to increase the living wage and the minimum wages of the workers. This will reflect the worker’s overall expense to survive food, shelter, transportation, and childcare facilities. Presently the living wage is fixed at $22.10 per hour. A formal renewal of a new living wage contract will be needed when the previous contract ends. The following agencies will be entitled to add payments of the living wage in the new agreement during the time of renewal and renegotiations.

Steps to Incorporate Changes

  1. Check whether any employee in the company is being paid the current minimum wage or if any worker is paid above the current minimum wage but below $20 per hour
  2. Employers should maintain a record of extra working hours performed by salaried employees. This can lead to a breach of minimum wage regulation in NZ. If an employee’s working hour reaches 45 hours per week, their subsequent per hour rate will automatically get reduced to $17.95 per hour
  3. It is compulsory to include the staffing costs in the living wage contract that are contracted publically through any organization

3. Alterations in leave rights

An employee is entitled and ideally suited to avail sick leave of 5 days in a year after the completion of the first six months in the company. The majority of the workers have different amendments and privileges in their employment deeds.

According to the Holidays (Increasing Sick Leave) Amendment Bill 2020, there will be an increase of minimum sick leave up to 10 days annually. However, the maximum entitlement of any unused sick leave will only be 20 days annually. Based on the public review and discussion, the bill is expected to pass in mid-2021.

Accrual basis will permit employees to avail sick leaves before completing six months of employment term in any company. Similarly, a worker will be entitled to enjoy the annual holidays before terminating the employment anniversary in an organization.

Employees will be able to take bereavement and family violence leave as and when required, irrespective of whether they have completed a six-month period or not.

4. Offering safety to dependent contractors

Providing safety to dependent contractors has also been added in the NZ new employment reforms 2021. Based on this rule, the dependent contractors have the right to bargain cooperatively. Various organizations need to take immediate steps to ensure that contracted laborers are independent contractors. These steps are as follows.

  1. Ensure that a particular contractor is not bound to work for any exclusive organization
  2. All the contractors should have the liberty to accept or reject work at any point in time independently
  3. A clear, specific, and printed agreement should be duly signed by all the contractors
  4. If a contractor is recruited for a particular time frame, the agreement should clearly mention the start and end date along with a notice period in it
  5. If the contractor is allowed to work for an indefinite period, the contract should include a termination clause and notice period associated with the job’s termination

5. Pay Equity

The NZ government had made specific changes in the Equal Pay Act 1972. These changes are as follows.

  • The proper process for claims related to pay equity
  • All the pay equity disputes should be raised with individual employers rather than proceeding legally through court
  • Inconsistency should be avoided in many cases, primarily based on gender norms or predominantly by the women workforce
  • Design a definite negotiating system to discuss and compare fair pay

6. Fair pay Agreements

This agreement allows a minimum set of rules and conditions for all the workers across any business or occupation. These conditions were already adopted by many countries such as Australia and other overseas ten years ago. Key points included in the fair pay agreement include:

  • This agreement implies both employees and dependent contractors
  • Unions would represent workers during the bargaining process
  • Ending an agreement would require settlement from both employers and workers

Other Changes in Employment Law

Apart from those mentioned above, the government has also introduced more Employment law revisions.

  • A better clarity on leave calculation for workers who work in day-night shifts
  • Age limit increased to 15-16 years for workers performing duties in hazardous environments
  • Workers in small companies can independently elect health and safety legislative bodies

Summing Up

With the latest introductions of employment law reforms in the country, NZ is set to usher in a new prosperity state. The government aims to highlight its importance in the world map as a nation that has sought to protect its indigenous and migrant population and nullify workplace exploitation or any factor that tampers with productivity and the employees’ well-being.

Book a Free Consultation

Book a Free Consultation