Changes to the Employment Relations Act 2002 (ERA 2002) and the Holidays Act 2003 (HA 2003) come into force on April 1, 2011 with the introduction of the Employment Relations Amendment Act 2010 (the ERAA 2010) and the Holidays Amendment Act 2010 (the HAA 2010).
The new legislation aims to give more flexibility to both employers and employees and ensure that their rights are balanced. The Government hopes that the changes will provide a mechanism for speedier resolution to employment relationship problems at minimal cost.
The following are the main changes to the ERA 2002 and the HA 2003:
1. Ninety-Day trial period extended to all employers
2. Test for justification in dismissal process changes from what a reasonable employer “would” do to what a reasonable employer “could” have done in the existing circumstances
3. Employer consent now required for union access to the workplace
4. Reinstatement no longer primary remedy
5. Employees can encash a maximum of one week of annual holiday
6. Transferring public holidays to another working day
The purpose of the ‘90-day Rule’ is to enable employers to recruit new staff without facing a personal grievance on grounds of dismissal at the end of the trial period if the new employee does not perform satisfactorily. The Trial Period encourages employers to employ people from groups that are disadvantaged in the labour market.
The decision of the Employment Court in the Smith v Stokes Valley Pharmacy case is a warning to employers that they must observe their good faith obligations during and after the trial period.
Reasonable Employer
Section 103A of the Act is a statutory test applied by the Employment Relations Authority and the Employment Court when determining whether an employer’s actions were fair and reasonable.
The employer must balance the interests of both employee and employer and to be fair and reasonable to both parties when considering whether to dismiss an employee or act in a manner that would disadvantage the employee in his or her employment.
The ERAA 2010 substitutes the word “would” for the word “could” in the test for justification. This change recognises that there are reasonable and fair responses an employer may take and not just one possible course of action. It gives the employer more confidence in being treated fairly when defending a personal grievance claim.
The ERAA 2010 provides that the Authority or the Employment Court must not decide that a dismissal or action by an employer is unjustified solely because of defects in the process followed by the employer if those defects were minor or technical and did not result in the unfair treatment of the employee.
Union Access
The ERAA 2010 provides that the union now needs employer consent to access workplaces. This is balanced by the requirement that the employer’s consent cannot be unreasonably withheld. The change is intended to give employers control on who enters their workplace at any time. This authority is important for a number of reasons such as security reasons, to protect the employers’ commercially sensitive interests and for business productivity.
The employer is required to provide its reasons in writing if it denies consent. Be warned employers, you will be subject to a penalty action if you do not provide reasons in writing for the refusal.
Holidays Encashment
Under the HAA 2010, employees will be able to request in writing that their employer pay the cash equivalent of one week (or less) of their Holiday entitlement. Employers have the right to decline such a request, without providing a reason.
Effective April 1, 2011, employers and employees may agree to transfer a Public Holiday to another working day. The employee’s entitlement is set in the law.
The ERAA 2010 provides for non-compliance penalties increasing from $5000 to $10,000 for individuals and from $10,000 to $20,000 for companies and other bodies corporate.
This gives employers an incentive to comply with their legal obligations.
Lyndal Yaqub is an Associate at Law & Associates based in Manukau. Phone: (09) 2625510 Email: lyndal@lawassociates.co.nz
