Employment / Workplace

Employment Law Changes – Is Your Business Ready?

And so we ready ourselves for another set of employment law changes, which come into effect on 1 April 2011. The Employment Relations Amendment Bill (No. 2) and Holidays Amendment Bill will require employers to review employment agreements and policies to bring them into line with the amendments. Here is a summary of these changes, together with our recommendations about the changes that you should (or could) make, depending on your business needs.

Review your employment agreements, policies, systems

90 day trial period

By now, most employers will know that, from 1 April 2011, the 90 day trial period will be able to be utilised by all employers. If the employment agreement provides for a 90 day trial period, employees will be barred from taking a personal grievance if they are dismissed during their first 90 days of employment.

If you want to take advantage of this option when employing new employees, you need to adhere to the following:

  • Trial periods can only be used for employees who have not worked for you previously - they must be genuine "new starts";
  • A trial period provision must be included in the employment agreement;
  • The employment agreement must be signed before the employee starts work (it will be void otherwise).

You should also ensure that the performance management/misconduct and termination provisions in your current employment agreements are not inconsistent with your new trial period provision. For employee's whose work falls within the coverage clause of a collective agreement, a trial period will not be effective (notwithstanding the employee's agreement) if it is inconsistent with an applicable collective agreement.

Signed employment agreements

Employers are required to retain a signed copy of an employee's employment agreement from 1 July 2011. If an employee refuses to sign an employment agreement, you must retain a copy of the unsigned agreement. You are already required to provide to the employee a copy of the intended agreement, or the part of the intended agreement, under discussion, during negotiations before employment commences (section 63A of the ERA).

Sick leave – medical certificates

From 1 April 2011, employers will need to amend their employment agreements and/or sick leave policies if they want to be able to require proof of an employee's sickness or injury within three consecutive calendar days. Employers will have to "meet the employee's reasonable expenses in obtaining the proof" (ie pay for the GP's visit) and inform the employee as early as possible that proof is required.

Communication during bargaining

Employers will be able to communicate directly with employees "about matters relevant to bargaining" during the bargaining process, from 1 April 2011. Some employers will need to review and amend their bargaining process agreements (BPAs) with unions, as the BPAs could continue to operate to prohibit any form of communication. Although the overriding duty of good faith still applies to all parties in the bargaining process, this legislative change will allow employers to communicate bargaining status reports/updates to their staff etc.

Union access

The rules around union access to workplaces will change from 1 April 2011, with employer consent being a prerequisite for union access to be lawful. Although employers cannot unreasonably withhold consent, matters including commercial sensitivity, security and business productivity are likely to be "reasonable grounds", particularly if the timing of the access sought is likely to disrupt business operations. Educating and training your managers around unreasonable business disruption triggers is essential, together with a review of any inconsistent provisions in collective employment agreements and BPAs.

Holidays - Cashing up

You will need to decide whether you want to allow your employees to cash up a portion of their annual leave (up to one week) and/or transfer public holidays. Under the new law (effective 1 April 2011), it is permissible for employers to adopt a policy preventing such requests from employees. It is not lawful to introduce a policy which requires employees to cash up their annual leave. Any policy preventing payout can apply to the whole of your business, or just parts of it. Depending on what your business decides to do, you will need to think about record keeping and any administrative changes, particularly to manage annual leave balances.

Holidays – Taking alternative leave days

From 1 April 2011, employers are able to require staff to take accrued alternative days, on the provision of a minimum of 14 days notice. Check your employment agreements for any inconsistencies.

Payroll calculations

The new law provides clarification around the definition of "discretionary payments" for the purposes of calculating an employee's gross earnings. Payments which qualify as "discretionary" do not from part of holiday pay. The definition now excludes a payment which the employer is bound to make, even where the amount of the payment is discretionary. This means that discretionary bonus payments will be included in the calculation of gross earnings and increase leave payments for some employees.

Employers may also want to review their employment agreements and payroll systems as there will be a new "average daily pay" rate, which may be used in certain circumstances instead of the "relevant daily pay" rate.

Other changes to look forward to...

Dismissal - Justification

By substituting the word "could" for "would" in the justification test, the Authority or Court will be required to recognise that there is a range of fair and reasonable actions that an employer could take in any situation.


Reinstatement will be removed as the primary remedy for unjustified dismissal after 1 April 2011. This should prevent the threat of a reinstatement application being used against employers to increase settlement payments during negotiations/mediations.

And as it's election year...

Labour is considering a rights-based legal framework "to help workers get a better deal when negotiating with bosses" (so says the party's labour spokesman MP Trevor Mallard). The proposed new framework could involve industry codes or standards and enterprise level bargaining (similar to the industrial instruments which operate in the Australian workplace). Other changes Labour has already decided it will make if elected are:

  • Increase the minimum wage to $15 an hour (nb: it goes up to $13 an hour from 1 April 2011);
  • Guarantee four weeks annual leave (ie no cashing up option);
  • Unrestricted workplace access rights for unions;
  • Return reinstatement as the primary remedy for unjustified dismissal; and
  • Extend paid parental leave minimums.

Labour has also signalled that it intends to repeal the 90-day trial period legislation entirely.

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The contents of this publication are general in nature and are not intended to serve as a substitute for legal advice on a specific matter. In the absence of such advice no responsibility is accepted by Brookfields for reliance on any of the information provided in this publication.


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