Election 2017 – Possible Workplace Relations Implications



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Wednesday 13 September 2017

Election 2017 – Possible Workplace Relations Implications

The general election is now less than two weeks away. If the recent polls are anything to go by, the result looks like it will be close. It also seems unlikely that either of the two main parties will be able to govern alone, which means concessions in some areas may be necessary in order to gain power.

Against this background, it is timely to consider what changes may be in store for workplace relations after the election on 23 September 2017.

The status quo – a centre right government

The National Party are not proposing any major changes to workplace relations. The most significant change National has proposed is an extension of paid parental leave from 18 to 22 weeks.

National has also focussed on the pay equity legislation, which was introduced in July this year. The Bill is intended to provide a process for employees to make pay equity claims with their employer where the work they perform has historically been performed by women and undervalued for gender-based reasons. Whether the Bill passes in its current form may depend on the result of the election. The current form of the Bill has been criticised for proposing a process that some say will make pay equity claims unnecessarily difficult. It remains to be seen whether there will be further changes. Significant support will need to be made available for employers and employees to facilitate the resolution of pay equity claims.

Large increases in the minimum wage (currently $15.75 per hour) seem unlikely under a National-led government. National says it will continue to raise the minimum wage at a “sustainable rate”, which over the past few years has meant an annual increase of 50 cents.

Looking at National’s possible coalition support partners, the Act Party is unlikely to have much of an influence on workplace relations. The only relevant policy they have published to date relates to education, where they promise to allow schools to opt out of collective agreements with the education unions.

The Maori Party have supported the National led government since 2011. It proposes introducing a living wage for all workers. The living wage is promoted as the hourly rate required to pay the necessities of life and be an “active citizen”. It is currently set at $20.20. However, it is unclear whether the Maori Party would again support National, particularly if Labour’s current surge in the polls translates to it winning the most seats in Parliament.

A Labour-led government

A change in government would likely result in the most significant changes to workplace relations law for a number of years.

Labour proposes an increase in the minimum wage to $16.50. It also says future increases will reflect the “real cost of living”. It also proposes extending paid parental leave to 26 weeks.

Labour proposes replacing the existing law around trial periods. It says it will introduce a “referee service” for resolving claims of unjustified dismissal during trial periods. Referees would hold short hearings (without lawyers) and make binding determinations. They would have the power to reinstate the employee or award damages up to a capped amount. It is unclear at this stage whether there would be a right of appeal or challenge from the determination of a referee.

The most significant change proposed by Labour is the introduction of Fair Pay Agreements (FPAs). These would be agreed between businesses across a particular industry and the applicable unions. FPAs would set “basic standards” for remuneration and other terms and conditions across that industry. FPAs would contain minimum standards, which would mean employers would be free to agree more favourable pay and other conditions with unions in collectives or individual employment agreements.

Some commentators have said the introduction of FPAs would be a move back to the old award systems of the 1970’s and 1980’s. They have referred to the negative impact on competition and the possible damage that would be caused by industry-wide strikes. However, it is not clear at this stage whether there will be a right to strike lawfully in support of bargaining for an FPA and, if so, under what conditions this may occur. Industry wide terms and conditions are not necessarily an historic phenomenon. They are used in Australia under its “modern awards” system.

  • Labour are also proposing to undo a lot of the changes made to collective bargaining by the National Government, including:
  • Restoring the right of unions to initiate bargaining before employers.
  • Restoring the requirement to conclude a collective agreement in bargaining.
  • Restoring the requirement that all new employees are employed on the terms and conditions set out in an applicable collective.
  • Removing the right of employers to deduct pay for employees taking partial strike action.

Labour also proposes increased protection for contractors. It will allow contractors to engage in collective bargaining. It will also introduce legal protections for “dependent contractors”, including temps.

Labour’s likely coalition partner, the Green Party, have focussed on pay equity issues. They propose introducing rules to require employers to keep information on what they pay their male and female employees. It also proposes introducing agreed pay equity principles and placing the onus on employers to prove they are paying women fairly. The Greens would fund an “expert body” to assist women with pay equity claims.

The wildcard – New Zealand First

New Zealand First may once again hold the balance of power. It also proposes a significant increase in the minimum wage; to $20.00 per hour. New Zealand First also promises a review of industrial relations law to ensure it is fair, flexible and neutral. It also proposes reviewing the law regarding casual employment to provide for better job security. However, little detail has been provided as to what this may mean in practice.

Commentary

It is difficult to say with any certainty what the outcome of the election will be. Recent polls suggest the odds of a Labour-led government are increasing. If that turns out to be the case, we are likely to see the biggest shake-up in workplace relations law since the introduction of the Employment Relations Act 2000.

It appears Labour is concerned the current legislation does not do enough to meet its stated aim of encouraging collective bargaining and intends to take steps to address these issues quickly; Labour has said it will make many of the changes it proposes (not including the introduction of FPAs) within the first 100 days it is in government.

On the other hand, a National-led government will likely mean little change. It is quite possible National will need to make concessions to Act, the Maori Party and/or New Zealand First to remain in power. Our prediction is that workplace relations issues are unlikely to be high on the agenda for these parties, except perhaps for some greater movement in the minimum wage in the case of the Maori Party and New Zealand First, and a review (but not necessarily amendment) of industrial relations law.

For now, it is a case of ‘wait and see’. If there are changes, a lot will depend on the detail of new legislation, and we will keep you updated with these developments. Please contact us if you would like a more detailed discussion about how these changes might impact on your business.

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