Workplace Relations and Safety Minister Michael Woodhouse released the Employment Standards Legislation Bill yesterday, which will amend various employment-related statutes. The aim of this omnibus Bill is “to promote fairer and more productive workplaces by providing enhanced protections and benefits for both employers and employees”. The proposed changes are wide-ranging and affect a number of key pieces of employment legislation.
The Bill is scheduled to come into force on 1 April 2016. Prior to this, there will be a Select Committee process, with an opportunity for public submissions on the Bill. We anticipate some further movement before the Bill is passed into law.
We have set out the most significant proposed changes below. You can access a copy of the Bill and Explanatory Note here.
Prohibition on practices that lack “sufficient mutuality”
True to recent media statements, the Bill targets the concept of “zero-hour contracts”. A “zero hour contract” is an arrangement where an employer does not commit to a minimum number of hours, but an employee is required to be available for work and no compensation is paid for that availability. There are also proposed changes to the cancellation of shifts, secondary employment and unreasonable pay deductions.
The proposed changes are as follows:
- Zero hour contracts must contain an “availability provision”, which would state that an employee was required to be available for work, but an employer was not required to guarantee work. An availability provision would, however, be unenforceable unless it contained an obligation on the employer to pay compensation to the employee for making himself/herself available. Other points to note:
- No minimum level of “compensation” would be required.
- If no compensation is provided in the employment agreement, the employee would be entitled to refuse the work and must not be treated adversely due to such a refusal.
- An availability provision could relate to all work performed under an employment agreement or only work in addition to contracted hours of work (overtime).
- Compensation for the availability provision could only be included in the employee's normal remuneration if the employee is paid a salary and the availability provision relates to overtime.
- Cancellation of shifts only with reasonable notice or compensation – all employment agreements for shift workers would need to specify the period of notice required for cancellation of a shift by the employer and the compensation payable if such notice is not provided.
- Secondary employment – an employment agreement must not prohibit the employee from working a second job unless the prohibition is for a genuine reason based on reasonable grounds. Such reason would need to be specified in the employment agreement. Permissible reasons set out in the Bill include protecting commercially sensitive information, intellectual property, or preventing a conflict of interest. We anticipate that some employers would also want to agree a prohibition on secondary employment for fatigue risk reasons.
- No unreasonable pay deductions – employers would not be permitted to make deductions from an employee’s pay if such deductions were “unreasonable”, even if the employee consented. What is “unreasonable” is not defined. This change appears to be a response to media attention around issues regarding employee liability for losses caused by third party conduct.
Expanded penalty and enforcement regime
The Bill proposes wide ranging enforcement powers for breaches of “minimum entitlement provisions”, including the Holidays Act 2003, Minimum Wage Act 1983 and Wages Protection Act 1983.
To support the enforcement of minimum entitlements, the Bill introduces a positive obligation on employers to keep records to demonstrate compliance with minimum entitlement provisions in addition to the existing record keeping obligations already in place for employers. Failure to comply with these record keeping obligations may be enforced by filing a charging document detailing the offence in the District Court or through an infringement notice issued by a Labour Inspector (which carries a $1,000 infringement fee).
The Bill contains further powers for Labour Inspectors (but, critically, not employees or unions) to enforce minimum entitlements through a declaration that there has been a “serious breach” of minimum entitlements. A declaration of breach triggers a range of additional orders that a Labour Inspector may seek in respect of a breach of minimum entitlements. These include:
- Pecuniary penalty orders – this carries a maximum $50,000 penalty for an individual, or for a company, the greater of $100,000 or three times the financial gain made by the breach. It will be unlawful for an employer to insure against these penalties.
- Banning orders – this is a prohibition on a person from entering into an employment agreement, being an officer of an employer, or being involved in the hiring or employment of employees for a specified period of time (up to a maximum of 10 years). A banning order may also be sought by an immigration officer.
- Compensation orders – an order that the person who is the subject of the breach be compensated for a breach for any loss that they have, or are likely to have, suffered.
The Bill provides defences to these orders, such as reasonably relying on information supplied by another person, or that a breach was the act of another person and the employer took reasonable precautions and exercised due diligence to avoid the breach.
Paid parental leave scheme – extension and increased flexibility
The Employment Standards Legislation Bill also proposes sensible changes to the Parental Leave and Employment Protection Act 1987:
- Extending parental leave eligibility – two new definitions are introduced, both of which will expand eligibility:
- the new definition of an “eligible employee” for the purposes of paid parental leave will extend paid leave to individuals with non-standard working arrangements; and
- the new definition of “primary carer” and “primary carer leave” place the definition of maternity leave. This new definition will extend entitlements (where the threshold test is met) to a person who assumes primary responsibility for the day-to-day care of a child under the age of 6. This is intended to capture individuals who may take primary care of a child without a formal adoption.
- Change to threshold tests – the Bill proposes to amend the threshold tests employees are required to meet for other parental leave entitlements. The “6-month employment test” and the “12-month employment test” require employees to have been employed by the same employer for at least an average of 10 hours a week in the 6 or 12 months (respectively) immediately prior to the expected date of delivery, or assumption of responsibility of the child. Extended leave of 26 weeks is available for employees who meet the 6-month test where previously they would not be entitled to any extended leave.
- Introduction of “keeping-in-touch days” – this will allow employees to work, and be paid, for up to 40 hours during their period of parental leave without being treated as having returned to work. A “keeping-in-touch day” can be used if both the employee and the employer have agreed, provided at least 28 days has passed since the child was born. This means employees would be able to attend training sessions or help with projects while they are on leave.
- Negotiated carer leave – employees who are not the primary carer may request a period of leave. Like flexible working arrangements under the Employment Relations Act, employers have an obligation to consider requests for negotiated carer leave, but are not required to consent.
- Penalty increased – the penalty for misleading, or attempting to mislead, the department in relation to paid parental leave is increased from $5,000 to $15,000.
Please feel free to get in touch with a member of the team if you would like to discuss the Bill in more detail. We will keep you updated on the progress of the Bill and when public submissions may be made.
This publication is intended only to provide a summary of the subject covered. It does not purport to be comprehensive or to provide legal advice. No person should act in reliance on any statement contained in this publication without first obtaining specific professional advice.