Changes to the Employment Relations Act 2000
Union access to workplaces
Union representatives intending to visit a workplace will be required to gain the permission of the employer first. This permission may not be unreasonably withheld.
The employer must respond within one working day after the request is received. If the employer decides not to grant access, they must provide written reasons for this decision no later than one working day after the date of the decision.
If the employer does not respond within two working days of the request, consent for the union representative to enter is deemed to have been given.
If an employer denies consent but does not provide reasons in writing for the refusal, or unreasonably withholds consent, the employer could be subject to a financial penalty imposed by the Employment Relations Authority.
Communications during bargaining
The Act is amended to clarify that an employer is able to communicate directly with his or her employees - including communicating about the employer's proposals for the collective agreement - while bargaining for a collective employment agreement.
Such communications must be consistent with the duty of good faith in section 4 of the Act. Section 32 of the Act sets out what the duty of good faith requires in the specific context of bargaining. Among other things, the union and employer must:
- recognise the role and authority of any person chosen by each to be its representative or advocate; and
- not (whether directly or indirectly) bargain about matters relating to terms and conditions of employment with persons whom the representative or advocate are acting for, unless the union and employer agree otherwise; and
- not undermine or do anything that is likely to undermine the bargaining or the authority of the other in the bargaining.
Requirement to retain and provide a copy of the terms and conditions of employment
Employers will be required to retain a signed copy of the employment agreement or the current signed terms and conditions of employment. Where an employer has provided an employee with an intended agreement the employer must retain the "intended agreement" even if the employee has not signed it or agreed to the terms and conditions specified in the intended agreement. An intended agreement cannot be treated as the parties' employment agreement if the employee has not signed the agreement or not agreed to the terms and conditions specified in the intended agreement.
The employer is required to provide a copy of the agreement on request of the employee.
Labour Inspectors can issue notices regarding any breaches of the requirements for employment agreements and give employers seven working days to fix the issue. Otherwise a financial penalty can be imposed by the Employment Relations Authority.
The intention of the provision is to ensure that an employee has access to the employment agreement and that the employment agreement is maintained for enforcement purposes.
The Act is already explicit about the need for an employment agreement to be in writing and to include elements such as the name of the employee and a description of the work to be performed.
Extending the trial employment period
The provision for an employee trial period of 90 days or less currently applies to employers with fewer than 20 employees. From April 1, 2011, the trial period provisions will be extended to cover all employers, regardless of the number of employees in the business.
Changes affecting cases investigated by the Authority
The "test of justification" in personal grievances
The test of justification is the test applied in assessing the fairness of an employer's actions usually in relation to a dismissal or other disciplinary action.
The Employment Relations Authority or Court must consider the following minimum requirements of a fair and reasonable process in making a decision as to whether or not the actions of the employer were what a fair and reasonable employer could have done in all the circumstances. This is change to the Act which previously required that the Authority or Court must consider what a fair and reasonable employer would have done.
The Authority or Court must consider whether the employer:
- having regard to the resources available, sufficiently investigated the allegations against the employee
- raised his or her concerns with the employee
- gave the employee a reasonable opportunity to respond to those concerns
- genuinely considered the employee's explanation (if any) in relation to the allegations.
Other factors may be taken into account by the Authority or the Court.
The change recognises that there is a range of fair and reasonable responses that could be made by an employer when considering a dismissal or other actions.
The law also makes clear that an employer's action cannot be viewed as unjustified solely because of mistakes made in the process, if those mistakes were minor, and they did not result the employee being treated unfairly.
Reinstatement as a remedy
Reinstatement is a remedy that restores the employee to the situation they were in prior to a dismissal. Prior to the Amendment Act the law required the Employment Relations Authority to provide for reinstatement where practicable. It was the primary remedy where sought by an employee in a personal grievance.
From 1 April 2011 reinstatement will no longer be the primary remedy. However reinstatement will be retained as a remedy where practicable and reasonable.
Early problem resolution without representation
A change to the Act clarifies that employers and employees can take up an option to secure a quick and low cost solution to a problem before a more formal mediation event. For instance, parties could obtain an assessment from a mediator of the risk of proceeding with, or defending, a claim. This might take place over the phone or at the worksite and may take place without formal representation if the parties request it.
Most mediation events take place through a relatively formal process that involves representation by professional advocates. However, given the choice, some parties may be able to settle their differences quickly at a lower cost than a formal process.
Promoting mediation
The Act is amended so that the cases of parties who have already been to mediation (but have not settled or only partially settled their dispute) are given priority at the Employment Relations Authority. The Authority will also continue to prioritise some other cases which are not amenable to mediation, such as sexual harassment cases or a Labour Inspector demand notice on minimum employment entitlements.
Recommendations by a mediator or Authority member
Department mediators and members of the Employment Relations Authority will have a new power to make written recommendations to the parties at the request of the parties. The recommendation will be about how the problem is solved.
Parties must agree in writing to a mediator's recommendation and that recommendation will be full final and enforceable under section 149 unless one or both parties notify the mediator within a specified timeframe.
The same process applies to recommendations from an Authority member.
The parties have time to consider whether or not to accept the recommendation. The onus, therefore, will be on the parties to say whether they accept or reject the recommendation. If one or both parties do not accept it, the mediation or Authority investigation will continue. The parties can request a different mediator continue the mediation or a different Authority member continue the investigation.
Reinforcing minimum employment entitlements in problem resolution
This change to the Act states that the Employment Relations Authority must actively consider whether it is appropriate to direct to mediation services a matter that is brought by a Labour Inspector which relates to an employee's minimum entitlements.
The law also clarifies that minimum entitlements cannot be negotiated away at mediation (thereby breaching the minimum standards). Minimum entitlements can still be a matter for consideration in mediation, but the lawful amount of those entitlements cannot be the subject of negotiation and possible reduction.
Minors
A change to the Act will allow minors aged 16 or 17 years to sign records of settlement and for those agreements to be final and binding. This change means minors aged 16 or 17, already considered competent to sign an employment agreement, may now sign any terms of settlement in regard to any dispute.
Other changes to that apply to the Employment Relations Authority
A number of other changes have been made to the powers and operation of the Authority.
Only the court can issue freeze orders and search orders
It has been clarified that the Authority does not have the power to issue freeze and search orders. These orders will only be able to be issued by the court.
Empowering the Chief of Authority to oversee its operation
The Chief of the Authority will have further powers to oversee the Authority's operation, including Authority members' conduct and training and instructions regarding the process, timeliness, or about a matter before the Authority.
For the purposes of recommending the reappointment of a member of the Authority, the Chief of the Authority will have the ability to provide a report to the Minister of Labour in respect of the member's adherence to and compliance with any instructions.
Establishing statutory right of cross-examination
There will now be a statutory right to cross-examination in the Authority. The Authority will still be able to control cross-examination where, in its view, the cross-examination is not assisting the proper investigation of a matter or is being conducted inappropriately.
Empowering Authority to refer cases to the Court
The Authority will now be able to remove cases to the Court at its discretion. Cases will be able to be removed in their entirety or in part and removal will be based on existing criteria within the Act. The Court retains the power to refer matters back to the Authority.
Filtering out frivolous or vexatious cases
The Authority will now be able to dismiss frivolous or vexatious claims or defences of claims. This allows the Authority to dismiss cases (or parts of cases) with little or no merit without having to go through a full investigation. A challenge to a dismissal would go to the court.
Cases inactive for three years may be treated as withdrawn
Cases that have not been actively pursued or progressed by a party within three years will now be treated as withdrawn.
Defining the functions of Labour Inspectors
The role of Labour Inspectors and their enforcement powers will change.
The expanded role of the Labour Inspector will encompass not only managing complaints but also supporting businesses to achieve sustainable compliance through improved practices and systems.
The functions of Labour Inspectors are now specified in the Act and give clarity and transparency to their role. Specific functions include:
- determining whether there has been compliance with employment laws
- taking all reasonable steps to ensure that there has been compliance
- supporting employers and employees to be compliant with employment laws through providing information and education
- preventing non-compliance with employment laws through assisting employers to implement systems and practices that comply with the law, and
- providing any other services that assist employers and employees to resolve employment relationship problems.
Enforceable undertakings
After a Labour Inspector has investigated a complaint, the employers will be able to enter into an enforceable undertaking with the Labour Inspector. This is an agreement that the employer will address a breach of any of the relevant employment laws, such as the Holidays Act 2003 and the Minimum Wages Act 1983.
The enforceable undertaking allows solutions to be negotiated in which the employer agrees to take actions that are appropriate to rectifying the breach; for instance, it may stipulate a time and wages recording system is put in place.
This is a voluntary agreement that allows the employer to improve and correct their employment relations practices. However, once agreed and signed the undertaking is enforceable and if it is breached the Employment Relations Authority may issue a compliance order, which may in turn incur a penalty,
Improvement notices
The changes will introduce a process in which an improvement notice can be imposed by a Labour Inspector where there is non-compliance with employment law. A similar the mechanism is currently available to Health and Safety Inspectors under the Health and Safety and Employment Act 1992.
A Labour Inspector may issue the employer with an improvement notice if they believe on reasonable grounds that any employer is failing to comply with any provision of relevant employment law. The improvement notice requires the employer to comply with the provision stated. The improvement notice will also state the steps that the employer could take to comply with the particular provision in law.
An employer may object to an improvement notice within 28 days of its issuing.
The notice may be withdrawn by the Labour Inspector but this does not prevent another being issued.
As with the enforceable undertaking, the improvement notice may be enforced through a compliance order and may be subject to a penalty action. The Employment Relations Authority may consider sending the matter to mediation but must take into account whether this may involve a reduction of minimum employment entitlements.
The improvement notice cannot be issued in addition to another recovery action commenced by the Labour Inspector for the same matter, for example, if a demand notice has already been issued.
Extending and increasing penalties
A law change extends and strengthens the rules around financial penalties.
Sections 63, 64, and 65 of the Act are amended to allow Labour Inspectors to seek a penalty where the employer is in breach of:
- the requirement to provide the employee with a copy of the intended employment agreement
- the new requirement to retain and provide a copy of the individual employment agreement or current terms and conditions of employment whether signed or not. (This must be preceded by written notice of the breach to the employer, allowing the employer by a seven-day timeframe for rectifying the breach)
- the obligation to provide an individual with terms and conditions of employment that are in writing and include the provisions relating to the content of the agreement
- a compliance order for failure to comply with an enforceable undertaking entered into with a Labour Inspector
- a compliance order for failure to comply with an improvement notice issued by a Labour Inspector.
The law is also amended so that the maximum penalties for non-compliance are doubled to a maximum of $10,000 for individuals and to a maximum of $20,000 for companies and other bodies corporate.
Non-compliance with a demand notice is also addressed by providing for interest on the penalty on a demand notice where there is long-standing, or repeated, non-compliance.
The Employment Relations Authority will also be provided with the ability to penalize anyone who obstructs or delays an Authority investigation (including by not turning up to an investigation meeting).
