New Zealand: NZ Employment Update

Last Updated: 8 December 2010
Article by John Hannan

The Employment Relations Amendment Bill (No. 2) 2010 and Holidays Amendment Bill 2010 were assented on 26 November 2010.

So what are the changes?

  • Union access - Union access to workplaces will require the consent of the employer. Consent must not be unreasonably withheld. 
  • Communication during Collective Bargaining  - Employers will now be able to talk about matters relevant to bargaining for a collective agreement directly with their staff - restrictions on what can be communicated remain, so caution is required. 
  • 90 day trial period - The voluntary 90 day trial period for new employees of businesses with less than 20 staff will now be extended to cover all employers. 
  • Test of justification for dismissals - The test of 'justification' under section 103A of the Employment Relations Act 2000 will be what a reasonable employer 'could' have done, instead of what a reasonable employer 'would' have done (as it is at present). 
  • Reinstatement - Reinstatement will no longer be the primary remedy, but will remain an available remedy.
  • Recommendations - Mediators and members of the Authority will be able to make recommendations to parties at their request.
  • Average Daily Pay - A new formula for 'average daily pay' has been introduced in relation to calculating leave entitlements.
  • Transfer of Public Holidays - Employers and employees can agree to transfer the observance of public holidays to another working day. However, an employer may adopt a policy that prohibits these agreements.
  • Cashing out annual leave - An employee may request a portion of their annual leave to be paid out. This portion can be up to one week's annual holidays for cash. This entitlement is subject to special conditions and an employer may have a policy preventing such a payout.
  • Proof of sickness or injury - Employers can now require proof of sickness or injury within 3 consecutive calendar days of sick leave being taken.

These changes will come into effect from 1 April 2011. 

Separately the following change will come into effect from 1 July 2011: 

  • Written Individual Employment Agreement - Employers must retain a signed copy of each employee's individual employment agreement or the current terms and conditions of employment. Employers must retain a copy of any intended agreement even if it has not been signed or agreed upon.

What should you do?

As we head to 1 April 2011 now is the time to review your employment agreements and policies to make sure that they are in line with the changes. It is also the time to consider whether you want to rely on some of the changes (or not) and to put that in writing. 

What you need to know prior to 1 April 2011

  • When considering whether or not to agree to a union's right to access, make sure that you respond by the next day. If you do not respond within 2 working days the union's request will be treated as having been accepted.  Make sure that your managers know their obligations and rights including how best to respond to such union requests.
  • If communicating with your employees about the negotiations during a period of collective bargaining, make sure that your communications are consistent with your duty of good faith.
  • Consider whether you want your new employees bound by a 90 day trial period. If so, put it in writing. Remember that employees who agree to a 90 day trial period will not be able to raise a personal grievance about dismissal within that period. 
  • The test for 'justification' has now changed. What does this mean for you? It basically means that employers' decisions, whether dismissal or otherwise, will no longer be found unjustified due to minor errors which have not resulted in any real unfairness to the employee concerned. The Authority and Court will consider the following:
    • What resources the employer had available.
    • Whether the employer raised the concerns with the employee.
    • Whether the employer gave the employee reasonable opportunity to respond to the concerns.
    • Whether the employer generally considered the employee's explanation (if any).
  • Be aware that the formula for 'average daily pay' when calculating leave entitlements is about to change. Make sure that payroll is up to date on this prior to 1 April 2011.
  • The transfer of public holidays and cashing in of up to one week's annual leave is now up for grabs.  If you do not want to allow this in your workplace make sure that you issue a policy informing staff of your position. 
  • You can now ask for proof of sickness or injury within 3 calendar days. This will allow employers to flush out employees who take habitual 'sickies' but are not genuinely sick. Be prepared to pay for obtaining such reasonable proof.  It is best to update leave policies so that employees are aware of your rights going forward.

What you need to know prior to 1 July 2011

  • Gone are the times of having no written individual employment agreement - now is the time to get on top of your game and make sure that you provide your employees with a signed employment agreement, or where not signed, an unsigned copy.  You need to retain copies of the employment agreements and be able to provide them to your employees at their request.

If you require any assistance with understanding these changes or implementing them please contact us.

© DLA Phillips Fox

DLA Phillips Fox is one of the largest legal firms in Australasia and a member of DLA Piper Group, an alliance of independent legal practices. It is a separate and distinct legal entity. For more information visit

This publication is intended as a first point of reference and should not be relied on as a substitute for professional advice. Specialist legal advice should always be sought in relation to any particular circumstances.

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