The Employment Relations (Breaks and Infants Feeding) Amendment Act has received royal assent, not only introducing mandatory breaks for all employees but also controversially altering the KiwiSaver legislation under urgency without public consultation and as a change to this Amendment Act - the title and content of which is totally unrelated. The changes and process used will be concerning for many.
The legislation states an employee's employment is adversely affected where, because the employee is a member of a KiwiSaver scheme or a complying superannuation fund, their salary or wages (defined as not including the employer compulsory contribution) is less than that of other employees in comparable roles. This change will have a significant impact on many existing remuneration structures. It means employers cannot now have a total remuneration approach which factors in compulsory employer contributions as part of an employee's remuneration package. The total remuneration approach was seen by many employers as enabling parity of pay and equity whilst giving employees some freedom to decide how their remuneration package would be structured.
The Amendment Act has teeth. It allows employees to bring personal grievances where they believe their employment has been adversely affected because they are a member of a KiwiSaver scheme or complying superannuation fund.
The amendments to the KiwiSaver legislation specifically relating to salary/wages apply to employment agreements entered into on or after 2 September 2008 and to variations made on or after 2 September 2008 to any employment agreements.
There are also other general provisions which may affect specific superannuation and KiwiSaver regimes put in place by employers. Employers with unique arrangements should seek advice to determine whether there are potential issues under this new legislation with their superannuation arrangements.
We suggest that, in light of these changes, employers review the remuneration structures of all current employees to ensure compliance with this legislation. When an employee's employment agreement is varied (by salary increase or other variation to a term or condition) the agreement will need to comply. All employees employed from 2 September 2008 will need to have employment agreements which do not have a total remuneration approach which factors in the employer's KiwiSaver contribution and pays a lesser base salary/wage than comparable employees as a result.
The Amendment Act also sets out minimum break requirements for all employees depending on the amount of time they spend in the workplace. Further, it requires employers to provide appropriate facilities for employees wishing to breastfeed in the workplace and appropriate breaks in which they are able to do this. We recommend alterations to employment agreements for new employees advising of these entitlements and a letter advising all existing employees, so as not to cause confusion, particularly in those workplaces which already provide structured breaks.
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