Proposed Law Changes To Reset The Balance Between Employers And Employees

With recent announcements from the government on significant proposed changes to employment relations law, it’s crucial for both employees and employers to get up to speed on the impending impacts on their rights and responsibilities.

Late last year, Workplace Relations and Safety Minister, Brooke van Velden released plans to reform how personal grievances are managed under the Employment Relations Act (ERA).

While no Bill is currently before Parliament, Employment Law specialist, Jo Douglas of Douglas Lawyers says the New Zealand government is signalling that employees shouldn’t be compensated for their “sub-optimal workplace behaviour” and these law changes aim to fix an over-emphasis on employment process over substance and restore some balance to employers.

“The proposed changes are obviously intended to enhance productivity in the workplace and will be especially beneficial for smaller businesses that often struggle with the complexities and costs associated with the employment process - and the risk of personal grievance claims,” she says.

Among the key proposed changes is the introduction of a salary cap for accessing unjustified dismissal claims.

If the proposals become law, employees earning a salary of over $180,000 per annum will no longer have the ability to pursue compensation for unjustified dismissal.

It’s intended there will also be new rules regarding remedies for serious misconduct.

Douglas says currently, even if an employee was found guilty of serious misconduct, there are instances where they could still receive compensation if the process followed by the employer is flawed.

“Under the proposed law change, those dismissed for clear instances of serious misconduct, for example proven theft or assault, would not have access to remedies such as compensation for hurt and humiliation.”

There will be an ability to look at an employee’s contribution in the case of other types of dismissals when considering whether remedies should be awarded and how much should be paid out.

"This shift will not only alleviate burdens on employers but will also encourage individuals to take ownership of their workplace behaviour," she suggests.

“Workplace bullying is an area where a lot of resource is involved during an investigation, as employers need to be sure the process is right to minimise the risk of claims against them. There are other ways of dealing with these types of behavioural issues, through better management, better communication, and better development of interpersonal skills through professional development and appropriate coaching support”.

“Employees will be incentivised to focus on positive actions and work on their skillset and personal development," she adds.

If a payout or settlement for a grievance is not likely, Douglas says that this could lead to a culture where individuals reflect on their contributions to workplace dynamics rather than assigning blame when facing employment changes. “However I would expect that for genuinely flawed employment decisions, employees will still be able to pursue a remedy against their employer.”

For small to medium-sized businesses, the reforms may provide more clarity and reduce hiring risks. “Knowing they can take swift action against serious misconduct allows employers to feel more secure in their staffing decisions,” says Douglas.

“When employers understand they can address disruptive behaviour, hiring new staff becomes less daunting.”

The aim of the changes is to strike a fair balance between protecting employees from poor treatment and simplifying processes for employers faced with employment issues.

“I recognise the potential impact these changes may have on both sides of the employment relationship. I would suggest that senior staff be encouraged to bring their individual skillset and resources to negotiations with their employers at the outset of the employment relationship, such as negotiating agreed exit clauses in their employment agreements”.

“This may become a better way of dealing with an exit for an executive rather than a negotiation following a personal grievance.”

Should the law changes go through, Douglas says that the New Zealand employment grievance laws may make it an easier jurisdiction for businesses with offshore management to understand and navigate the New Zealand process. “This could mean we will be a more desirable place to employ and retain our senior talent.”

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