Posted on: Apr 12, 2016
Employment standards are requirements such as the minimum wage, annual holidays and written employment agreements. They protect vulnerable workers and help to ensure workplaces are fair and competitive.
As a result of the Employment Standards Legislation Bill, new measures have come into force as at 1 April 2016. Various statutes that govern the employment relationship have now been amended, including; the Holidays Act 2003, Minimum Wage Act 1983, Wages Protections Act 1983, the Parental Leave and Employment Protection Act 1987 and the Employment Relations Act 2000.
It is important that employers understand what they are now obliged to do, as well as be aware of the serious consequences that may result if they do not comply. We have provided an outline of the key changes below:
- Tougher sanctions
- Maximum penalties have increased from $10,000 to $50,000 for an individual and $20,000 to $100,000 for a company. Penalties for moderate breaches would remain at $10,000 for an individual and $20,000 for a company.
- Employers will be publically named if the Employment Relations Authority or Employment Court finds they have breached minimum standards (we call this ‘naming and shaming’).
- Individuals also face the possibility of being banned as a manager if they commit serious or persistent breaches of employment standards, or are convicted of exploitation of migrant workers under the Immigration Act.
- Persons other than the employer – such as directors, senior managers, legal advisors and other corporate entities – will now also be held accountable for breaches of employment standards if they are knowingly and intentionally involved when an employer breaks the law. These cases can be pursued even if the employer ceases to exist.
- Clearer-record keeping requirements
- The changes require all employers to have a record of the hours their employees work each day and the pay they receive for those hours.
- For employees who work regular hours each day for regular pay, to which they already agreed to with the employer, a statement of the regular hours and pay is all that is needed to comply. It could be set out in the employment agreement, for example.
- However, if employees do not work these usual hours (or have no usual hours) an accurate record of the hours worked each day and the pay received for those hours will be required.
- Additional hours worked by employees on salaries do not generally need to be recorded, as long as they are in accordance with the employment agreement. However, employers will still need to record additional hours worked by salaried employees if this is needed to show that minimum employment entitlements are being met.
- There is flexibility around the format for records, so long as they can show compliance with the law.
- The key requirement is that employers can produce a record of the number of hours worked each day in a pay period, and the pay for those hours, in an easily accessible form on request from the employee or from a Labour Inspector.
- Infringement notices have been introduced for clear-cut breaches of these obligations with a penalty of $1,000 per breach with a cap of $20,000 if there are multiple breaches in a three month period.
- Increased tools for Labour Inspectors
- Information sharing: The new law sets out a framework for how information will be shared with other regulators such as Immigration New Zealand, the Companies Office and Inland Revenue to improve the ability of Labour Inspectors to identify and investigate alleged breaches.
- Information requests: Labour Inspectors will now able to request any record or document from employers that they consider will help them determine whether a breach has occurred – for instance financial records or bank statements.
- Changes to the Employment Relations Authority’s approach to employment standards cases
- More employment standards cases, particularly those that involve more serious and systemic and/or intentional breaches of employment standards will be resolved at the Employment Relations Authority or Court, rather than being automatically directed to mediation services in the first instance as was previously the case.
- If it wishes, the Authority will continue to be able to send standards cases to mediation if they are mixed up with other employment relationship problems, or if it considers that mediation will contribute constructively to addressing the problem (for example, through clarifying the facts of the case).
- Employees are now able to seek penalties at the Employment Relations Authority for any minimum entitlement breach – previously this was only possible for breaches of the Wages Protection Act.
- Employees have already been able to seek penalties under the Wages Protection Act. Extending this right to the Minimum Wage Act and Holidays Act is consistent with the ‘self-enforcement’ nature of the employment legislation. Employees are also able to seek penalties relating to the employer’s obligations regarding individual employment agreements.
- This means that the opportunity for the Authority to penalise employers is no longer dependent on who brings the case (i.e. an employee or a Labour Inspector).
It is important that employers are aware of these changes as failure to comply will be met with tougher sanctions and public shaming.
Source (and for more information): See MBIE
This article, and any information contained on our website is necessarily brief and general in nature, and should not be substituted for professional advice. You should always seek professional advice before taking any action in relation to the matters addressed.