A proposed change is the introduction of an income threshold above which an employee would lose the statutory right to raise an unjustified dismissal personal grievance, writes Jeremy Sparrow. Photo / 123rf
A proposed change is the introduction of an income threshold above which an employee would lose the statutory right to raise an unjustified dismissal personal grievance, writes Jeremy Sparrow. Photo / 123rf
Opinion by Jeremy Sparrow
Jeremy Sparrow is a partner with Holland Beckett in Tauranga specialising in employment law.
The Coalition Government has scrapped the Fair Pay Agreements frameworkand reinstated 90-day trial periods for all employers.
A new “gateway test” will determine if a worker is a contractor or employee, affecting the Employment Relations Authority’s approach.
An income threshold of $180,000 will limit senior employees' rights to raise unjustified dismissal grievances.
It seems like with every change of Government comes the inevitable slew of changes to employment law.
The Act Party’s focus on employment law reform has made this truism even truer for the Coalition Government.
Big changes have already been made. The ink was barely dry on theelection results when the Coalition Government binned the Fair Pay Agreements framework proposed by the previous Labour Government.
Next up was that classic political football, 90-day trial periods, with the Coalition Government re-opening them back up to employers regardless of size (the Labour Government had limited them to employers with fewer than 20 employees).
So what morsels can we look forward to on the Coalition Government’s menu in 2025?
The Holidays Act was temporarily in the crosshairs, with plans to replace it with an entirely new Act, but this has now been sent back to the drawing board by Workplace Relations Minister, Brooke van Velden.
On the other hand, work is continuing on reform of the Health and Safety at Work Act, following consultation which concluded late last year.
We can expect more detail of proposed changes later in the year.
The minister announced a new “gateway test” for determining whether an individual is an employee or a contractor last year.
This will significantly alter the way the Employment Relations Authority approaches this question.
As it stands, the authority looks beyond the written agreement in place and assesses the “real nature of the relationship”, to determine whether a worker labelled as a contractor is actually an employee.
Last year provided a high-profile example, when the Court of Appeal ruled Uber drivers were employees, not contractors.
The changes proposed would mean that, in the first instance, the authority would instead first consider whether:
If these criteria are all met, then the worker will be automatically deemed to be a contractor.
If one or more of the criteria are not met, only then will the authority apply the “real nature” test as usual.
Our take is that the criteria need a lot more clarification before employers can enjoy the certainty that the changes are designed to provide.
Hopefully, this will come when the bill containing the changes is introduced later this year.
Another major proposed change on the cards for 2025 is the introduction of an income threshold above which an employee would lose the statutory right to raise an unjustified dismissal personal grievance.
Cabinet has agreed the threshold base salary will be $180,000.
The minister has said that this is directed at offering senior employees and their employers more choice over their employment arrangements.
Employees and employers can agree to opt back into the unjustified dismissal personal grievance regime, or agree their own dismissal procedures.
Despite this, we would expect to see fewer protections against unjustified dismissals for senior employees as a result of this change.
One question requiring clarification is whether these employees will retain the ability to challenge their dismissal via another type of claim; eg, a common law claim for breach of contract.
The Coalition Government is also targeting remedies for personal grievances, with proposed changes to disqualify employees who pursue successful personal grievances from being awarded remedies where their behaviour has amounted to “serious misconduct”.
Further, employees would be disqualified from being reinstated to their previous role, or from receiving compensation for hurt and humiliation, where their behaviour has “contributed to the issue”.
Other proposed changes included allowing remedies to be reduced up to 100% for other types of bad behaviour, a requirement that the authority consider if the employee’s behaviour obstructed the employer’s ability to meet their legal obligations, and “increasing the threshold for procedural error” in cases where the employer’s actions against the employee are considered fair.
Jeremy Sparrow is a partner with Holland Beckett in Tauranga specialising in employment law.
This last point is particularly interesting, given we are concerned that an unintended consequence of these changes could be that employers would no longer be required to meet any fair process standards as long as they can establish they had a good enough reason to dismiss an employee.
We look forward to this issue being clarified as well, when the bill containing these changes is introduced later in 2025.
Jeremy Sparrow is a partner with Holland Beckett in Tauranga specialising in employment law.
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