Navigating the changes to employment legislation HOW DO THEY AFFECT YOU AND YOUR BUSINESS?

What’s changed? Changes introduced at 1 April 2016 that amended: Employment Relations Act Parental Leave and Employment Protection Act Holidays Act Wages Protection Act Minimum Wage Act

Changes Changes introduced fall into three broad categories Changes to parental leave and payment entitlements and eligibility Enhancing enforcement of employment standards Prohibiting certain unfair employment practices

Parental leave entitlements and eligibility Extend eligibility to paid parental leave entitlements to wider range of employees. Any employee who has worked an average of 10 hours per week over any 26 of the 52 weeks immediately preceding date of birth or adoption Primary Carer E.g. Aunt, Uncle, Grandparent 6 months extended leave after 6 months service Flexibility about how and when parental leave is taken – by negotiation Keeping in touch days Additional paid leave for premature babies One additional week paid parental leave for each week a child is born prior to 37 weeks Employees can resign while on paid parental leave and retain paid parental leave entitlement Increased penalties for paid parental leave fraud

Enforcing Employment Standards Increased penalties for serious breaches of employment standards Public naming of Employers in breach of minimum standards Individuals banned as manager for serious or persistent breaches Persons other than the Employer held accountable for supporting or permitting serious breaches Consistent record keeping requirements across all relevant legislation Maximum penalties for breaches of minimum standards Enhanced information sharing powers between Government agencies Labour Inspector enhanced powers to request information from Employers

Prohibiting Unfair Employment Practices Where hours of work are agreed, they must be stated in the employment agreement Compensation must be agreed and paid if employees required to be available to work beyond agreed hours Employers not obliged to offer, and employees are free to decline, work that is above the agreed number of hours Reasonable notice or compensation where shifts cancelled – rates and notice period to be agreed in the employment agreement Secondary employment may only be restricted where there are reasonable grounds to do so Unreasonable deductions from wages prohibited

Unreasonable Deductions Section 5 Wages Protection Act 1983 An employer may make lawful deductions from a worker’s pay: a. with the written consent of the worker (including consent in a general deductions clause in the worker’s employment agreement); or b. on the written request of the worker. BUT An employer must not make a specific deduction in accordance with a general deductions clause without first consulting the worker; and A worker may vary or withdraw consent given or request made by that worker for the making of deductions from that worker’s pay, by giving written notice AND Section 5A Wages Protection Act An employer must not make a deduction under section 5 if the deduction is unreasonable

What does this mean? Even if you have a deductions clause in your employment agreement, you need to consult with the employee if you intend to make a deduction Certain deductions that are unreasonable are not permitted even if there is a valid deductions clause in an agreement E.g. deductions for losses to business outside of the employee’s control – petrol station drive-offs Even if there is a deductions clause in an agreement, an employee can withdraw consent to deductions by giving written notice Consider how this might impact your business if you have a staff account arrangement and make regular deductions from employee’s pay How might this impact your business if your employees are issued with valuable business equipment – mobile phones, tablets, computers, company cars How might this impact your business if your employee incurs fines or penalties e.g. parking fines, traffic infringements

“Zero Hours” Contracts No guaranteed hours of work, but requirement to be available to work when required Section 67D Employment Relations Act Employer may only include an availability provision in an employment agreement where the agreement a. specifies agreed hours of work and includes guaranteed hours of work; and b. the employee is required to be available to accept additional hours of work; and c. there are genuine reasons based on reasonable grounds for including the availability provision; and d. the availability provision provides for payment of reasonable compensation to the employee for being available to work the additional hours

Agreed hours of work Section 67C Employment Relations Act Must be specified in the employment agreement and includes any or all of the following: a. the number of guaranteed hours of work b. the days of the week on which the work is to be performed c. the start and finish times of work d. any flexibility in the matters referred to in (b) or (c)

What does this mean? Section 67E No guaranteed hours of work specified in the employment agreement; or No availability provision in the employment agreement; or Availability provision doesn’t provide for reasonable compensation for the requirement to be available to perform work; Then Employee is free to decline work/additional hours

Example A – No guaranteed hours Employment agreement provides no guaranteed hours of work, but requires that an employee be available to perform work as directed by the employer. Employer notifies the employee of hours of work by way of a weekly roster Employee is entitled to decline any hours of work offered, whatsoever

Example B – Guaranteed hours, no compensation for availability Employment agreement provides the employee’s ordinary hours of work will be 40 hours per week, between the hours of 7.00 am and 5.00 pm, Monday to Friday Employment agreement provides that the employee may be required to work additional hours and days, including weekends, from time to time to meet business demands No compensation is provided for the requirement to be available to work additional hours and days Employee is free to decline additional hours of work over and above 40 hours per week, or outside the stated hours or days of work

Example C – Guaranteed hours, availability provision, compensation for availability Employment agreement provides the employee’s ordinary hours of work will be 40 hours per week, between the hours of 7.00 am and 5.00 pm, Monday to Friday Employment agreement provides that the employee may be required to work additional hours and days, including weekends, from time to time to meet business demands Employment agreement provides that the employee will be compensated for the requirement to be available to work additional hours and days of work Employer can require the employee to be available to work additional hours and days over and above those agreed in the employment agreement

Genuine reasons based on reasonable grounds S67D Employment Relations Act requires there must be genuine reasons based on reasonable grounds to include an availability provision in an employment agreement. This requires the employer to consider: a. whether it is practicable for the employer to meet business demands for the work to be performed by the employee without including an availability provision; b. the number of hours for which the employee would be required to be available; c. the proportion of the hours referred to in (b) to the agreed hours of work

Example Employment agreement provides an employee a minimum of 10 guaranteed hours of work per week The employee’s hourly rate is $22.00 per hour The employer’s business operates between the hours of 7.00 am and pm, 7 days per week The agreement provides that the employee may be rostered to work up to 50 hours per week, subject to business demand The agreement provides that to compensate the employee for the requirement to be available to work, they will be paid a minimum of $300 per week Arguably unenforceable Wide range of hours for which the employee is required to be available to work Hours of work required to be available are disproportionate to the guaranteed hours of work

Reasonable compensation Not defined by legislation Will depend on the circumstances, having regard to all relevant matters, including: a. the number of hours for which the employee is required to be available; b. the proportion of hours referred to in (a) to the agreed hours of work; c. the nature of any restrictions resulting from the availability provision; d. the rate of payment under the employment agreement for the work for which the employee is available; e. if the employee is remunerated by way of salary, the amount of the salary Salaried employment agreements may contain a provision that states the salary compensates the employee for being available to work under an availability provision

Key take-outs - Availability You don’t need to have agreed hours of work, but if you don’t you cannot require an employee to be available What is appropriate for your business and employees will depend on your individual circumstances – No “one-size fits all” Workforce planning and management will be very important to ensure business needs are met and labour costs are effectively managed Flexibility can still be achieved

Shift Cancellation Section 67G Employment Relations Act Where employees are engaged to do shift work, the employment agreement must specify: a. a reasonable period of notice that must be given before the cancellation of a shift; and b. reasonable compensation that must be paid to the employee if the employer cancels a shift of the employee without giving the specified notice If the employee’s shift is cancelled and the employment agreement doesn’t have a compliant shift cancellation clause; or the employee is not notified of the cancellation until the commencement of the shift; or the remainder of the shift is cancelled after the shift has begun, then: The employee is entitled to be paid what he or she would have otherwise earned for working the shift

Reasonable notice Not defined by legislation Will depend on the circumstances, having regard to all relevant factors, including: a. the nature of the employer’s business, including the employer’s ability to control or foresee the circumstances that have given rise to the proposed cancellation; and b. the nature of the employee’s work, including the likely effect of the cancellation on the employee; and c. the nature of the employee’s employment arrangements, including whether there are agreed hours of work in the employee’s employment agreement and, if so, the number of guaranteed hours of work (if any) included among those agreed hours

Reasonable compensation Not defined by legislation Will depend on the circumstances, having regard to all relevant matters, including: a. the period of notice specified in the employee’s employment agreement; b. the remuneration that the employee would have received for working the shift; c. whether the nature of the work requires the employee to incur any costs in preparing for the shift

When does it apply? Shift cancellation obligations only apply to: Periods of work performed in a system of work in which periods of work a. are continuous or effectively continuous; and b. may occur at different times on different days of the week The Act does not enable an employer to cancel an employee’s shift if that cancellation would breach the employee’s employment agreement

Example A - Restaurant Employee is rostered to work the dinner shift – 4.00 pm – 11.00pm The employment agreement provides that the employee will be notified by am on the day of the shift if her shift is cancelled If the notice above is not provided, the employee is entitled to be paid compensation of the equivalent of 2 hours’ ordinary time The employer determines the employee is not required on the day, and provides the relevant notice that the employee’s shift is cancelled The employer is not required to pay compensation for shift cancellation

Example B - Restaurant Employee is rostered to work the dinner shift – 4.00 pm – 11.00pm The employment agreement provides that the employee will be notified by am on the day of the shift if her shift is cancelled If the notice above is not provided, the employee is entitled to be paid compensation of the equivalent of 2 hours’ ordinary time The employer determines the employee is not required on the day, but does not provide notice of cancellation to the employee until 2.00 pm The employer is required to pay the employee compensation of 2 hours’ ordinary time due to late notice of cancellation

Example C - Restaurant Employee is rostered to work the dinner shift – 4.00 pm – pm The employment agreement provides that the employee will be notified by am on the day of the shift if her shift is cancelled If the notice above is not provided, the employee is entitled to be paid compensation of the equivalent of 2 hours’ ordinary time The employee commences their shift, but due to lower than anticipated diner numbers, the employee is sent home at 7.00 pm The employee is entitled to be paid for the remainder of the shift

What about other industries? Horticultural and Agricultural sectors – weather Building and Construction – weather, supply chain Manufacturing and Production – break down, supply chain Freight and Transportation – cancelled/delayed orders

Key take-outs – Shift Cancellation Reasonable notice and reasonable compensation will be dependent on your individual circumstances – No “one-size fits all” There may be circumstances that cannot be anticipated or planned for – reduce your liability by providing as much notice as possible Consider how you define shifts. It may be possible to minimise scenarios where they may be cancelled Make provision in your employment agreement to redeploy employees to alternative duties where their substantive duties are unavailable

Next Steps Existing employees as at 1 April 2016 – transition period until 1 April 2017 New employees from 1 April 2016 – must be compliant Contact Grow HR to discuss your circumstances and requirements