Employment Relations - Updates to know for 2024

Fair Pay Agreements

• The Fair Pay Agreements Act 2022 was formally repealed on 20 December 2023 by the Fair Pay Agreements Act Repeal Act 2023.    

90-day trials

• 90-day trial periods look set to soon be extended to all employers regardless of size.  The Employment Relations (Trial Periods) Amendment Bill is now waiting for Royal Assent.  Once the Bill receives Royal Assent, trial periods will be able to be used by all employers.       

• Take care with drafting and using 90-day trial periods.  They are narrowly interpreted and strictly enforced.  If they are deemed invalid then an employee is lawfully able to pursue an unjustified dismissal claim and the associated remedies.  

• At the bottom of this article is our template trial period clause*. We strongly suggest you contact us to discuss if you are going to use this as there are many boxes that need to be ticked to lawfully do so.  

• One critical element is that employment agreements containing trial periods must be signed before the employee commences employment: not the day of, or after. 

• Another critical element is that the employee is given a reasonable amount of time to obtain independent advice about the agreement, including the trial period: we suggest a minimum 3-5 working days.  

• The Ministry of Business, Innovation and Employment’s Regulatory Impact Statement:  Extending the availability of 90-day trial periods (5 December 2023) stated that 133 out of 178 90-day trial periods considered by the Employment Relations Authority between 2015 and 2023 were found to be invalid. 

Remedies for personal grievance and breach of contract claims

• Compensation for humiliation, loss of dignity, and injury to feelings; one of the primary remedies ordered for a successful personal grievance(s) claim, is steadily increasing.  Gone are the days where $10,000 orders were considered sizeable.  

• The compensation bands were adjusted in 2023 to: 

Band 1:  Zero - $12,000

Band 2: $12,000  - $50,000

Band 3:  over $50,000 

• Between January and June 2023, 73 orders of compensation were made.  The range in which the most orders were made was $20,000-$20,999, with a total of 12.  Then it was $25,000+ and 15,000-$15,999, with a total of 10 orders, then $10,000-$10,999 with a total of 8 orders.  

• Damages for non-economic loss of $130,000 and $97,500 were awarded to two claimants who developed PTSD because of their employer’s failures to provide a safe working environment – the obligation implied in all employment agreements.  The Employment Court also ordered the employer to pay, among other things, lost wages equating to around 7 years of just over $450,000 and $600,000 respectively.  This case was not an average case - it involved sustained serious psychological harm over many years.  

• The important takeaway however is that employers must be vigilant in proactively addressing mental health-related and safety risks.  Any failure to do so can result in significant remedies being ordered. 

Tikanga / Tikanga values

• The Courts have clearly signaled that tikanga / tikanga values are not only relevant in employment relationships, but they should also inform the way an employer acts when addressing employment issues.  

• If tikanga / tikanga values are being incorporated into the employment relationship, care must be taken.  We strongly recommend independent advice from a tikanga expert before doing so.  Employers are falling afoul of their own policies because they have not properly understood how to appropriately apply tikanga / tikanga values in the workplace.  

• Employment processes, such as disciplinary and restructuring must consider and align with tikanga values if relevant.  Failure to do so can render a process and/or decision unlawful. 

Restructuring – Redeployment

• Genuine consultation about redeployment opportunities must occur and this cannot occur unilaterally outside of the restructure process.  To put this another way, employers must explore reasonable redeployment opportunities with employees – this means consultation with the employee(s) about the reasonableness of redeployment, not unilaterally making that decision.    

Mental health in the workplace

• This continues to be a difficult issue for employers to navigate.  Some key judgments have recently been issued that set out some guidance on what employers must do, which includes taking proactive steps to understanding and addressing risks to mental health and the interrelationship with employment-related processes.  However, there is still not much information available to employers about how to adequately navigate this difficult area.  

• In November, WorkSafe put out a good practice guideline for managing psychological risks at work for consultation.  Submissions closed on 15 December.  When finalized, these guidelines could greatly assist employers with better understanding their obligations when it comes to psychological harm in the workplace.   

Restraints of Trade

• A Bill was introduced in 2022 that will, among other things, prohibit the use of restraints of trade of all kinds (non-solicitation, non-dealings, and non-compete) for those earnings less than three times the minimum wage; circa $140,000.  

• The select committee is due to report on the Bill on 26 January 2024.  

• Our view is that it is likely that even if the Bill was passed into law there would be significant amendment as it is too prohibitive (and unreasonable) as currently drafted. 

Interpreting Employment Agreements

• Employment agreements are not the same as ordinary commercial contracts.  They are treated differently – for example they are not strictly interpreted like commercial contracts are, and there are overarching statutory and common law obligations and concepts that apply to employment agreements such as good faith and the obligation of fidelity and fair dealing.  This is important to remember when a dispute about the application or interpretation of an employment agreement arises.  Whilst this is not a new concept, it is a good reminder.    

Who can take a personal grievance?

• There could soon be an income threshold for taking personal grievance claims.  

• In Australia, employees that earn over $167,500 AUD per annum cannot take such claims. 

Employees / independent contractor distinction

• There could be some changes on the horizon regarding how workers are determined to be employees or independent contractors.  This has been signaled by the coalition government.  However, it is uncertain what these changes could look like.  Act has certainly made it clear that more emphasis should be placed on contractual arrangements.  This is an area to keep a close eye on.    

• There have been many high-profile cases in recent years dealing with this tricky issue; the Uber cases and Parcel Express; among others.  At present, the Court and Authority determine the real nature of the relationship, which requires an in-depth factual inquiry into how the relationship works on a day-to-day basis.  

• If more emphasis is placed on the contractual arrangements; it could be much simpler to distinguish between employees and independent contractors.  We suspect there will need to be a carve out for vulnerable employees however – such as some migrants. 

Health & Safety

• The coalition government has signaled changes to health and safety laws and regulations.  In what shape or form, is unclear.  This could be amendments to the Health and Safety at Work Act and the regulations. 

 TRIAL PERIOD
 1.1. The Employee’s employment is subject to a trial period for the duration set out in SCHEDULE 1 (TRIAL PERIOD DURATION) starting from the commencement of the Employee’s employment, set out in SCHEDULE 1. 

 1.2. During this period, the Employer may terminate the Employee’s employment by giving the notice set out in SCHEDULE 1 (NOTICE OF TERMINATION (TRIAL PERIOD)). 

 1.3. The Employer however may choose to pay the Employee wages in lieu of working out the notice period. 

 1.4. If the Employer terminates the Employee’s employment under this provision, the Employee cannot bring a personal grievance or other legal proceedings in respect of the dismissal. 

 1.5. The Parties acknowledge and agree that this clause constitutes a trial period provision within the meaning of section 67A(2) of the Employment Relations Act 2000.