Monday, 6 May 2019 is D-day
Last year saw many changes in the employment law sphere, with the Labour-led government delivering on promises of reform in this area. Of particular significance are the changes incorporated into the Employment Relations Amendment Act 2018 that was passed late last year. These changes will affect both employers and employees. We summarise some of these below.
No 90-day trial periods for ‘large employers’
From 6 May 2019, employers who have 20 or more employees (‘large employers’) will no longer be able to include 90-day trial periods in their employment agreements.
The number of employees will be judged at the date employment agreements are entered into, not on the day the employee starts work. If you are an employer with close to 20 employees and wish to include trial periods within your employment agreement, it will be important to carefully consider whether any such trial period would be enforceable. Casual employees are likely to be ‘counted’ as employees when judging whether your organisation is a large employer.
Probation periods can be used
Even though large employers will not be able to use trial periods, probationary periods are allowable. Probationary periods are an agreed period at the start of an employee’s employment where the employee’s ongoing employment is conditional on their employer being satisfied with their performance and suitability for the role at the end of the probationary period. Probationary periods are more flexible than trial periods and the requirements to have a valid probationary period are not as strict as for trial periods.
However, employers must still follow a fair process if they wish to dismiss their employee on the basis of a probationary period; and it’s wise to note that your employee is not prohibited from bringing a personal grievance. The employment relations institutions (such as the Employment Court) do, however, acknowledge that the requirements for fair process and the substantive justification for termination of employment based on a probationary period are somewhat less stringent than in cases of termination outside a probationary period.
Employers should note that employment agreements cannot include both a trial period and a probationary period clause.
If you wish to include a probationary period clause in your employment agreement, or need advice as to your obligations as an employer if you want to terminate an employee in reliance on a probationary period, please see us for advice first.
Rest and meal breaks
Another significant change on 6 May is that the legislation will provide minimum allowances for rest and meal breaks, and default provisions for the timing of those breaks if an employment agreement does not specify otherwise. The requirements are summarised here.
Work period Entitlement
2–4 hours 1 x 10 minute paid break
4–6 hours 1 x 10 minute paid break | 1 x 30 minute unpaid break
6–8 hours 2 x 10 minute paid breaks | 1 x 30 minute unpaid break
For periods of more than eight hours, the breaks set out above effectively repeat.
Employers and employees are free to agree between them on when these breaks will be taken. If they don’t agree, and record that in the employment agreement, the breaks must be evenly spaced throughout the work period to the extent that is reasonable and practicable.
Given many employers in customer service industries will not want all their employees taking their lunch break at the same time, for example, employers should carefully consider the timing of breaks and record those in employment agreements.
There are some narrow exceptions from these changes where the employment relationship involves national security or essential services, but these exceptions will not apply to most employers.
Further points of note
• The exemption for small-medium sized employers (with 19 or fewer employees) from the ‘restructuring’ provisions in Part 6A of the Act, so far as they relate to ‘vulnerable employees’, will be removed from 6 May. This means that where there is a restructuring as defined in the Act (for example, a business sale) vulnerable employees will be entitled to transfer to the new employment structure (including a new employer) on the same terms and conditions – if they wish to do so. Vulnerable employees are those working in certain industries, such as catering and cleaning.
• Reinstatement has been restored as the ‘primary remedy’ for grievances claiming unjustified dismissal. If an employee succeeds and asks to be reinstated, that must be ordered if it is practical and reasonable to do so.
• There are significant changes for employers who use collective agreements. Please contact us if you need advice on this.
• Lastly, aside from the changes in the new legislation, health and safety prosecutions continue and the sentences being delivered are consistently more severe than under the previous regime. These court decisions are frequent reminders to all employers on the importance of having, and following, appropriate health and safety policies.
As always, please contact us if you have any queries about any of the above matters, or indeed any employment matter.