There is little guidance in New Zealand on how courts should approach penalties for companies that do not adhere to minimum employment standards, particularly for multiple breaches. However, a recent New Zealand Employment Court case, demonstrates an increased willingness to impose high penalties for multiple failures of minimum standards.
A New Zealand Teaching Association (union) has claimed that employees are being “forced” to accept fixed term contracts. The Teaching Association reports that only 15% of new teaching graduates are being employed in permanent positions, with many schools relying on fixed term contracts as a way to manage funding from year to year or to “trial” new teachers. In New Zealand, fixed term employment contracts can only be used where an employer has a genuine reason based on reasonable grounds for limiting employment to a fixed term. The consequences of not complying with the requirements for a fixed term contract are that if an employee challenges his/her termination, the employer is not able to rely on the fixed term to justify that employee’s termination. The practical effect of this will be that the employee relationship is permanent, and the employer could be ordered to pay compensation for an unjustified dismissal or to reinstate the employee.
Statistics New Zealand report that job numbers in New Zealand rose strongly to 3.1% in the year to June 2016, compared with a 2.2% increase in filled jobs in the year to the March 2016 quarter. While job numbers have grown, annual wage growth has remained low.
New Zealand’s Employment Court has held that it is possible for an employee trial period provision to be lawful and enforceable, even where the employment agreement cannot be produced. Provided there is evidence to demonstrate that there was a lawful trial period provision and employment agreement in place, the absence of the agreement does not mean that such a provision is invalid. Under New Zealand law, a trial period provision enables an employer to terminate an employee’s employment within a maximum of 90 days, without the employee being able to challenge the dismissal (except in the case of any ground of discrimination). It is important to note that section 64 of the Employment Relations Act requires all employers to retain a signed copy of an employee’s individual employment agreement and generally speaking, strict compliance with the law is required for an employer to be able to rely on a trial period provision in an employment agreement.
The limits of what preparatory steps can lawfully be taken by an employee who intends to leave an employer, and set up his or her own competing business, have been set out in a recent case. In this decision, the Court assessed the obligations an employee owes to its employer in such circumstances, such as fidelity and good faith, in addition to any restrictive covenants or restraints of trade that might apply.
A stern reminder has been issued from the Court regarding the effect that post-dismissal conduct may have on the amount of compensation awarded to a successful party. In this case, an employer’s post-dismissal conduct resulted in the compensation already ordered to be paid to an employee in a lower court, being doubled from $15,000 to $30,000, when it appealed the decision, where it had also been unsuccessful.
Statistics New Zealand reports that the Consumer Price Index (CPI), which measures the rate of price change of goods and services purchased by New Zealand households and is often used as a factor in determining wage increases, has increased from 0.2% in the March quarter to 0.4 % in the June 2016 quarter. From January 2016 to June 2016, the CPI inflation rate has remained stable, at 0.4 %.
New Zealand’s government ministry responsible for employment matters – the Ministry of Business, Innovation Employment (MBIE) – is continuing to take a tougher approach to non-compliance with employees’ pay. The MBIE has increased the number of prosecutions against employers in 2016. The greatest non-compliance risk for employers is generally where employees have fluctuations in the hours they work, or receive additional pay on top of their normal wages, such as for shift work or commission payments.
New Zealand’s Court of Appeal (the court one tier below the country’s highest court) confirmed that it is not unlawful to disclose a person’s name nor is it offending to their employer, where a court order forbidding publication of those details, has been made, nor is it a “publication” where the employer has a genuine interest in the information.
Several new employment laws (previously reported on) were introduced in April 2016: i) Employment Relations Amendment Act 2016 (came into force on 1 April 2016) This law amends the Employment Relations Act 2000, particularly in relation to ensuring minimum standards are maintained, and appropriate methods of enforcement are available. ii) Health and Safety at Work Act 2015 (came into force on 4 April 2016) This law replaces the Health and Safety in Employment Act 1992. iii) Parental Leave and Employment Protection Amendment Act 2016 (came into force on 4 April 2016) This law amends the Parental Leave and Employment Protection Act 1987, and extends eligibility entitlements, particularly in relation to government-paid parental leave.