Submission on the Employment Standards Legislation Bill

Posted By TEU on Oct 16, 2015 |


Tertiary Education Union Te Hautū Kahurangi o Aotearoa

6 October 2015

The Tertiary Education Union (TEU) Te Hautū Kahurangi o Aotearoa welcomes this opportunity to submit on the omnibus legislation Employment Standards Legislation Bill.

TEU represents academic staff and general staff across the tertiary education sector – in universities, institutes of technology/polytechnics, wānanga, REAP and private training providers.

Whilst many would regard staff working in tertiary education to be amongst the most privileged groups of workers, many of our members and other staff are in casual employment or fixed term employment, placing them alongside other more vulnerable workers.

TEU members also see a role for their union to advocate on behalf of workers across the labour market, to ensure that everyone receives their entitlements to fair pay, safe and healthy working conditions, and proper processes for resolving employment issues.

TEU supports the Council of Trade Union’s submission on this Bill; we have drawn on the excellent work undertaken by CTU staff in preparing their submission and acknowledge its contribution to our own submission.

TEU’s submission responds to the three broad policy areas that are dealt with in the Bill:

  1. Part A considers amendments to the Employment Relations Act 2000 and Wages Protection Act 1983 that relate to availability for work outside of contracted hours, shift cancellation, secondary employment and wage deductions;
  2. Part B considers amendments to the Parental Leave and Employment Protection Act 1992 to extend entitlement and access to the parental leave scheme; and
  3. Part C considers proposals to strengthen the enforcement of minimum employment standards under minimum code legislation (the Employment Relations Act 2000, the Minimum Wage Act 1983, Wages Protection Act 1983, the Holidays Act 2003 and the Equal Pay Act 1972).

The Bill contains several proposals that TEU supports. However there are a number of parts of the Bill where if the current wording was adopted, this would result in worse outcomes for workers.

We are opposed to those parts of the Bill and ask that the Select Committee look more closely at these clauses and implement the necessary changes.

Part A: Amendments to the Employment Relations Act 2000 and Wages Protection Act 1983

1 The scope of the problem

1.1. The temporary nature of insecure work makes it is difficult to identify the numbers of workers who work zero-hour contracts, minimum-hours agreements, agreements that contain restrictions on temporary employment or agreements which allow short term cancellation of shifts. However our experience in the tertiary education sector leads us to believe that it is a growing problem.

1.2. The Council of Trade Unions and other union affiliates representing different occupations and sectors have provided the committee with a number of examples of poor employment practices relating to insecure work, shift work, availability requirements and pay deductions. These range from large employers to SMEs and in some instances require employees to be available seven days a week, 365 days a year. These types of arrangements are akin to the life of an indentured servant in the 18th and 19th century.

1.3. These practices are reinforced by poor advice from the Ministry of Business, Innovation and Employment (MBIE), for example as outlined in The Employment Agreement Builder [1] This document includes advice requiring employees to take ‘all reasonable steps to be available’ and that (in the case of piecework) that there are ‘no fixed hours of work’.

1.4. This flawed advice does not recognise an important element of casual employment in New Zealand – that it is not an ongoing employment relationship but rather an open-ended series of fixed term engagements. This is why the ability to refuse to undertake work is so central to the definition of casual work. This is supported by case law as well as the Employment Relations Act 2000 (s66).

1.5. TEU’s view is that given the clear legal status of casual employment as a series of fixed-term engagements, there is nothing in the Employment Relations Act 2000 that permits derogation from s66 of that Act in relation to each engagement of casual employment. However expressly stating that casual workers are included in the criteria outlined in s66 would clarify this issue.

1.6. This means that casual work will only be permissible where it occurs for a genuine reason based on reasonable grounds and that reason is set out in writing. We do not contend that this must occur before each engagement (the reason for the fixed term may be negotiated when the casual employment agreement is first drafted) but where the reason for the fixed term changes, this must be recognised by written amendment.

2. Proposals in the Bill relating to availability, shift cancellation secondary employment and unreasonable pay deductions

2.1. The Bill attempts to address four interrelated issues. First is the lack of certainty around recording of hours of work in employment agreements. Second is the practice of requiring employees to be available for some or all of their hours of work without any guarantee that the hours will be provided. Third is the practice of cancelling shifts with little or no notice including immediately before or during a shift. Fourth is the practice of restricting workers’ ability to seek secondary employment in situations where no reasonable interest is being protected by that restriction.

2.2. The Bill also proposes changes to the Wages Protection Act 1983 to prevent employers from making unreasonable deductions from workers’ wages such as docking wages of service station attendants when customers drive off without paying for petrol.

2.3. As we noted above, the relationship between availability and payment in exchange for this availability is crucial to casual employment relationships. However in the Bill, the clauses on compensation for availability are poorly drafted, and could easily leave an individual to all intents and purposes ‘employed’ by the business or provider, unable to work for another employer, but never actually working for that employer. We are certain this is not the intent of this part of the Bill, and submit that this error needs to be corrected by the committee.

Agreed hours of work (cl 87; proposed s 67C and D)

2.4. Under s65(2)(a)(v) of the Employment Relations Act 2000, individual employment agreements are only required to contain “an indication of the arrangements relating to the times the employee is to work.” This broad description is open to abuse because it allows employers to draft clauses that set out hours in very general terms, then allowing tools such as rostering to be used to control and/or favour employees.

2.5. There are circumstances where flexible work arrangements are needed and suit both parties, but a careful balance between a genuine need for flexibility and legislation that prevents this flexibility from being abused needs to be found. TEU supports the Council of Trade Union’s view that when policy is developed, the norm for any employment agreement must be the inclusion of (wherever practicable) hours and days of work and start and finish times.

2.6. Proposed s67C and s67D provide that where hours of work are agreed, they must be specified in proposed and actual individual and collective employment agreements. However many of the workers most in need of these protections are not in a position to negotiate (and if in receipt of income support, will be sanctioned by Work and Income for refusing work). The proposal is also ambiguous as to whether the agreed hours must be recorded in writing and whether agreed hours can be (as now) varied by conduct or verbally. If the Government is serious about protecting vulnerable workers it will strengthen s67C and s67D to ensure vulnerable workers are protected.

2.7. This requirement then needs to be enforced. TEU support’s the CTUs recommendation that Labour Inspectors should be empowered to issue determinations of working hours and times. An employee and a labour inspector should also be empowered to seek penalties for failure to comply.

Availability clauses and compensation (cl87; proposed s67E and 67F)

2.8. The Bill attempts to address the current practice of imposing requirements on workers by including availability provisions that require work to be available and the worker to be available to accept any work offered.

2.9. An availability provision must include compensation to the worker for making themselves available (proposed s67F(3)). This compensation may be included in wages and salary. If no compensation is payable then a worker must not be “treated adversely” for refusing to accept work (proposed s67F).

2.10. During the early stages of policy development for the Bill, it was intended that compensation for availability and shift cancellation should be “reasonable compensation.” [2] The lack of a requirement of reasonable compensation for availability and shift cancellation in this Bill is concerning. We urge the Government to reinstate a test of “reasonableness” for compensation under proposed s67E(3) and 67F(2)(b). Formal guidance to support the reasonableness test should then be provided through a code of employment practice developed under s 100A of the Employment Relations Act 2000.

2.11. TEU also strongly opposes the imposition of availability only employment agreements. Proposed s67E(2)(a) should be deleted. Employers who wish to place workers on call should be required to guarantee at least some hours.

Notice and payment for cancellation of shifts (cl87; proposed s67G)

2.12. TEU supports the proposition that shift cancellation should result in the employee being paid what they would have earned for working the shift. This is consistent with contract law where if a worker is contracted to undertake a shift and ready to work then they have fulfilled their side of the contract and are entitled to be paid.

2.13. We note that the phrase “An employee is entitled to what they would otherwise have earned for working a shift” is new to the minimum code legislation. TEU support the CTU’s recommendation to add the concept of “relevant daily pay” under the Holidays Act 2003 by stating “An employee is entitled to what they would otherwise have earned for working a shift (including their relevant daily pay as that term is defined in the Holidays Act 2003).

2.14. To ensure that those who may have little or no bargaining power are protected we submit that compensation for cancellation must be expressed as reasonable compensation in proposed s67G(2)(b). [3]

2.15. As well the definition of shift work in proposed s67G(6) should be revised to state: “shift work means any period of continuous or effectively continuous work that that employer and employee have agreed that the employee will work.” This change recognises that an agreement to work is between the employer and employee, not just the employer.

Restrictions on secondary employment (cl87; proposed s67H)

2.16. This proposal is intended to make prohibitions on secondary employment (either in general or unless the employer consents) unenforceable unless there is a genuine reason based on reasonable grounds and that reason is set out in the employment agreement (proposed s67H(1) and (2)).

2.17. Whilst the intent of this section is good, poor drafting means this intent is lost. The clause appears to have been influenced by s66 of the Employment Relations Act 2000 (genuine grounds for a fixed term agreement). However, restrictions on secondary employment are more complex than fixed term employment agreements because the reasonableness of a fixed term is assessed at the point of making the employment agreement whereas the reasonableness of a restraint on secondary employment must always be judged by comparing the current and proposed employment.

2.18. TEU supports the CTU’s recommendations for clarifying this proposal. First instigate a general ban on clauses restraining employees from undertaking secondary employment unless the restraint is for a genuine reason based on reasonable grounds. It must be in writing and the employee with the reason clearly stated and an opportunity provided for the employee to seek advice.

2.19. Second – proposed s67H(2) should be expressed more clearly to state that:

(2) A restraint on secondary employment is unlawful except to the extent that –
a. The restraint has been set out in a lawful clause under [the subsection which permits restraints on secondary employment on reasonable grounds only];
b.Undertaking work for another person is likely to contravene the genuine reason based on reasonable grounds set out in that clause; and
c. The employer and employee have discussed the matter in good faith.

2.20. Third – an employer who contravenes this section should be liable to both a personal grievance (as proposed in cl88) and a penalty under the Act.

2.21. Fourth – the proposal that an employer could place a worker who has no guaranteed hours under a restraint on secondary employment is of concern. The section should specifically render restraints on secondary employment unlawful where no fixed hours have been agreed.

Deductions from wages (cl131)

2.22. Clause 131 of the Bill proposes to amend the Wages Protection Act 1983 to restrict “unreasonable deductions” from wages regardless of whether employees have consented to these. This proposal is useful as far as it goes but is effectively statement of existing law. A much more significant issue for workers is what can be subject to a general deduction clause. We think that case law is clear that a fair process should be followed and specific consent sought for any deductions for loss caused.

2.23. We submit that “unreasonable deductions” should explicitly include deductions from workers’ wages for loss or damage beyond their control and deductions for loss or damage caused by the worker unless those deductions are subject to a fair and reasonable process in good faith and explicit subsequent written consent to the specific deduction.

Part B: Amendments to the Parental Leave and Employment Protection Act 1992

3. Proposals in the Bill relating to paid parental leave

3.1. The extension of eligibility of workers in casual and fixed term work to paid parental leave is a welcome and a necessary addition to the Parental Leave and Employment Protection Act, 1987 (the Parental Leave and Employment Protection Act 1987). We also welcome the change for access to Paid Parental Leave (PPL) to not be dependent on attachment to a single employer but rather to being in employment. These changes will particularly affect those employees in the tertiary sector who work for more than one tertiary institution.

3.2. We also welcome the extension of unpaid leave to workers who have been with their employer for more than six months (but less than 12) as a standard six month leave period (inclusive of the 18 weeks’ paid leave).

3.3. Although these are much needed improvements, New Zealand still lags behind comparable countries and falls short of international standards in relation to both the length of PPL and the level of payments. This Bill and current Government policy does not deal with these gaps, yet they are fundamental to achieving the objectives of the Parental Leave and Employment Protection Act 1987.

3.4. TEU supports the progressive realisation of 52 weeks paid parental leave with an additional month of paid paternity/partner leave, available solely for the father or partner.

3.5. A further significant issue is the relative decline in the level of paid parental leave payments. When PPL was introduced in 2003, the maximum weekly payment was $5.00 above the minimum wage. Currently the maximum payment is $516.85, before tax, compared to the maximum weekly minimum wage of $590. The maximum parental leave payment is now 87% of the minimum wage. This needs to be addressed.

3.6. The International Labour Convention Organisation (ILO) Maternity Protection Convention 2000 (No. 183) states that payments should be no less than two-thirds of previous earnings but recommends the payments reflect the full amount of previous earnings.

3.7. While New Zealand has not ratified ILO Convention No. 183, our membership of the ILO means we have obligations to meet these standards. Some progress has been made with the length of time with the increase to 18 weeks PPL which is the ILO recommended standard, but we are well short of meeting the standard on payment levels.

3.8. TEU believes parental leave payment levels should immediately be returned to 100% of minimum wage levels and progressively increased to meet ILO Convention standards.

Extending paid parental leave to temporary, casual and fixed term workers

3.9. TEU welcomes the change to extend eligibility of PPL to casual and seasonal workers as well as those on fixed term agreements. The ineligibility of workers in insecure work arrangements to PPL is a major inequity and has been so since its introduction.

3.10. In the tertiary education sector, there is widespread use of fixed term agreements as well as extensive casual and hourly-paid employment. Many of these employees have worked consistently in the sector over a number of years and their inability to access PPL has discriminated against a group of workers who already have reduced terms and conditions of employment.

3.11. The changed eligibility proposed in the Bill recognises a changing labour market and the increase of New Zealand workers in non-standard work. [4] confirmed that women are more affected by casual and temporary employment. Temporary workers were more likely to be women and had a younger age profile than people in permanent jobs. Women made up 58% of temporary employees, compared with 48% of permanent employees. Women made up the majority of workers in fixed term and casual jobs. These findings are also reflected in the tertiary education sector.

3.12. The CTU has noted that providing PPL to casual, seasonal and temporary workers may have a positive impact on Māori and Pacific employment equity. The Regulatory Impact Statement[5] for this Bill reported on a range of labour market research showing that Māori and Pacific mothers are over-represented in the types of jobs and employment arrangements that tend to exclude mothers from being eligible for parental leave. TEU would support and be interested in any further research on the implications of the changes for workers in the tertiary sector.

3.13. The Regulatory Impact Statement acknowledges that, “there is a risk that workers and employers may be confused about their rights and obligations following the changes”. TEU believes it is important for employers to be clearly charged with responsibility for providing information to their casual, hourly-paid and fixed term employees and supported with resources to enable this to happen.

3.14. TEU also believes there is a need for a targeted campaign to inform women workers in areas where there are high levels of seasonal, casual and fixed term agreement of the extended eligibility to PPL through the proposed changes to the Parental Leave and Employment Protection Act 1987.

Maternity leave and primary carer leave (cl6)

3.15. The Bill proposes to remove reference to “maternity leave” and replace it with “primary carer leave”. While the term primary carer has a place and recognises the new diversity of family caring arrangements, TEU supports the retention of the term maternity leave and recommends that the term primary carer leave be used alongside the term maternity leave i.e. maternity/primary carer leave.

3.16. One of the main purposes of the Parental Leave and Employment Protection Act 1987 is to protect the rights of female employees during pregnancy and to allow the expectant mother a period of time before and after giving birth, to prepare for and recover from the delivery.

3.17. Maternity leave acknowledges the importance of maternal health and well-being for the biological mother after child birth as well as the promotion of breast feeding and support for the World Health Organisation recommendation of breast feeding for six months.

3.18. We agree that there is a real need to improve the uptake of men or partners taking parental leave and the Parental Leave and Employment Protection Act 1987 should change to incorporate more than solely biological or formal adoptive parents. However by removing maternity leave there is a removal of support for the biological connection that women have to child birth, which is one of the primary purposes of parental leave legislation.

3.19. A further critical reason for the establishment of PPL is to address the inequity and disadvantage that women face as a result of taking leave out of the workforce to have and to care for children. While men should be encouraged to take more parental leave it is still women who take the bulk of parental leave. Therefore the term maternity relates specifically to women and should be retained.

3.20. Retaining the term “maternity leave” is also important for reporting at an international level. New Zealand provides reports and data to both the OECD and the ILO on parental leave. Both international organisations use the standard terms of maternity, paternity and parental leave.

3.21. TEU recommends that the word “maternity” is retained in the Parental Leave and Employment Protection Act 1987 and that the term used is “maternity/primary carer leave” in all applicable sections.

The ‘hours’ threshold

3.22. The ‘hours’ threshold proposed in the Bill is an average of 10 hours per week for both the six-month and twelve-month employment test. TEU notes that 10 hours does not correspond to either a 7.5 hour or an 8 hour working day, commonly used in the tertiary education sector. We therefore question the use of ten hours, which requires by implication more than one day a week employment in tertiary education and most public services.

3.23. A threshold of 7.5 hours average would extend entitlement to those consistently working one day a week in areas of the tertiary education (and other) sector.

Negotiated carer leave (cl34 inserting new Part 3A)

3.24. New Part 3A in the Bill is proposed to provide for workers who are not eligible for maternity / primary carer leave to request a period of “negotiated carer leave” to enable them to receive parental leave payments e.g. if an employee has been in the job under six months they would be ineligible for PPL.

3.25. We commend the intention behind this and the development of a mechanism to accommodate a new anomaly. However the mechanism proposed is problematic and does not provide sufficient support for employees to maintain their connection to the workforce.

3.26. We note that the provision in new Part 3A is modelled on provisions in the Employment Relations Act 2000 providing the right to request flexible work arrangements. However, there have been problems relating to the use of this provision, including in the tertiary education sector.

3.27. These provisions are, in effect, a procedural right only and are expressed similarly in this Bill. As such they are a weak entitlement for employees. Only having the right to request flexible arrangements and not the right to flexible work arrangements partially explains why there has been such a poor uptake of the provisions of Part 6AA. Therefore the proposed Part 3A needs substantial strengthening if it is to address the disadvantage experienced by some workers who are not eligible for paid parental leave e.g. because of a recent job change.

3.28. If there is not to be a statutory right to maternity/primary carer leave for those who do not meet the six-month employment test, then the grounds in Part 3A for rejecting the ‘negotiated carer leave’ request need to be tightened. This could be achieved by adding a reasonableness test for the employer’s decision and permitting workers to challenge this reasonableness.

3.29.  TEU supports the CTU recommendation that proposed section 30E(1) be amended to state that the employer may refuse a request only if the employer determines that “the request cannot reasonably be accommodated on one or more of the grounds specified in proposed Section 30E subsection (2).

3.30. Strengthening these provisions should also include amending proposed s 30F to provide that a worker may challenge the reasonableness of their employer’s refusal and should be renamed “Challenging Employer’s Refusal” and amending proposed s 30F(2) to state:

An employee may challenge his or her employer’s failure to respond to a request for “negotiated carer leave”, or failure to respond adequately to a request or failure to grant the request if the employee believes his or her employer has not complied with Section 30D or (proposed amended ) Section 30E.

Penalties for breaches relating to parental leave/misleading information

3.31. The Bill has a penalty in proposed s 30J if an employer has not complied with the requirements under new Part 3A for maternity/ primary carer leave. The return of penalties for non-compliance with the Parental Leave and Employment Protection Act 1987 is welcomed. However, the penalties for employers for non-compliance with the Parental Leave and Employment Protection Act 1987 should be consistent with the penalties in s135 of the Employment Relations Act 2000.

3.32. TEU considers that the increase in the penalty for employees who mislead the department from $5000 to $15000 is excessive and there appears no just cause for this significant, or any increase. This is especially so as we understand there has never been cause to invoke this penalty.

Labour inspectors and parental leave (cl45, 46)

3.33. The Bill proposes adding a new section 30G to provide that a labour inspector may provide assistance to employers and employees for the purposes of the new Part 3A.

3.34. New Zealand currently has inadequate numbers of labour inspectors. Because of the specific knowledge about requirements for parental leave we recommend that MBIE ensure that there are additional labour inspectors appointed with a specific focus on and expertise in the Parental Leave and Employment Protection Act 1987.

3.35. Proposed s30H and 30I of the Parental Leave and Employment Protection Act 1987 allow for issues relating to an alleged noncompliance to be referred to mediation and subsequently to the Employment Relations Authority for determination. However, s30H(3) only allows referral to mediation following Labour Inspectorate intervention. This is problematic where the Labour Inspectorate cannot intervene or simply does not have the resources to intervene in individual cases.

3.36. We recommend changes to Section 30H to enable workers to access mediation for the purpose of parental leave issues without first needing to access the services of a labour inspector.
Employee’s notice in relation to return to work (cl39)

3.37. The Bill proposes to amend cl39 of the Parental Leave and Employment Protection Act 1987 to provide that if an employee’s employment agreement requires a longer period of notice of resignation than 21 days then the statutory requirement in the Act of 21 days’ notice of not returning to work does not apply and the employment agreement would prevail.

3.38. TEU opposes this proposed amendment. Employment agreements with a three-month notice period are common for academic staff in tertiary education institutions. A three-month period of notice is unreasonable in the context of maternity/parental leave.

3.39. We welcome the change that enables employees to resign and still receive the parental leave entitlements. This is consistent with the changes extending eligibility to seasonal, casual and fixed term workers who have no guarantee of returning to employment following paid parental leave.

Changes to annual adjustment of parental leave payment rates

3.40. The Bill proposes that a section which related to the annual adjustment of paid parental leave to be adjusted by Order in Council at 1 July be replaced by the requirement that the Minister must publish the adjusted rate on an internet site.

3.41. We support the change in the Bill which would no longer require annual adjustments to be done by Order in Council.

Keeping-in-touch days (cl55)

3.42. TEU generally supports the principle of ‘keeping in touch’ days. We recognise that there are a range of situations where with mutual agreement the employee may return to work for an occasional day, for example, training, updating. Keeping-in-touch days are a response to the provision where employees have been deemed to return to work and lost their right to paid parental leave because they came back to work while on paid parental leave.

3.43. We have some concerns that there could be situations where employees could feel pressured to come into work (sudden sick leave of other employees, time-bound pressures for employers etc.). This could be addressed by adding explicitly that the employee must agree and there shall be no element of coercion.

3.44. We also consider that KIT days during the period of extended leave would be productive for both the employer and employee. We consider that it should be explicit in the Act that use of occasional KIT days, by mutual agreement, will not cause the employee to be deemed to have returned to work.

3.45. An unmet need in parental leave policy is to return to work following extended parental leave with different work arrangements. TEU members have reported instances where requests to change hours/days or working arrangements following parental leave have been refused, or seen as unwelcome and there has been no ability or willingness to discuss possible arrangements. The flexible work provisions under the ERA do not offer resolution in these situations and there is no mechanism for review of such decisions, often made by managers with little appreciation of the overall objectives of the Act.

3.46. TEU believes there is a need to provide a right to return to work from parental leave with flexible working arrangements. This would support an on-going attachment to the workforce and indeed the employer. We believe there are very few situations in the tertiary education sector where accommodation of flexible arrangements could not be met.

Calculating hours for paid parental leave entitlements

3.47. There may be an issue for workers in seasonal and casual work in calculating their hours retrospectively for the purpose of paid parental leave payments, when workers have multiple employers. The Regulatory Impact Statement notes that a statutory declaration will be sufficient and this has been confirmed by MBIE officials. We consider this will be helpful.

Public awareness campaign

3.48. We were pleased to see the Regulatory Impact Statement acknowledge the need to improve the information about statutory PPL entitlements for pregnant employees or employees going on maternity/primary carer leave. One suggestion is that improved information and resources should be provided to and then made available by Lead Maternity Carers and midwives, Primary Health Care practices and antenatal clinics. This should be multi-lingual and in clear, easy-to-understand language. For adoptive parents and other carers taking on maternity care and primary care roles, there should be appropriate information readily available from government agencies, especially Child Youth and Family and primary health care and children’s organisations.

An evaluation of paid parental leave is a priority

3.49. Paid parental leave plays a critical role in sustaining women in employment and promoting equality through financial support and on-going connection with the workforce. TEU supports the need for new research and evaluation of the parental leave scheme. The RIS for this Bill identified this but qualified it with “a review will depend on available resources and other competing priorities”.

3.50. TEU recommends that an evaluation of the parental leave scheme be a MBIE and Government priority to be commenced 12 months following the enactment of the 2015 changes to the Act.

Annual leave following parental leave (s42)

3.51. Section 42 of the Parental Leave and Employment Protection Act 1987 provides that when leave is accrued while on parental leave or in the 12 months following return to work from parental leave, the payment for that leave is calculated based on their earnings over the preceding 12 months.

3.52. This will more often than not mean that parents receive no paid holiday leave on returning from parental leave at the very time when paid holiday leave is most needed for the well-being and health of the employee and their family. Some employment agreements provide clauses which provide specifically for paid leave in the first year back and some employers agree to pay this leave at the full rate of pay. This is both necessary and sensible.

3.53. TEU strongly recommends the repeal of s42(2) of the Parental Leave and Employment Protection Act 1987, which we regard as discriminatory and unfair.

Paternity/partner leave

3.54. New Zealand’s parental leave legislation and policy is out of step with other OECD countries in not having provision for paid paternity/partner leave.

3.55. The 2005/2006 evaluation of parental leave research (Department of Labour, 2007) found that fathers / partners are not using the unpaid leave but rather are using annual leave at the time of the birth/adoption of their child.

3.56. Many OECD countries provide a month’s paid leave for the father/partner with in the first 12 months of a child’s life, that is solely available for the father/partner and if not used is forfeited. TEU supports this approach and recommends New Zealand takes steps to introduce such provisions. Anecdotal evidence suggests this would support a cultural shift in shared parental responsibilities.

The low levels of New Zealand’s paid parental leave payments

3.57. As noted earlier in this submission, New Zealand’s paid parental leave payments are low with a cap at a maximum weekly rate of $516.85 which is 87% of the minimum wage. The Regulatory Impact Statement acknowledges this. New Zealand does not meet the standards set in the ILO Maternity Convention No 183 of maintaining earnings at two-thirds of the average wage.

3.58. Paid parental leave has lost relativity with the minimum wage from the time it was introduced. Adjustments to PPL payments are made according to average wage movements. Increases in the minimum wage (especially between 2002–2008) were higher than the increases in the average wage, thus PPL payments have dropped relative to the minimum wage.

3.59. TEU recommends that there be an immediate rise in the maximum paid parental leave payment to the minimum wage level of $590 and that we work progressively towards ILO Convention No 183.

Language of ‘confinement’

3.60. TEU notes that the term ‘confinement’ is still in use in the Act. This is a very old (and old-fashioned) term which is no longer relevant or appropriate. We recommend that when changes are made to the Act, alternative wording is employed, wherever the term ‘confinement’ is currently used.

Part C: Proposals to strengthen the enforcement of minimum employment standards

4. The scope of the problem

4.1. It is difficult to accurately measure the scope of breaches of minimum employment standards, but information that has been gathered indicates that these breaches pose a significant and growing problem. We note MBIE’s comments in the Regulatory Impact Statement Regulatory Impact Statement [6] that 17% of respondents to the Statistics New Zealand Survey of Working Life 2012 reported that they were not receiving one or more basic entitlements.

4.2. Non-compliance with employment standards (particularly deliberate non-compliance) is usually hidden and difficult to measure. Migrant workers, young people and temporary workers are large parts of the New Zealand workforce. It is likely that other disproportionately disadvantaged groups face similar knowledge barriers. This means that breaches of minimum entitlements are likely to be systemically underreported in survey questions such as those in the Survey of Working Life unless these questions and the sampling for the survey are very carefully constructed.

The role of the Labour Inspectorate

4.3. One of the most significant gaps in the current employment standards system is the capacity of labour inspectors and other actors in the system to enforcement minimum employment standards.

4.4. As we noted previously, New Zealand has low staffing levels for the Labour Inspectorate. The lack of resource in the Labour Inspectorate poses a significant challenge to the proposed operation of the Bill.

4.5. We support the CTU’s recommendation that the number of labour inspectors should be doubled to 100 and over the next three years raised to 150 (equal to the current number of health and safety inspectors).

The role of unions in relation to minimum standards

4.6. We support moves to make labour inspectors more effective and to create stronger disincentives for breaches of minimum employment standards.

4.7. However despite the valuable role of unions, the Government has proceeded with changes to employment law that make it more difficult for workers to speak up or unions to assist workers including:

  • a. The introduction of 90-day “dismissal at will” trial periods in 2008 and their extension in 2010;
  • b. The introduction of a requirement for employer consent to union workplace access in 2010. This allows employers to hide exploitation;
  • c. The weakening of justification needed by employers to dismiss workers (also from 2010);
  • d. The removal of the statutory right to meal and rest breaks and replacement by loosely-defined compensatory measures;
  • e. Loss of protections for employees in industries deemed most vulnerable (cleaning and catering along with orderly and laundry services in particular industries); and
  • f. Weakening of unions’ ability to negotiate collective agreements will be weakened resulting in fewer collective agreements, more legal action and less resource put into working with un-unionised sites and new workers.

4.8. Unions offer expert advice and representation to their members, and do so in a much more timely fashion than the currently understaffed Labour Inspectorate. If the Government is serious about the protection of employment standards it will embark upon a programme of strengthening and extending the role and ability of unions to protect basic employment standards.

4.9. This should include the repeal of legislation hindering unions’ ability to represent and assist workers.

Adequacy of remedies for breaches of employment standards

4.10. TEU supports the insertion of new s133A (by cl90) setting out matters to be taken into account in determining penalties. We also agree with the list of matters set out for the consideration of the Authority and Court. We think this is likely to assist in transparency of the penalty setting process. However, we are sceptical that the introduction of s133A will have any tangible effect on the quantum of penalties levied by the courts.

4.11. We support moves to give new powers to labour inspectors to pursue and deter serious breaches. However, the vast bulk of cases taken are by workers and their representatives not labour inspectorates. These cases must also have credible deterrent value.

4.12. As an affiliate of the CTU, TEU has been a strong advocate of rationalisation of the penalties regime to ensure that, in general, workers and labour inspectors have the same rights to seek penalties. Therefore we support the changes proposed in the Bill to give effect to this and other recovery of monies owed.[7]

4.13. Therefore we support the CTU’s recommendation to double maximum penalties under s135(2) to $20,000 for an individual and $40,000 for a company.

Additional provisions relating to breach of employment standards (cl 95 inserting Part 9A)

4.14. TEU supports the proposed ability of labour inspectors to seek declarations of breach and the stepped approach allowing Inspectors to seek pecuniary penalty orders, compensation orders and banning orders either at the same time or subsequent to the declaration of breach.

Infringement offences (cl 110)

4.15. TEU supports the introduction of an infringement offence regime for breaches of minimum standards. However we are unclear how infringement notices would work in relation to recurrent breaches of record keeping requirements.

4.16. It is unclear whether the proposed s235G stating that infringement fees and fines are not payable for the same conduct applies to pecuniary penalties under proposed s142E-142I as well as ‘standard’ penalties in accordance with s133-136 of the Employment Relations Act 2000. If so, an infringement fee may represent a very cheap way to escape liability (notwithstanding the usual rules around recovery of wages without records).

4.17. We support the CTU’s recommendation that proposed s235G be amended to refer specifically to “penalties sought under s 135 of this Act.”

4.18. Additionally, setting the maximum infringement fee in primary legislation makes the amendment cumbersome. The likely result is stagnation of the fee relative to inflation. By way of comparison, the Health and Safety at Work Act 2015 sets infringement fees via regulation instead.[8]

4.19. Our view is that regulation is a better way of implementing these fees. This would involve amending proposed s235E(1) to delete the specific quantum for offences specified in s235(a) and altering cl 111 (amending s237) to include prescribing infringement fees under s 235A(a) and removing the $1,000 cap.

The role of mediation in maintaining employment standards (cl83, 97, 98, 100-101)

4.20. The Bill proposes a new s159AA where if a matter before it relates substantially to an alleged breach of employment standards relating to an employee, the Authority must not direct the parties to use mediation or further mediation unless:

  • a. The facts of the alleged breach are in dispute and the Authority is satisfied that mediation will be a cheaper and quicker way to clarify the facts;
  • b. The alleged breach appears to be minor and inadvertent;
  • c. Both parties agree; or
  • d. The Authority is satisfied that in the circumstances and having regarding one of the purposes of the Act (the effective enforcement of minimum employment standards) mediation is appropriate.

4.21. While we sympathise with the problem that this amendment is attempting to address, this is a poorly thought-though proposal. Therefore TEU supports the CTU’s recommendation that proposed s159AA is deleted.

4.22. Section 148A (added in 2010) provides for minimum standards safeguards for individual employees by forbidding mediators from signing agreements where employees agree to forgo their minimum entitlements.

4.23. Section 159(1A) of the current Act could be strengthened to address the concern that recalcitrant employers are delaying action through mediation by amending it with the following recommendation from the CTU:

(1A) If the matter before the Authority was brought by a labour inspector and relates to an employee’s minimum entitlements, the Authority must not direct the matter to mediation or further mediation.

Information sharing between the Labour Inspectorate and other agencies (cl108) and additional powers for labour inspectors

4.24. Missing from the Bill is the ability for labour inspectors to determine the employment status of workers. The need to apply to the Employment Relations Authority to determine whether one is an employee is an access to justice issue that prevents many employees who have been disguised as independent contractors from challenging their status.

4.25. It is acknowledged that employment status questions always involve a weighing up of various factors and the answer may be finely balanced. However, it would become possible for the Labour Inspectorate to build up substantial expertise in these matters and their decisions may be subject to appeal rights.

4.26. Alongside employment status in the wider sense of whether a person is an employee or not, we submit that labour inspectors should be entitled to determine whether a person is a permanent, fixed term or casual employee and the genuineness of any fixed term.

4.27. A labour inspector should also be empowered to determine what an employee’s regular hours are.

4.28. This information is often misrepresented in employment agreements and sometimes wage and time records. It is critical to determining whether entitlements such as annual leave and the minimum wage are paid correctly.

Footnotes

  1. http://dol.govt.nz/Tools/EmploymentAgreementBuilder/Guide/default.aspx?sID=6
  2. This was the basis on which most of the earlier consultation occurred. However, by way of a Briefing entitled Final Cabinet Paper on Addressing Unconscionable Practices in Employment Relationships (28 April 2015)
  3. MBIE raised concerns (we think largely unwarranted) with the prospect of ultimately the Courts being asked to determine what constituted reasonable compensation.
  4. The 2012 Survey of Working Life Statistics New Zealand. (2014). Flexibility and Security in Employment: Findings from the 2012 Survey of Working Life. Wellington.
  5. Ministry of Business, Innovation and Employment. (2015). Regulatory Impact Statement: Modernising Parental Leave. 2015: Ministry of Business, Innovation and Employment
  6. ‘Strengthening Enforcement of Employment Standards’ at [25].
  7. Specifically: Cl 86 re retention of individual employment agreements; Cl 89 re penalties for failure to keep wage and time records; Cl 117 re penalties under the Holidays Act 2003; Cl 119 recovery of arrears of wages under the Holidays Act 2003; Cl 125 re recovery of penalties under the Minimum Wage Act 1983; Cl 126 re arrears of wages under the Minimum Wage Act 1983; Cl 133 re arrears of wages under the Wages Protection Act 1983; Cl 135 re penalties under the Wages Protection Act 1983
  8. MBIE has recently been consulting on these proposed regulations. See the exposure draft at: http://www.mbie.govt.nz/info-services/employment-skills/workplace-health-and-safety-reform/development-of-regulations-to-support-the-new-health-and-safety-at-work-act/document-and-image-library/hsw-infringement-offences-fees-regulations.pdf
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