The Employment Relations Amendment Bill has passed the third reading in the Parliamentary process and will now become law. The most significant changes follow:
The 'Specified Contractor'
If you hire someone as a contractor and you want them to be a "Specified Contractor", the engagement MUST meet a specific set of criteria. As such this then exempts them from later challenging the fact and from arguing they were an employee all along.
- A statement of intent (written agreement) stipulating that the worker is an independent contractor, or 'not an employee';
- The party has no restriction on other work. They have the freedom to work for any other party other than during the time in which they are engaged with you, unless if the agreement is to complete a specific project or task
- Has the flexibility to arrange their working time/hours OR has the ability to subcontract the work;
- The worker will not be terminated from the arrangement if they decline additional work;
- Is proven to have had a reasonable opportunity to seek independent advice before entering the commencement.
The important point with all this is that if all the above are not met the worker IS able to challenge the status of their engagement as we have seen for many years.
It has been made clear that this provision will not apply retrospectively therefore our recommendation is that if you wish to consider a worker a 'Specified Contractor' going forwards we strongly recommend reviewing your contract with them and vary or re-sign accordingly.
Personal grievance remedy awards
If an employee brings a personal grievance against their employer, and it is proven that the employee's behavior has given rise to the issue in the first place, reinstatement of employment may be off the table, and/or financial compensation to the employee may be reduced by up to 100%, and particularly so in the instance or serious misconduct.
$200,000.00 remuneration limit on unjustified dismissal grievances
An employee who earns over a certain income threshold (currently set at $200k per annum) cannot bring a personal grievance against the employer for unjustified dismissal. This potentially means that in such cases an employer can 'fire at will' without following a good faith process.
This threshold figure includes all wages/salary, commissions, bonuses etc, and will be revised periodically by the Government.
The amendment does allow for parties to explicitly opt out of this provision, meaning if agreed an employee on more than that threshold
could bring a grievance against their employer. Why an employer would opt into that remains to be seen!
For new employees this position is effective immediately. For existing employees you have 12 months to negotiate this point before the default position applies, being that an employee earning $200,000 or more per annum cannot raise a personal grievance for unjustified dismissal.
90-Day Trial Period
Further protection for employers is now available. It is a technical point legally, but previously a compliant 90-day trial period provision and associated termination gives an employer legal protection against a personal grievance for unjustified dismissal. However, it is common knowledge and practice that lawyers & savvy advocates turn such challenges into claims of unjustified disadvantage instead, thus potentially circumventing the legal protection for the employer under the Act.
This avenue is now blocked. Under this Amendment Act an employee (or representative) cannot claim unjustified dismissal or unjustified disadvantage relating to the dismissal.
30-day rule abolishment
For businesses where collective employment agreements (CEA) are in place, previously any new hire whose work would normally fall under the scope of a CEA scope of such must be hired at least for 30 days on the CEA before even negotiating with the person the option of an individual employment agreement (IEA).
Summary
These changes are significant and will require employers to make changes. We will discuss this in further articles. In terms of timings outside of what we have mentioned above, the Amendment Act takes effect the day after it receives Royal Assent which generally happens within 7 days of it passing the third reading in the Parliamentary process.