The Employment Relations Act 2000 is the main legislation governing employment relationships and specifies the rules governing the formation and renewal of all employment agreements (individual and collective) covering all wage and salary earners. It also contains rules and procedures for upholding and enforcing the respective employment rights of employers, employees and unions, and places important obligations on parties to an employment relationship, such as the duty of good faith. 

• The parties to an employment relationship must deal with each other in good faith.
• Membership of unions is entirely voluntary, and any arrangement or pressure to compel either membership or non-membership of a union is unlawful.
• Only unions registered under the Act may negotiate on behalf of employees for collective agreements (CAs).
• Representatives of unions require the employer’s consent to enter workplaces, but an employer may not unreasonably withhold consent.  Note however, that union representatives are entitled to enter workplaces where the union has a collective agreement in place or has initiated bargaining for a collective agreement.  In either case, the union representatives must comply with the employer’s reasonable health and safety requirements and any relevant security procedures. 
• Union members have a statutory entitlement to attend union meetings without loss of pay.
• Employment relations education leave is available to unionised employees.
• There are specific provisions concerning the process of collective bargaining and strikes and lockouts.
• There is specific provision for multi-employer (MECA) and/or multi-union (MUCA) bargaining.  Employees may strike in support of such bargaining.  
• Employees are free to negotiate individual employment agreements (IEAs) within the framework established under the Act.
• Employment agreements must specify the agreed hours of work. Zero Hours contracts are prohibited. There are provisions for employees to request flexible hours of work; and provisions for rest and meal breaks and breast feeding in the workplace. 
• There is a provision for trial periods of up to 90 days for new employees only, during which period the employer is exempt from the usual case law on unjustifiable dismissal. 
• There are rules in respect of contracting out an employee’s work or part of their work, which differ depending on the type of work undertaken by an employee.  Individuals engaged as contractors may challenge whether, in fact, they have employee status.
• Reinstatement is the primary remedy in personal grievance cases where unjustified dismissal is alleged.
• A Mediation Service and the Employment Relations Authority (“the Authority”) are provided to assist in the resolution of Employment Relationship Problems (which includes personal grievances).  A direction to mediation usually occurs before an Authority investigation meeting takes place.
• A strong enforcement regime is in place.  Labour Inspectors have significant powers including the ability to issue Demand Notices to recover arrears of wages and holiday pay; Infringement Notices and fines for failing to hold copies of employment agreements and breaches concerning wage and leave records; and Improvement Notices for failure to comply with legislation. The Courts may issue orders banning a person from being an employer or an officer of an employer, impose fines or order payment of compensation to an employee. 

Good faith is the key concept underpinning the Act. The philosophy means that the conduct of employment relations must be based on the understanding that employment is a human relationship involving issues of mutual trust, confidence and fair dealing, and is not simply a contractual economic exchange.

The Act therefore requires employers, employees and unions to deal with each other in good faith.  The basic requirements are that the parties may not mislead or deceive each other, and must be active and constructive in maintaining a constructive employment relationship. 

There are also good faith obligations that only apply to the employer party, such as the obligation to provide information where decisions potentially affecting the continuation of an employee’s employment are being considered (ie dismissal or restructuring situations); and the opportunity to comment on the information before a decision is made.  Employees are entitled to access confidential information about themselves, including evaluative material provided about them in circumstances where there is a mutual understanding of secrecy.  However, an employer is not required to provide access to confidential information:

• That is about an identifiable individual other than the affected employee, if providing that information would involve unwarranted disclosure of the affairs of that other individual;
• That is subject to a statutory requirement to maintain confidentiality;
• Where it is necessary, for any other good reason, to maintain the confidentiality of the information (for example to avoid unreasonable prejudice to the employer’s commercial position).
  
  

Note also that an employer must not refuse to provide access to information merely because it is contained in a document that includes confidential information.  That means that such information may have to be provided to the employee in summary form, or with the confidential information redacted.

Good faith applies to all aspects of the employment relationship including, but not limited to collective bargaining, interaction generally between employers, employees and unions, union access to workplaces, and as noted to consultation about matters affecting the employment of staff such as restructuring.

The parties’ good faith obligations may be enforced by way of compliance order obtained from the Employment Relations Authority. There are penalties for breaches of good faith e.g. in collective and individual bargaining where the failure is deliberate as well as being sustained and serious or was intended to undermine the bargaining or the employment relationship.  The Employment Relations Authority can fix new terms of employment where serious and sustained breaches of good faith have undermined the bargaining process.

Good Faith and Collective Bargaining

The Act does not define “good faith bargaining” as such, but it does set out the minimum requirements that must be met in any bargaining for a CA.  These are that the union and the employer parties must:

• Use their best endeavours to agree a process for conducting the bargaining in an effective and efficient manner.
• Meet periodically to bargain.
• Consider and respond to proposals.
• If an impasse is reached on a particular matter, continue bargaining on the matters on which agreement has not been reached, but there is no obligation to continue to meet about proposals which have been considered and responded to.
• Recognise the role and authority of the representatives and advocates of the other party (or parties).
• Not bargain either directly or indirectly about employment conditions with the employees for whom the representatives act.
• Not undermine the authority of the other party (or parties) in the bargaining process.
• Provide information on request that is reasonably necessary to support, reject or respond to claims made.  If this information is considered confidential, it must be referred to an independent reviewer appointed by the mutual agreement of the parties. The reviewer will decide whether, and to what extent, the information may be disclosed.  If the decision is that the information may not be disclosed, the reviewer will answer any questions in a way that protects the confidentiality of the information.
  
  

It is not a breach of good faith for an employer to pass on to employees on IEAs (or to members of other unions) terms and conditions that are the same as or substantially similar to those negotiated in bargaining with another union.  However, it is a breach of good faith if that is done with the intention of undermining the CA and the effect of doing so results in the CA being undermined.

Obligation to conclude Collective Agreement

The Act requires parties that are bargaining for a CA to conclude an agreement unless there are genuine reasons, based on reasonable grounds, not to do so.  Whilst the Act does not define what amounts to genuine reasons, it does provide that the following are not genuine reasons: 

• Opposition or objection in principle to being a party to a CA, or
• Opposition to including rates of pay in a CA;
• Disagreement about the inclusion of a bargaining fee clause in a CA.

Good Faith and Individual Employment Relationships

The duty of good faith also applies to the relationship between an employer and an individual employee and specifically to the process of bargaining over individual employment agreements.

During individual agreement bargaining employers must consider and respond to issues raised by employees on a case-by-case basis.  This is required to be a genuine two-way process as opposed to a “take it or leave it” stance by the employer.

The Act supplements this general duty with a specific prohibition against unfair bargaining.  Unfair bargaining includes where an employee:

• Does not understand the provisions or implications of his or her IEA by reason of diminished capacity due to, for example, the employee’s age, sickness, emotional distress, mental or educational disability, or a disability relating to “communication”.
• Relied on the skill, care or advice of the employer at the time he or she entered into the agreement.
• Was induced to enter into the agreement by oppressive means, undue influence or duress.
• Has not been given the required information or the opportunity to seek independent advice before entering into the agreement.
  
  

An employee may apply to the Authority if he or she considers there has been unfair bargaining.

If unfair bargaining is found to have occurred, the Authority may direct the parties to seek to resolve the problem themselves through mediation.  If mediation fails to resolve the problem, the Authority may cancel or vary the individual employment agreement.  Compensation may also be awarded. 

Under the Act, employees have the freedom to choose whether or not to form, or be part of a union.  Union membership remains voluntary, and preference may not be given to a person on the basis of either membership or non-membership of a union or a particular union.  This does not however, prevent a CA from containing a term or condition that is intended to recognise the benefits of a CA or benefits arising out of the relationship on which a CA is based.

Undue influence may not be applied in an attempt to persuade a person towards or away from membership of a union or a particular union. 

The Act makes it unlawful to discriminate on the basis of union membership or involvement in union activities and includes provision for employees to take a personal grievance on discriminatory grounds relating to union membership or involvement in union activities.

Only unions that are registered under the Act have the right to represent employees in bargaining for CAs.

A union is entitled to represent its members in relation to any matters involving their collective interests as employees, or in relation to an employee’s individual rights if the union has an authority from that employee to do so.

Attendance at Union Meetings

Union members are entitled to attend at least two union meetings each calendar year.

If the meetings are held at times when the employee would otherwise be working, attendance is to be on ordinary pay.  The meetings may be for no longer than two hours each, and the union is required to:

• Give the employer at least 14 days’ prior notice.
• Advise the employer of the duration of the meeting.
• Make arrangements with the employer to ensure that the employer’s business is maintained during the meeting (and, if appropriate, ensure that sufficient union members remain available to work during the meeting to enable the employer’s operations to continue.); and
• Give the employer a list of members who attended the meeting and advise the duration of the meeting.
  
  

Access to Workplaces by Unions

Subject to certain conditions, representatives of unions may enter workplaces for purposes related to the employment of members of the union, purposes related to the union’s business, or purposes related to the health and safety of any employee on the premises who is not a member of the union, if the employee requests the assistance of a union representative on such matters.

However, if the employer has no CA in place with the union concerned, and neither party has initiated bargaining for a CA, union access is subject to the employer’s consent, which must not unreasonably be withheld.  The employer must respond to the union’s request for access as soon as practicable, but note that if a response is not given to the union within 2 days, access is deemed to have been granted.

In addition to meeting with Union members, the representative may also meet with non-union members who agree to do so, provided the union official concerned reasonably believes that the membership rule of the union covers the type of work being undertaken by the employees in that workplace.  

The union official may visit workplaces at any reasonable time when employees are employed to work in the workplace.  In accessing the premises the union official must do so in a reasonable way having regard to normal business operations in the workplace and must comply with all existing procedures and requirements applying in respect of that workplace which relate to safety, health or security. Such procedures must be reasonable and apply to entry to the premises in general. That is, they must not be procedures put in place simply to restrict the access of the union official.

On entering a workplace the union official must at the time of the initial entry, and at any other time if requested by the employer, advise the purpose of the entry, and produce evidence of the official’s identity and evidence of his or her authority to represent the union concerned. If the union official cannot locate the manager or a representative of the management, the official is required to leave a written notice setting out the name of the official, the union concerned, the time and date of the entry and the reason for the entry.  

Access may be denied:

• On the grounds of religious belief, but only if the employer holds a current certificate of exemption issued by MBIE; or
• In order to avoid prejudice to the security or defence of New Zealand, or to the investigation or detection of offences.
  
  

Deduction of Union Fees

Unless it specifically provides otherwise, a CA is to be read as if it contains a provision requiring the employer to deduct the employees’ union fees from their salary or wages.  The union fees deducted are to be paid to the union in accordance with any arrangements agreed to between the employer and the union.

Union Delegates

An employee is entitled to spend reasonable time on pay undertaking union activities during normal work hours, if:

• They are a union delegate;
• The activities relate to representation of employees of the employer; and
• The activities do not unreasonably disrupt the employer’s business.

Before the employee can do so, they;

• Must agree with the employer that they can undertake such activities from time to time without notice; or
• Notify the employer when they intend to undertake the activities and how long they intend to spend doing so. 

The employer can only refuse permission if satisfied on reasonable grounds, that the activities would unreasonably disrupt the employer’s business or the union delegate’s performance of his/her role.

Employment Relations Education Leave

The Act provides a statutory entitlement to paid employment relations education leave.  The number of days leave that may be taken in any year is calculated using the formula set out in s.74(1) of the Act.

The calculation is made on the basis of the number of full time equivalent union members employed by the employer.  No individual union member may take more than five days leave in any one year, unless the employer agrees otherwise.

Note that it is up to the union to calculate the amount of leave entitlement. This is to be calculated on 1 March each year unless the parties agree on another specified date.  The union must within one month of that date advise the employer of the amount of leave entitlement.  If the union is late in advising the employer, the union forfeits one-twelfth of the leave for each complete month that it fails to do so.  Any unused entitlement at the end of the year may not be carried over to the following year. 

The leave entitlement is the union’s to allocate as it sees fit.  A union member allocated leave must notify the employer at least 14 days prior to the first day of leave.  However, an employer may refuse to allow an eligible employee to take leave if it would unreasonably disrupt the employer's business. 

It is perhaps in the area of collective bargaining that the Act has its most obvious impact on employment relationships.

Multi-party bargaining

In addition to “one-union, one-employer” collective bargaining, the Act provides for “multi-employer” as well as “multi-union” bargaining.

Multi-employer bargaining is where:

• A union approaches two or more employers with a view to covering its members under one CA; or.
• Two or more employers approach one or more unions with a view to negotiating a single CA.
  
  

Multi-union bargaining is where:

• One employer approaches two or more unions with a view to negotiating a single CA; or
• Two or more unions approach one or more employers with a view to negotiating a single CA.
  
  

The duty of good faith extends to all parties involved in the collective bargaining process. In other words, good faith is required not only between individual unions and the employer, but also between all the unions and all the employers (and employees) involved in bargaining for a particular CA.

When may bargaining be initiated?

If there is no applicable CA in force between an employer and a union, either party may initiate bargaining at any time, provided that the employer may only initiate bargaining if the proposed coverage of the agreement is the same (or partly the same) as another CA that the employer was, or is, a party to.

If there is an applicable CA in force between an employer and a union, the union must not initiate bargaining earlier than 60 days before the expiry of the CA, and the employer must not initiate earlier than 40 days prior to the expiry of the CA.

Where there is more than one applicable CA in force that binds one or more unions or one or more employers, or both:

A union must not initiate bargaining before the later of the following dates;

• The date that is 120 days before the date on which the last applicable CA expires, and
• The date that is 60 days before the date on which the first applicable CA expires.

An employer must not initiate bargaining before the later of the following dates:

• The date that is 100 days before the date on which the last applicable CA expires;
• The date that is 40 days before the date on which the first applicable CA expires.
  
  

How is bargaining initiated?

Bargaining is initiated by one party providing the other party with a written notice identifying the intended parties and the intended coverage of the agreement.  An employer receiving a notice of initiation must advise all of its employees whose work would be covered by the intended coverage clause (whether or not the employees are union members) about the bargaining and the parties to it.  This must be done as soon as possible, but no later than 10 days after receiving the notice if only one employer is an intended party to the bargaining (or no later than 15 days if two or more employers are intended parties to the bargaining).

Joining bargaining after it has commenced

Another union or employer may become a party to the bargaining only if the parties consent to this and the new party complies with the Act’s general requirements (e.g. relating to secret ballots where applicable).

Ratification

At the beginning of the bargaining for a CA (or for the renewal or a variation of it), the union must advise the other parties to the agreement of its ratification procedure.  The union may not sign any CA (or variation of it) unless the agreement (or variation) has been ratified by the employees in accordance with that ratification procedure.

Term of Collective Agreements

CAs must be for a specific term, not exceeding three years.  The expiry date may be specified, or the CA may state that it will expire on the date on which a specified event occurs.  For example, the parties could agree to negotiate a CA that will expire on the date of completion of a specified project (even if it is not possible to state in advance what that actual date may be), provided that date is not more than 3 years after the date the CA became effective. 

Continuation of CA after Expiry

A CA continues in force after it expires for the period during which bargaining continues to a maximum of twelve months, provided the bargaining was initiated before the expiry date of the CA.  This applies whether the bargaining is initiated by the union or the employer.

Content of CA's

A CA may contain anything that is lawful and not inconsistent with the Act.  It must be in writing and signed by each union and employer party.  In addition, it must include:

• A coverage clause (this should clearly specify the type of work to which the agreement applies).
• A clause setting out how the agreement may be varied during its term.
• An expiry date.
• The agreed hours of work.
• The rates of wages or salaries payable for certain types of work or types of employees; and how the rates of pay may increase during the term of the CA.
• A plain-language explanation of the services available to resolve any employment relationship problem, including a reference to the 90-day period for raising a personal grievance.
• An Employee Protection Provision dealing with the rights and obligations of the employees and the employer if the work of any of the employees is contracted out or the business (or part of the business) is sold or transferred.
  
  

Click here for Collective Bargaining Process Flowchart 

Strike Definition

A strike is the act of a number of employees in:

• Discontinuing employment, whether wholly or partially, or in reducing the normal performance of it; or
• Refusing or failing after any such discontinuance to resume or return to their employment; or
• Breaking their employment agreements; or
• Refusing or failing to accept engagement for work in which they are usually employed; or
• Reducing their normal output or their normal rate of work.

Lockout Definition

A Lockout is the act of an employer in—

• Closing the employer's place of business, or suspending or discontinuing the employer's business or any branch of that business; or
• Discontinuing the employment of any employees; or
• Breaking some or all of the employer's employment agreements; or
• Refusing or failing to engage employees for any work for which the employer usually employs employees;
  
  

And is done with a view to compelling employees, or to aid another employer in compelling employees, to—

• Accept terms of employment; or
• Comply with demands made by the employer.
  
  

Secret Ballot

Before taking strike action the union must hold a secret ballot of its members who would become a party to the strike with the result of the secret ballot being in favour of the strike.  The result of a secret ballot is determined by a simple majority of the members of the union who are entitled to vote and who do vote.

An exception is that in the case of a strike on grounds of health and safety no ballot is required.

Written notice required 

No employee may strike without having given to the employer and the Chief Executive of MBIE, notice of an intention to strike, before the date and time specified in the notice as the date and time on which the strike will begin.  The notice must be in writing specifying:

• The period of notice given,
• The nature of the proposed strike, including whether or not it will be continuous,
• The places where it will occur,
• The date and time on which it will begin,
• The date and time, or an event on the concurrence of which, it will end.
  
  

The notice must be signed by a representative of the employee’s union.  It need not specify the names of the employees if it is expressed to be given on behalf of all employees covered by the bargaining and employed in the relevant part of the workplace.

An omission or error in any information specified in the strike notice, or a failure by the union official to sign the strike notice, does not affect the validity of the notice if the omission or error, or failure is minor and technical only.

Similar notice requirements apply in the case of lockouts.

Note that the above provisions do not apply to strikes and lockouts in essential services (as defined in Schedule 1 of the Act), strike action in certain passenger transport services, or strikes in schools.  In these cases there are specified notice periods, being 14 days’ notice in the case of the essential services specified in Part A of the Schedule and 3 days in respect of those specified in Part B.  In passenger transport services at least 24 hours’ notice must be given.  However, notice requirements for such strikes and lockouts also specify requirements about notification of the date and time on which the action will begin; and the date and time or occurrence on which the action will end.

A strike notice may be withdrawn at any time by a representative of the employee’s union giving written notice to the employer and the Chief Executive of MBIE.  Similarly, a lockout notice may be withdrawn at any time by the employer or a representative of the employer giving written notice to the union and the Chief Executive of MBIE.

Unlawful Strikes and Lockouts

Participation in a strike or lockout is unlawful if the strike or lockout:

• Occurs while a collective agreement binding the employees concerned is in force; or
• Occurs during bargaining for a proposed collective agreement that will bind the employees participating in the strike or affected by the lockout, unless—
• at least 40 days have passed since the bargaining was initiated; and
• if on the date bargaining was initiated the employees were bound by the same collective agreement, that collective agreement has expired; and
• if on that date the employees were bound by different collective agreements, at least 1 of those collective agreements has expired; or
• Occurs in a situation where the notice requirements have not been complied with; or
• Relates to a personal grievance; or
• Relates to a dispute; or
• Relates to a bargaining fee clause or proposed bargaining fee clause under Part 6B; or
• Relates to any matter dealt with in Part 3; or
• Is in an essential service and the requirements as to notice that are contained in section 90 or section 91, as the case may be, have not been complied with; or
• Takes place in contravention of an order of the court.
  
  

No pay deductions for partial strikes 

In the event employees take partial strike action – such as refusing to wear uniforms – the employer may not make pay deductions in relation to the strike action.

Where there is a strike, the employer may suspend the employment of an employee who is a party to the strike.  Note that the suspension must end when the strike ends.

If during a strike an employer is unable to provide normal work for a non-striking employee, the employer may suspend the employee's employment until the strike is ended.

Employees suspended must be advised on what basis they are being suspended (ie as striking employees or non-striking employees).

An employee may agree to be employed under an IEA.  However, the Act sets out specific rules to be followed in setting the terms and conditions of that type of agreement. 

Terms and Conditions where there is no applicable CA

Where there is no applicable CA, the employer must provide a prospective employee with a copy of the intended IEA.  The employer must tell that person that he or she is entitled to seek independent advice about the proposed agreement, and give the person a reasonable opportunity to obtain that advice.

While an IEA may contain such terms as the employer and employee may agree, there are certain minimum requirements.  In particular, the IEA must:

• Be in writing (a simple oral agreement is not sufficient).
• Include the names of the parties, and an indication of the place of work and the hours to be worked by the employee.
• State the salary or wages that will be payable.
• Include a description of the work to be performed.
• Include a plain-language explanation of the services available to resolve any employment relationship problem (including a reference to the 90-day period for raising a personal grievance).
• Contain an Employee Protection Provision dealing with the rights and obligations of the employees and the employer if the work of any of the employees is contracted out or the business (or part of it) is sold or transferred. 

Terms and conditions where there is an applicable CA and the employee is NOT a union member:

If the new employee is to be employed in a role within the scope of the coverage clause of an applicable CA but is not a union member, the employee’s terms and conditions for the first 30 days of employment comprise: 

• The terms and conditions of the CA that would bind the employee if they were a member of the Union (with the exception of any bargaining fee provision); and
• Any additional terms and conditions mutually agreed that are no less favourable to the employee than the terms and conditions of the CA.

Where there is more than one applicable CA the one that applies is the one covering the greater number of employees.

The employer must, in addition to doing the things above, inform the employee:

• that a CA exists and covers work to be done by the employee; and
• that the employee may join a union that is a party to the CA; and
• about how to contact the union; and
• that, if the employee joins the union, the employee will be bound by the CA.

The employer must also:

• provide a copy of the CA; and
• pass on to the prospective employee any information about the role and functions of the union that the union has requested to be passed on to employees. The union must provide the information to the employer. The employer may refuse to pass on the information only if it is likely to mislead the employee and would significantly undermine bargaining between the employer and the employee.
• share information about the new employee with the union, unless the employee objects. Note this only applies where there is a CA covering the work the new employee will perform. There are special forms to be used for this purpose - read more. You can access the MBIE guidelines here

No term or condition of employment may be expressed to alter automatically after the 30-day period, but after 30 days the employer and employee may agree to vary the terms as they see fit.

Terms and conditions where there is an applicable CA and the employee is a union member:

• Where the employee is a union member and there is an applicable CA in place, the employee is automatically bound by the CA.  The employee may also have additional individual terms and conditions, but only to the extent that those terms and conditions are no less favourable than the terms and conditions applying to the employee under the CA.
• If the applicable CA expires, the employee is then employed under an IEA based on the terms of the expired CA.  The terms and conditions of employment may then be varied by mutual agreement.
• If an employee bound by an applicable CA resigns from the union, the employee becomes employed on an IEA, based on the terms of the CA.  However, the employer and employee may then agree to vary those terms and conditions as they see fit.  However, the employee may not participate in any bargaining for a new or different CA, or be bound by a different CA until 60 days before the expiry of the CA to which the employee was previously a party.

Where there is a CA covering the work the new employee will perform the employer must, within 10 days of the new employee commencing, provide the employee with a standard form approved by MBIE to complete and return for the purposes of: 

• notifying the employer whether the employee elects to join a union (or a particular union);
• objecting to the employer providing information about the employee,— 

            - to any union, if the employee elects not to join a union; or 
            - to any other union, if the employee elects to join a particular union. 

The form must be accompanied by a notice that:

• specifies the period during which the employee may complete and return the form.
• explains that unless the employee objects, the employer will provide the following information to each union that is a party to a CA that covers the work to be done by the new employee:

            - the name of the employee
            - whether the employee has notified the employer that the employee intends to join the union,
            - or notified the employer that they do not intend to join the union, or not returned the completed form.

• The employee must be advised that the form may be completed during the period starting when the employee receives the form and ending 30 days after the employee commences employment.
• Within 10 days after the expiry of the above period the employer must provide the union parties with:

            - the employee’s name,
            - a copy of the completed form,
            - or if the employee does not return the completed form, advice to that effect.

You can access a copy of the prescribed form here. You can access the MBIE guidelines here.

If there is a CA in place covering the work the new employee will perform, the employer must: 

• pass on to the prospective employee any information about the role and functions of the union that the union has requested be passed on to employees.
• the union must:

           - specify the information the union wants passed on,
           - specify the form in which the union requests the information to be provided,
           - provide the information to the employer in the specified form.

• The employer may refuse to pass on the information only if:

           - The information is confidential,
           - The information is about the employer and is likely to mislead the prospective employee, and
           - Would or is likely to significantly undermine bargaining between the employer and the employee. 

New employees may be employed on the basis of a trial period of up to 90 days.

Some see this as a serious erosion of employee rights.  Others see this as an opportunity for reducing the risks associated with hiring a new employee, while at the same time increasing the possibility of job seekers becoming employed.

To put this in perspective, in Australia the qualifying period during which time an employee can’t bring a case of unlawful dismissal, is 12 months for small employers (those with <15 employees) and six months for larger employers.

But take note that trial periods are no silver bullet as there are many pitfalls for the inexperienced.  The following points should be noted:

• Circumstances which may justify the use of a trial period are where the applicant has not previously been employed, or has not been employed recently or for whom obtaining employment may prove difficult for any other reason.
• The maximum period of the trial is 90 days.
• The applicant’s agreement to the trial period is required and the applicant has the right to refuse the offer of a trial period, in which case the employer may withdraw the offer.
• The trial period may only apply to employees who have not previously been employed by the employer. Therefore it is critical the employment agreement is signed before the employee starts work, otherwise the trial will be null & void.
• The trial period must be recorded in a written employment agreement and must specify:
• The period of the trial, being a period not longer than 90 days.  Note: The trial period should be specified to start from the day the employee starts work, otherwise it may be deemed to start from the day the employee signs the employment agreement.
• That during the trial the employer may dismiss the employee.
• That if the employer does dismiss the employee, he/she is not entitled to bring a personal grievance for unjustified dismissal.
• The trial period should include a notice period, including the right of the employer to pay in lieu of notice.
• Any provisions in the agreement relating to review periods or assistance that will be provided by the employer, must be honoured.
• There must be good reasons for the employee’s employment to be terminated – ie the decision should not be arbitrary or capricious.
• If the employee is to be terminated they must be given notice. The notice must be given before or at the end of the trial period even if the employee’s employment ends after the expiry date of the trial period.
• Particular care must be taken in sale and purchase situations where employees of the vendor are offered employment with the purchaser.
• At the point of termination the employer is not obliged to advise the employee of the reasons for the termination or provide an opportunity for the employee to comment before the dismissal takes place. However, if the employee asks the reasons he/she is entitled to an explanation at that time.
• Provided the foregoing conditions are met the employee has no grounds for bringing a personal grievance for unjustified dismissal. However, that does not prohibit the employee from bringing a personal grievance for unjustified disadvantage and grievances arising from alleged discrimination, sexual and racial harassment and other similar more specific grievances.
  
  

Collective Agreements

Where a collective agreement covers the work a new employee will perform, for the first 30 days of employment, the employee’s terms and conditions of employment comprise the terms and conditions in the collective agreement that would bind the employee if the employee were a member of the union; and any additional terms and conditions mutually agreed to by the employee and employer that are no less favourable to the employee than the terms and conditions in the collective agreement.

Therefore, unless the applicable collective agreement makes express provision for trial periods (which is unlikely), any new employee who will perform work covered by the collective agreement may not be subject to a trial period. That is because:

• Where the new employee is a member of the applicable union, the trial period would be inconsistent with the terms and conditions of the collective agreement [section 61(1)(b) ERA].
• Where the new employee is not a member of the applicable union, the trial period would be a less favourable term of employment than the terms and conditions of the collective agreement [section 62(3)(b) ERA].

Employers and employees may enter into IEAs for a fixed term.  The employer must have a genuine reason based on reasonable grounds for the fixed term. 

Note: The employer cannot use this type of arrangement to deprive an employee of his or her rights under the Act or to assess the employee’s suitability for permanent employment.

Before entering into a fixed-term agreement, the employer must explain to the employee when or how the employee’s employment will end and the reasons for the fixed term.

“Genuine reasons” for fixed-term agreements could include the following:

• To cover an employee on parental leave or other absence (e.g. study leave or special leave without pay).
• To undertake a specific project or work of a finite duration (e.g. the implementation of an IT system).
• To cover those situations where there is no guarantee of funding for the work beyond a specific period.
• To cover a temporary increase in normal workloads (e.g. seasonal fluctuations).
  
  

The terms of any fixed-term agreement must be very clear and accurately set out the agreement reached with the employee.  The agreement should include a statement of the reason for the fixed term.

Care is needed if an existing fixed-term contract is to be renewed.  A genuine reason will need to exist at the time of the renewal which will in fact be a new agreement rather than an alteration to the previous one.

If an employee on parental leave resigns, any person filling that position under a fixed-term agreement is not automatically entitled to on-going employment in that role.  The employer is entitled to advertise the permanent position and to select in the usual way whichever candidate is best suited to the permanent role. 

Agreed Hours of Work

The agreed hours of work must be included in the employment agreement. In this context “hours of work” means any or all of the following:

• The number of guaranteed hours of work.
• The days of the week on which work is to be performed.
• The start and finish times
• Any flexibility in the start and finish times and days of work.
  
  

“Zero Hours” Contracts are prohibited.  A Zero Hours contract is one requiring an employee to remain available for work when requested by the employer without any reciprocal obligation on the employer to make any payment to the employee unless work is actually performed. 

An employee may only be required to be available to perform work when directed by the employer if there is an agreed “availability provision” under which the employee’s performance of work is conditional on the employer making work available, and the employee being required to perform any work the employer makes available.  

There must be genuine reasons based on reasonable grounds for including an availability provision in an employment agreement and note that the employment agreement must also specify guaranteed hours of work or the availability provision will not be valid.

Genuine reasons include:

• Whether it is practicable to meet business demands without including an availability provision.
• The number of hours the employee is required to be available.
• The proportion of the above hours to the agreed hours of work.
• The number of hours of work must be specified in the agreement which must also provide for reasonable compensation for the employee being available to perform work.
  
  

Factors to be considered when assessing compensation include:

• The number of hours the employee is required to be available.
• The proportion of the hours to the agreed hours of work.
• The nature of any restrictions resulting from the availability provisions.
• The rate of payment for the work the employee is available.
• The amount of the salary (where applicable).
  
  

In the case of an employee who is paid a salary, the salary may include compensation for the employee being available for work under an availability provision.

The employee has the right to refuse to perform certain work in addition to any guaranteed hours and the employee must not be treated adversely as a result of such refusal.

Note: The above provisions do not apply to casuals who have the ability to decline work for any reason.

Cancellation of Shifts

In this context “shift” means “a period of work performed in a system of work in which periods of work are continuous and may occur at different times on different days of the week”.  An employer may not cancel an employee’s shift unless the employment agreement specifies:

• A reasonable period of notice that must be given before a shift is cancelled.
• Reasonable compensation that must be paid if the requisite notice is not given.
  
  

The period of notice must be determined after considering all relevant factors including:

• The nature of the employer’s business and the employers ability to foresee the circumstances that gave rise to the cancellation.
• The nature of the employees work and the impact of the cancellation on them.
• The nature of the employees employment arrangements, including whether there are agreed hours of work and if so the number of guaranteed hours.
  
  

Compensation must be determined after considering all relevant factors including:

• The period of notice specified.
• The pay the employee would have received for working the shift.
• Whether the nature of the work requires the employee to incur any costs in preparing for the shift.
• However, the employee is entitled to be paid for what he or she would have earned for working the agreement does not specify a notice period, or the employee is not notified until the start of the shift or the remainder of the shift is cancelled after the start of the shift.

The Act extends the right to request flexible working arrangements to all employees, not just those with caring responsibilities as was previously the case.  In this context “working arrangements” means hours, days or place of work.

An employee may make a request at any time (previously the limit was one request per year), which must be in writing setting out certain information about the change proposed, including whether the change is to be permanent or temporary.   The employer must deal with a request as soon as possible but no later than one month after the request is made (previously was 3 months). 

The only grounds on which an employer may refuse a request are those specified in s.69AAF(2) or (3).  The employer’s response must also be in writing stating:

• That the request has been refused because of a specified ground, and
• The specified ground for the refusal, and
• The reasons for refusal.
  
  

However, note that an employer must refuse a request if—

• The request is from an employee who is bound by a CA; and
• The request relates to working arrangements to which the CA applies; and
• The employee's working arrangements would be inconsistent with the CA if the employer were to approve the request. 

 
Family Violence Provisions

An employee affected by family violence may make a request at any time for a variation of their work arrangements for the purpose of assisting them to deal with the effects of family violence.  This applies regardless of how long ago the family violence occurred, and even if the family violence occurred before the person became an employee. Also note that this covers persons affected by family violence even though they may not be the person directly subjected to the family violence.

• Requests may be made for flexible working arrangements, for up to 2 months.
• Agreement must not unreasonably be withheld.
• The request must be in writing and set out a number of details, including how the variation will assist the employee.
• Employers must respond to all requests within 10 working days of the request.
• The employer may require reasonable evidence.

The Act provides a prescriptive approach to employee break entitlements, in terms of their number, duration and timing.  If an employer and employee have agreed on the times at which an employee is to take rest breaks and meal breaks, then the breaks are to be taken at those times.  In the absence of agreement, breaks are to be taken as follows:  

Exemption from requirement to provide rest and meal breaks

This is very limited.  Only employers engaged in the protection of New Zealand’s security and those engaged in an essential service are exempt from providing rest and meal breaks in a prescribed manner, and then only if:  

• The continuity of service or production in essential services is critical to the public interest, including services affecting public safety; and
• The employer would incur unreasonable cost in replacing an employee, employed in the essential service, during rest and meal breaks with another person who has sufficient skills and experience; and without compromising public safety. 

Where the exemption applies, the employer and employee may agree that rest and meal breaks be taken in a different manner (including the number of and timing of breaks).

Compensatory Measures

If the employer and employee cannot agree on alternative rest and meal breaks (for employees in essential services and those protecting NZ’s security) then the employee is entitled to a compensatory measure.  In this context a “compensatory measure” means a measure that is designed to compensate an employee for a failure to provide rest breaks or meal breaks and may include:

• a measure that provides the employee with time off work at an alternative time, for example by allowing a later start time or an earlier finish, or an accumulation of time off work to be taken on one or more occasions; or
• financial compensation; or
• both time off and financial compensation.

Compensatory measures must be reasonable.  To avoid doubt, if an employee is provided with time off at an alternative time, the employee must be provided with the same amount of time off if they had taken the break. 

Similarly, if it is financial compensation, then the compensation must be an amount at least equivalent to the amount the employee would have earned during the time that they would have otherwise have taken a rest or meal break. 

An employment agreement that excludes or reduces an employee’s entitlement, or excludes compensatory measures has no effect.

Note that the starting point is the employment agreement.  If it contains express provisions for breaks then employees are entitled to breaks as set out in the agreement, provided that the employee is entitled to at least the minimum statutory entitlement.