Employment Law, Government & Legislation

New employment laws in the pipeline

The government has announced changes to the Employment Relations Act, which will take effect July next year. It appears that the government has read the many submissions made on the proposed changes earlier this year. Many changes sound very promising and might, if implemented as planned, iron out the most annoying glitches in the current legislation.

Employment Relations Act

90-day Trial Period

The 90-day trial period for new employees will be extended to cover all employers, not only those with fewer than 20 employees. This means that, for all new employees, an individual employment agreement may remove the ability to raise a personal grievance in respect of a dismissal within the first 90 days of employment, however, claims for sexual or racial harassment, discrimination, disadvantages and failure to comply in business transfer provisions remain.

Test of Justification for Dismissals

s103A of the ERA will be reverted back to the pre-2000 version by replacing the word ‘would’ with the word ‘could’. That essentially means whether an action by an employer is justified or not will be determined  on objective basis by considering whether the employer’s actions, and how the employer acted, were what a fair and reasonable employer could have done in all the circumstances at the time the dismissal or action occurred.

The Authority and the Court can then no longer substitute its judgment for that of the employer, instead have to decide whether the course of action the employer took was one of (maybe several) options the employer had in that given situation.  This might not change much in terms of how the Authority or Court are going to rule in clear cut cases, but could give more room to argue in cases where it is difficult to distinguish between a “warning-able” offence or straight dismissal.

Minimum Requirements of a Fair and Reasonable Process

The Government has confirmed that an employer’s disciplinary process should not be subject to “pedantic scrutiny” and that therefore substance should rule over form. If an employee’s conduct was clearly dismissable, minor glitches in the process should not make the dismissal invalid and the employer liable for damages.

This was certainly one of the main areas of concern by employers over the last few years. However, interesting enough, according to Gordon Anderson, Associate Professor for Employment Law and Relations at Victoria University, there is no evidence to confirm this perception. The classic nightmare of every employer that an employee caught stealing had to be re-instated due to some flaws in the dismissal process, is a myth. These cases dont exist and it appears that its mostly the media through their shoddy reporting and sensationalising which have created the impression that the law puts to much emphasis on form, not substance.

Still, it will be a relief for most employers to have this clarified.

Vexatious or Frivolous Claims

The Authority will have the ability to strike out vexatious or frivolous claims early on in the process.

Arguably, due to its wide procedural discretion, the Authority already has that ability. Many Authority members, however, are afraid of accusations of being unfair and that discretion has therefore hardly ever been exercised to strike out claims without merit.


Although reinstatement will be retained as a remedy, it will no longer be the “primary” remedy. This change is intended to recognise the reality that reinstatement is often not practicable or reasonable.


Cashing Up Leave

Employees will be able to request that one of their four weeks’ annual leave is paid out in cash. Employers can not ask or request their employees to do so,  however, they can  refuse such request by the employee if there are good reasons to do so (for example if the employer considers that the employee should better take leave for rest and recreation).

Proof of Sickness or Injury

Employers can ask for proof of sickness from employees from the first day on, but will have to cover the costs in obtaining a medical certificates.

It will be interesting to see how this will play out in practise. Arguably, there are many who like to call in sick on a Friday or Monday to have a long weekend.  But, and this is not based on any statistics or surveys, I believe there are far more diligent employees who sometimes just get sick on the weekend. It is common knowledge that in times of stress you are able to function and pull through. Exams, work deadlines, important meetings – in times of high pressure, the body is able to pull through. But once that pressure is gone, the body needs to recover, slows down and might react with allowing that odd cold to get through.

And to then ask that employee to go through the doctor on the day they are supposed to be resting is adding insult to injury. We will see how many employers will actually make use of that provision.

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