Targeted consultation has since taken place about proposed changes to the Holidays Act. Workplace Relations Minister Brook van Velden then directed her officials to change the proposed direction of the Act reform.
She has directed work begin on an hours-based accrual model for annual leave and to consider whether greater simplicity can be achieved for the core system, if other models can be used for more complex work arrangements.
More recently, the minister announced other proposed changes to employment law. The government aims to introduce the Employment Relations Amendment Bill this year.
Income threshold for unjustified dismissal claims
The government proposes to introduce an income threshold for unjustified dismissal personal grievances of $180,000. This will apply to regular base salary and will exclude other income such as incentive payments and benefits like vehicle use.
Currently, about 3.4% of the workforce earns above this threshold. The income threshold will apply to existing employment agreements after one year. If the employee is dismissed before the threshold applies to them, they will be able to raise an unjustified dismissal grievance.
The apparent rationale for the proposal is that “highly-paid workers, such as senior executives or technical specialists can have a significant impact on organisational performance and culture.”
The minister is on record stating a poor performing manager or executive can have big flow-on effects for the entire business and increase the risk of poor culture and low morale. The proposed change “will provide greater labour market flexibility enabling businesses to ensure they have the best fit of skills and abilities for their organisation”.
While the minister makes a valid point, the same concerns may equally apply to employees earning less than $180,000.
Senior executives’ employment agreements often include a “no fault” or “incompatibility” provision to provide for an agreed exit.
The enforceability of such provisions is far from clear. Even if enforceable, an employer is required to follow a good faith consultation process before actioning such a provision.
The government is also intending to remove, or significantly reduce, personal grievance remedies and proposes to introduce a gateway test for businesses to distinguish the difference between an employee and a contractor.
There are four specific criteria:
— A written agreement with the worker, specifying they are an independent contractor; and
— The business does not restrict a worker from working for another business (including competitors); and
— The business does not require the worker to be available to work at specific times of day or days, or for a minimum number hours or the worker can subcontract the work; and
— The business does not terminate the contract if the worker does not accept an additional task or engagement.
All four criteria need to be met in order for a worker to be considered a contractor.
The third and fourth criteria may prove problematic. A number of businesses will require workers to be available to work at specific times of a day or on specific days. The ability of a contractor to refuse additional tasks or engagements is also likely to be problematic.
There are other reforms proposed as part of members’ bills which are working their way through the parliamentary process.
End to pay secrecy
If enacted, an employer will be prohibited from including clauses in employment agreements preventing employees from discussing their pay with others.
Pay deductions for strikes
Employers cannot deduct from an employee’s pay if they are engaged in a partial strike unless they suspend the employee or use a lockout notice. “Partial strikes” are strikes which do not involve a total withdrawal of labour. The Bill currently at select committee-stage will change that, allowing employers to make pay deductions in response to partial strikes.
Exit discussions
Act MP Laura McClure’s Employment Relations (Termination of Employment by Agreement) Amendment Bill has been drawn from the members’ ballot and introduced into Parliament. Under this Bill, employers would be able to make an offer to an employee for the purposes of negotiating termination of employment. Critically, the offer of an exit settlement would not create grounds for a personal grievance claim.
Presently, this conversation may amount to grounds for an unjustified constructive dismissal claim.
Exit settlement discussions are fraught with risk. Where the employer forms a view the employment relationship is not working, they cannot simply express that view without the risk of the employee claiming the outcome has been predetermined.
Good faith obligations require both parties to an employment relationship to be open and communicative and constructive in maintaining an employment relationship. If an employer is unhappy with an employee, they are obliged to take good faith action to try to solve the problem rather than simply end the employment relationship.
Currently, the only way an employer can safely have an honest conversation with an employee about their exit is on a “without prejudice” basis. Without prejudice conversations are effectively “off the record” and evidence of what is said cannot be later used in court proceedings.
However, there are a number of requirements before a conversation can be truly categorised as “without prejudice”.
The proposed law change would at least allow employers to have an honest conversation without fear of repercussion.
If an honest conversation can be had which may resolve the issue then we may possibly see more widespread improvement in workplace relationships and increased productivity.
— The opinions expressed in this article are those of the writer and do not purport to be specific legal or professional advice. John Farrow is a partner with Anderson Lloyd, specialising in employment law.
