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New Government heralds a period of change for NZ Employers

NZ’s employment sector is preparing for a period of change following the election of the Ardern Labour Government in October.

NZ Labour campaigned on an agenda of change for the employment sector, including an increase in the minimum wage, the introduction of Fair Pay Agreements, changes to the 90-trial period for new workers and a commitment to paying the Living Wage to all workers in the core public service, extending it to contractors over time. It also committed to implement recommended changes to the Equal Pay Act to give all women in female-dominated workforces access to collective bargaining and courts to settle claims.

The employment sector has expressed some concern around the impact of the proposals on affordability of employees, staffing levels, quality of labour and increasing costs for smaller operators.

With the new Government a complex union of three political parties however, just how much of Labour’s ambitious agenda will be achieved in coalition remains to be seen. That said, while it’s true that coalition can make implementing policy agendas more difficult, NZ First, The Greens and Labour are largely aligned on broad directions for employment relations policy.

RCSA has worked effectively with Labour in opposition on its Future of Work Report and we share strong alignment on both the importance of labour market intermediaries in a modern and progressive NZ economy and on our commitment to ethical operation within the sector.

As an established voice on these issues, we look forward to working with the incoming government on behalf of the recruitment sector to help achieve the right balance between flexibility, adaptability and responsibility in employment relations policy.

New Workplace Relations and Safety Minister (Cabinet) Hon Iain Lees-Galloway is a former Student activist and employee of the New Zealand Nurses Organisation, NZs largest trade union representing the nursing profession, midwives and caregivers. He became a politician in 2008 and has held several portfolios in opposition including Veteran’s Affairs, Transport and Land Information and associate spokesperson for Health and defence.

As spokesperson for Workplace Relations and Safety, he was the lead Opposition MP in the campaign to end zero hour contracts As Minister for Workplace Relations and Safety, Iain’s stated aim is to ‘create an employment relations framework that ensures working people get a fair share of a growing economy while workplaces are productive and safe.’

New employment Minister, Willie Jackson, comes to the role from a background as a trade union organiser, record company executive, broadcaster, talkback radio host, politician and passionate Maori advocate. We will engage early with the new Minister and look forward to working with him in his new capacity.

Attached below is a brief summary which outlines some more detail around the key employment relations policies Labour took to the election:

Minimum wage:

Labour has committed to boost the minimum wage to $16.50 per hour by April 2018 per hour (5% increase) lifting to $20 by 2021. Over time, they propose to lift minimum wage to two-thirds of the average wage as economic conditions allow.

The sector has expressed some concern around affordability of employees and the subsequent challenge that presents to staffing levels and accessibility. There are also concerns that this change to impact the ability to attract and provide quality labour. There remains a question around how the sector will respond to the increase in costs, and what impact the market will be willing to accept in terms of increased costs for supply of labour.

New Prime Minister Ardern has indicated tax cuts may be considered for small business to offset increases in costs, but any change on that front will not occur until 2021.

Changes to 90-day trial periods:

Labour has proposed to replace the existing ‘fire at will’ law with trial periods that include recourse for employees in the event of unjustified dismissal, establishing a new referee service for claims of unjustified dismissal during trial period. The referee will hold short hearings without lawyers and be able to make decisions to reinstate or award (capped) damages.

Fair Pay Agreements (FPAs):

FPAs will be agreements between businesses within an industry and unions representing workers within that industry. FPAs will set basic standards for base pay and conditions within a particular sector, according to job type and experience.

By setting a floor, Labour’s ambition for FPAs is to prevent a ‘race to the bottom’ where good employers are undercut by bad employers offering low wages and poor conditions. FPAs will cover all employees and workplaces within the relevant industry. It is anticipated FPAs will begin negotiation once a sufficient percentage of employers or employees in an industry call for one.

FPAs are a construct to facilitate negotiations between business and unions around pay and conditions, but do have the potential to put financial pressure on smaller operators within some sectors.

Living wage:

Labor has committed to paying all core public sector employees at least the Living Wage (currently $20.20 ph) and to extend that commitment to contractors over time.

Labour Inspectors:

Labour committed to double the number of Labour Inspectors to 110 at a cost of $9m


Brooke Lord is RCSA's media and government relations officer

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