The Employment Relations Amendment Bill (No 2) 2010 (196-1) was introduced on 16 August 2010 and was scheduled to have its first reading on 17 August 2010. The Bill gives form to the employment law reform proposals heralded by Prime Minister John Key at the National Party Conference a few weeks ago. The Bill is to go to the Transport and Industrial Relations Committee. With one exception (see "Employer to keep signed copy of agreement" below), its provisions are intended to take effect from 1 April 2011.

Trial periods

The Bill proposes that firms with 20 or more employees have the ability to agree to trial periods of 90 days or less with new employees. This opportunity has been available to smaller operations for a while.

Amending test of justification

The test of justification of an employer's actions is to be amended, essentially by substituting the word "would" with "could" so that the question in s 103A is whether the actions of the employer were what a fair and reasonable employer could have done in all the circumstances at the time the dismissal or other action occurred. Explanatory notes to the Bill state that the change is to recognise that there may be a range of fair and reasonable responses to a situation, and to ensure that minor or technical defects do not mean that an action that is substantially justified can be found to be unjustified. The Bill supplies a non-exhaustive list of matters the Employment Relations Authority or the Employment Court must consider when applying the test:

• whether having regard to the resources available the employer sufficiently investigated the allegations

• whether the employer had raised the concerns with the employee

• whether the employer had given the employee a reasonable opportunity to respond to those concerns, and

• whether the employer genuinely considered the employee's explanation (if any), before dismissing or taking action against the employee.

It is expressly stated that the Authority or the Court cannot determine a dismissal or action to be unjustified solely because of a minor or technical defect in the process which "did not result in the probability that the employee was treated unfairly."

Reinstatement

While retained as a remedy where practicable and reasonable, reinstatement is removed as the primary remedy under the Employment Relations Act 2000 (the Act).

The Authority and the Employment Court

The Authority is to have the power to award monetary penalties against persons who obstruct or delay an investigation, including failing to attend as a party before an Authority investigation.

Ex parte freezing orders and search orders are to be the province of the Court and not that of the Authority.

The Chief of the Authority is to have powers to issue instructions to Members regarding the process and conduct of matters before the Authority.

There is to be a statutory right to cross-examine in the Authority, an opportunity currently at the discretion of the Authority member.

The Authority is to be able to remove matters to the Court at its own instigation. It will also be able to dismiss frivolous or vexatious claims without fully investigating them. The Authority is to have the power to treat as withdrawn cases that have been inactive for three years.

The Court is to be able to address applications for pre-proceeding discovery even when it is not the originating body.

Union access

As interpreted by the courts, the Act currently gives almost unfettered access to workplaces by unions. A change would make this conditional on the consent of the employer, but such consent could not be unreasonably withheld. A penalty action can result where an employer denies consent but does not provide reasons in writing.

Communications with employees during collective bargaining

Amendments are proposed that would clarify an employer's right to communicate directly with employees while bargaining is underway, provided the employer communicates in a way consistent with the duty of good faith.

Employer to keep signed copy of agreement

A new provision would require employers to retain a copy of an employee's individual employment agreement or the current terms and conditions of employment that make up the employee's individual terms and conditions. The obligation also extends to an intended agreement under s 63A(2)(a) of the Act. A Labour Inspector may bring an action for a penalty for non-compliance with the provision, though first he or she must give the employer written notice of the breach and allow seven days for it to be rectified. This provision is intended to take effect from 1 July 2011.

Mediators and settlements

At the behest of parties, mediators and the Authority will be able to make recommendations in relation to a matter with a view to assisting those parties to reach settlement. This would not limit their options if they did not accept the recommendations, but if accepted the recommendations would become final and binding.

Clarification that mediation services include early problem resolution and that this may occur without legal representation and at the request of the parties has been included in the Bill.

It has been clarified that minimum entitlements cannot be negotiated away at mediation.

Minors aged 16 years and over are to be able to sign final and binding terms of settlement in line with the Act's current recognition of the competency of minors to participate fully in employment relationship matters.

Clarification has been made as to the situations in which mediation may be an impractical or inappropriate step. However, changes are included that would encourage parties to use mediation. The Authority will be able to give priority to cases in which mediation has been attempted, subject to recognition of the fact that it is not always viable.

The Bill requires the Authority to actively consider whether it is appropriate to direct demand notices that relate to minimum entitlements to mediation before taking such action. (Penalty interest will provide an incentive for employers to adhere to demand notices.)

Greater powers for Labour Inspectors

A widening of the role of Labour Inspectors is designed to extend it from a narrow complaints focus to a more proactive approach to achieving compliance. As well as the measures described elsewhere in this summary, the Bill specifies the functions performed by the inspectors and seeks to clarify the role as being one of managing complaints as well as supporting businesses to achieve compliant practices and systems.

In the future, Labour Inspectors will be able to negotiate an outcome of compliance with employers who are in breach of the minimum code and enforce undertakings given. Breach of such written undertakings would be enforced through the Authority or the Court.

The Bill would also grant Labour Inspectors powers (akin to those possessed by health and safety inspectors) to issue statutory improvement notices which would create an incentive for employers to achieve compliance with the Act.

Penalties

Penalties for non-compliance with the Act have been doubled. They are now a maximum of $10,000 for individuals and $20,000 for corporates.

(SOURCE: CCH, retrieved 17th August 2010)