A number of important changes to our employment laws came into force on 1 April 2011. These changes will affect employment agreements and employment relations between employers and employees before, during and on termination of an employee's employment.
Set out below are some of the key changes to the Employment Relations Act 2000 and the Holidays Act 2003.
Please contact a member of our Employment Law team if you would like us to review and/or update your employment agreements and/or your employment policies to ensure compliance with the updated legislation.
90 Day trial period
From 1 April 2011 the 90 day trial period is extended to all businesses, not just those businesses with fewer than 20 employees. A 90 day trial period is enforceable if the employee has not worked for the employer before and the employer and employee agree to the trial period in writing before the employee begins work.
An employee dismissed during the 90 day period cannot raise a personal grievance on the grounds of unjustified dismissal.
If you are an employer and wish to rely on your ability to dismiss employees during the 90 day trial period without your employees raising a personal grievance on the grounds of unjustified dismissal, it is important you ensure your new employees sign their employment agreement before they begin work. The Employment Court has recently held that if an employee has not signed their employment agreement before they begin work they will not be considered a 'new employee' and the employer cannot seek to rely on the provisions of the Employment Relations Act relating to 90 day trial periods.
If you currently include a 90 day trial period provision in your employment agreements or would like to, you will need to update your employment agreements for new employees. Please contact a member of our Employment Law team if you would like us to assist you with that.
Retention of signed copies of employment contract
Employers must retain signed copies of employment agreements with their employees and provide a copy of the employment agreement to an employee when requested. Employers must also retain copies of intended agreements provided to any new employees.
Previously an employer could only require an employee to provide proof of sickness or injury for an absence of less than three consecutive days if the employer had reasonable grounds to suspect the sick leave taken by the employee was not genuine and agreed to pay the costs to obtain that proof e.g. costs to obtain a medical certificate.
Now an employer has the right to request proof of sickness or injury at any time, including for an absence of less than three consecutive days, provided the employer advises the employee as early as possible that proof is required and pays the costs of obtaining that proof.
Portion of employee's annual leave entitlement paid out
Employees can request their employer pay out up to a maximum of one week of the employee's annual holidays during each entitlement year. The request must be in writing. The employer must advise the employee within a reasonable time whether it agrees to the request. The employer is not required to provide reasons if the employer declines the request.
Alternatively, an employer can adopt a policy that it will not accept requests to pay out annual holidays if it wishes to do so. That policy can apply to all or part of the employer's business.
Transferring Public Holidays
Employers can agree with an employee to transfer a public holiday to a different date provided the employee would otherwise have worked on that public holiday.
Alternatively, an employer can adopt a policy that it will not agree to transfer public holidays if it wishes to do so. That policy can apply to all or part of the employer's business.
We can help you to draft or update employment policies in relation to paying out annual holidays or transferring public holidays.
In determining an employee's eligibility for public holidays, alternative holidays, sick leave and bereavement leave, the employer must consider whether a day would otherwise be a working day for the employee.
If it is unclear whether a day would otherwise be a working day for the employee, the following factors must be taken into account:
The employee's employment agreement;
The employee's work patterns;
Whether the employee works for the employer only when work is available;
The employer's rosters or other similar systems;
The reasonable expectation of the employer and the employee that the employee would work on the day concerned.
In addition, the employer must now also consider whether, but for the day being a public holiday, an alternative holiday, a day on which the employee was on sick leave, or bereavement leave, the employee would have worked on the day concerned.
Avearge Daily Pay
A new calculation, referred to as an employee's ”average daily pay", has been introduced for calculating payment for a public holiday, an alternative holiday, sick leave or bereavement leave. This calculation is intended to apply to those employees who have irregular working hours and pay. It may be used if it is not possible or practicable to determine an employee's relevant daily pay or the employee's daily pay varies within the pay period when the holiday or leave falls.
Average daily pay will apply to those employees instead of the relevant daily pay calculation.
Average daily pay is calculated by dividing the employee's gross earnings for the preceding 52 weeks by the number of whole or part days during which the employee earned those gross earnings including paid holidays or paid leave but excluding days on which the employee did not actually work.
Justification for Dismissal
An employee may bring a personal grievance against their employer or former employer for unjustified dismissal or unjustified disadvantage.
The previous test for determining whether the employer's actions were justified was "whether the employer's actions, and how the employer acted, were what a fair and reasonable employer would have done in all the circumstances at the time the dismissal or action occurred".
The new justification test is "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".
This change recognises that employers may have a number of fair and reasonable courses of action open to them rather than a single one.
The minimum requirements the Employment Relations Authority or Employment Court must take into consideration are:
Whether, having regard to the resources available to the employer, the employer sufficiently investigated the allegations against the employee before dismissing or taking action against the employee; and
Whether the employer raised the concerns that the employer had with the employee before dismissing or taking action against the employee; and
Whether the employer gave the employee a reasonable opportunity to respond to the employer's concerns before dismissing or taking action against the employee; and
Whether the employer genuinely considered the employee's explanation (if any) in relation to the allegations against the employee before dismissing or taking action against the employee.
Many employers believed the previous interpretation of the test by the Employment Relations Authority and Employment Court allowed an employee to succeed in a personal grievance claim on the basis of failures by an employer to follow correct process despite the dismissal or action against the employee being justified. It appears Parliament has taken note of these concerns. The Employment Relations Act now explicitly states that the Employment Relations Authority or Employment Court must not determine a dismissal or an action to be unjustifiable solely because of defects in the process followed by the employer if the defects were minor and did not result in the employee being treated unfairly.
Reinstatement no longer primary remedy
Previously, if it was determined that the employee had a personal grievance and the employee sought reinstatement, the Employment Relations Authority had to provide for reinstatement if practicable.
In practice, reinstatement was often not awarded because the employment relationship between the employer and employee had been irreversibly damaged.
Now, reinstatement is no longer the primary remedy in personal grievance claims for unjustified dismissal, but it will continue to remain an option where it is practicable and reasonable.