Employment Relations Act 2000
The New Zealand Employment Relations Act 2000 is a statute of the Parliament of New Zealand. It was substantially amended by the Employment Relations Amendment Act 2001 and by the ERAA 2004.
Preceding statutes
The original statute governing employment relations in New Zealand was the Industrial Conciliation and Arbitration Act 1894. It remained in force for 80 years from 1894 to 1973.In 1973, the Third Labour Government brought in the Industrial Relations Act 1973.
In 1987, the Fourth Labour Government brought in the Labour Relations Act 1987.
In 1991, the Fourth National Government brought in the Employment Contracts Act 1991. It was in force from 15 May 1991 to 2 October 2000 when it was repealed by the Fifth Labour Government and replaced with the ERA 2000.
The ICAA and IRA gave the most power to a government agency to force employers and employees to reach an agreement. The ECA gave the most freedom to employers and employees to reach agreement without government intervention. The LRA, the ERA 2000 and the ERAA 2004 lie in the middle of this spectrum.
Courts and institutions
Each Act established a court or institution to settle industrial disputes.The ICAA had the Court of Arbitration.
The IRA had the Industrial Court and the Industrial Commission which was replaced in 1977 by Arbitration Court.
The LRA had the Labour Court and the Arbitration Commission.
The ECA had the Employment Court and the Employment Tribunal.
The ERA established the Employment Court, the Employment Relations Authority, and the Mediation Service.
Employment Court
The judges of the Employment Court are appointed by the Governor-General on the advice of the Attorney-General. Section 187 of the ERA gives the Employment Court jurisdiction over all matters relating to employment disputes. The Employment Court is a court of record and has equal standing to the High Court of New Zealand.Employment Relations Authority
The members of the Employment Relations Authority are appointed by the Governor-General on the advice of the Minister. Section 157 states that the Employment Relations Authority is an investigative body that examines the facts of the case, as opposed to legal technicalities, in seeking to resolve problems with the parties' employment relationship.Mediation Service
Section 144 established the Mediation Service, which was hosted by the Department of Labour until 2012, when the department ceased to exist and the role was transferred to the Labour Group of the newly formed Ministry of Business, Innovation and Employment. Section 164 says that the parties should have tried to solve their problems before going to the Employment Relations Authority.Coverage of the ERA
Almost all employees in NZ are covered by the ERA. The ERA covers persons who do any work for payment for an employer under a contract of service. Payment may include commissions, piece rates, salaries, or wages. In 2007 the Employment Relations Authority decided that some Ukrainian sailors, who entered into their employment agreements in Russia and were working on a Russian registered ship in NZ waters for a NZ-based charter were entitled to get the NZ minimum wage while in NZ waters.However, the armed forces, judges, the NZ SIS, and to some extent the police are not covered. The ERA specifically includes homeworkers, for example, a person who buys material from a provider to make shirts at home and then sells the shirts back to the provider, and persons intending to work, that is, those who have accepted a job offer but not yet started working. It specifically excludes volunteers.
The ERA does not cover the relationship between principal and contractor or between contractor and sub-contractor. When the nature of the employment relationship is in doubt the Employment Court "must consider all relevant matters" pertaining to the nature of the relationship..
Employee vs independent contractor
Independent contractors are not covered by the ERA. Whether a worker is an independent contractor or an employee can be difficult to determine. In Bryson v Three Foot Six Ltd &, the Employment Relations Authority decided Bryson was a contractor but the Employment Court and the Supreme Court decided he was an employee.The Employment Court may consider the following factors when deciding when a person is an employer or a contractor.
- The intention of the parties, that is, the terminology used in their contract.
- Whether one party is able to exercise control over how the other party does the work and to what degree.
- Whether the worker is free to get another person to do part of the work.
- Which party provides the tools or equipment needed to do the job. Hook v JB's Contractors Ltd.
- Whether the alleged contractor hires their own workers or not. Hook
- Which party is assuming the risk of making a profit or a loss. Hook
- The amount of responsibility for management and investment each party has. Hook
- The way in which taxes are paid. Employers must deduct PAYE and ACC levies from employees' wages.
- The way in which workers are paid.
- Whether the person is GST registered. If they are, they are likely to be a contractor.
- Whether the work the worker does is fundamental to the organisation.
- The way in which the relationship may be terminated.
Duties and obligations of employers and employees
Section 4 states that the parties must deal with each other in good faith. In Telecom South Ltd v Post Office Union the contract of employment was described as "a special relationship under which workers and employers have mutual obligations of confidence, trust and fair dealing." A contract of employment is not the same as a commercial contract as it resembles a fiduciary relationship in some ways. When the ERA was introduced in 2000 the Government's policy statement stated that it is
... based on the understanding that employment is a human relationship involving issues of mutual trust, confidence and fair dealing, and is not simply a contractual, economic exchange. This basis requires specific recognition of the relationship – something not satisfactorily achieved by general contract law.
Duties and obligations of employers
Most of the duties and obligations that fall on employers are not found in the ERA but in other statutes or in common law.To pay the worker
Section 65 of the ERA requires the employer to set out in writing the rate payable to employees. The Minimum Wage Act 1983 sets the minimum wage. The Minimum Wage Act also applies to workers who are being trained, as an Auckland Subway sandwich branch recently discovered when it tried to pay new workers in training $5 an hour. Under the Wages Protection Act 1983 most employers must pay wages in cash unless they have written consent to do otherwise. Employers may only make deductions required or permitted by statute or with the written consent of the employee.To ensure a safe workplace
Under the Health and Safety in Employment Act 1992 the employer has a duty to ensure that the workplace is safe for employees, contractors and visitors.In Williams v Dunedin City Ford the Employment Relations Authority decided that a female worker who had viewed 2 pornographic images at work in three days, and complained about them to her supervisor, had not been provided with a safe and secure workplace "free of avoidable harm", due to the employer's failure to deal with the second pornographic image. The employee was eventually dismissed after being absent from work on long-term sick leave. She was awarded $10,000 for lost salary and $7500 as compensation for distress.
To permit employees to take paid leave
The Holidays Act 2003 gives employees 11 public holidays, 4 weeks of annual leave, 5 sick days, and 3 days bereavement leave. The Parental Leave and Employment Protection Act 1987 gives employees 14 weeks of government funded parental leave. Employees may also take an additional 38 weeks extended leave for child care. There is a presumption that the job will be kept open for the employee taking leave.Not to discriminate against employees
Three pieces of legislation cover discrimination in the workplace.The Equal Pay Act 1972 made different pay rates for men and women doing the same job illegal.
The Human Rights Act 1993 made discrimination on 13 grounds illegal. They are : sex, marital status, religious belief, ethical belief, colour, race, ethnic or national origin, disability, age, political opinion, employment status, family status, or sexual orientation.
Section 103 of the ERA adds 3 more prohibited grounds to the 13 in the Human Rights Act. They are sexual harassment, racial harassment and discrimination due to union activities.
To take responsibility for employees actions
Unless employees are knowingly acting unlawfully or deliberately disobeying instructions employers have a common law duty to honour contracts or promises that employees make on their behalf. Employers also have a duty to indemnify employees for losses and reimburse them for reasonable expenses. In October 2005, an Air New Zealand flight attendant lost a $450 gold tie-pin on a flight. 18 months later, the Employment Relations Authority ordered Air NZ to pay for the tie-pin. Employers are also vicariously liable for damages caused by employees in the course of their employment.To provide written employment agreements
Section 65 of the ERA states that individual employment agreements must be in writing. An employment agreement must contain:- The names of the employer and employee.
- A description of the work to be performed.
- An indication of where the employee will work.
- The working hours.
- The wages or salary.
- A plain-language explanation of the services available for sorting out employment relationship problems.
- Notice of the 90-day time limit to raise a personal grievance.
A good employment agreement should also have clauses covering the term of employment, protection of the employer's confidential information, leave, redundancy, termination of employment, serious misconduct, suspension, and where applicable, clauses covering probationary periods, targets and bonuses, and restraint of trade.