Employment relations and standards regulatory system

This page describes the regulatory system for employment relations and standards, its objectives and our qualitative assessment of it. It also lists the main statutes and changes to regulation either proposed or in progress.

System description and objectives

System description

The employment relations and employment standards regulatory system aims to promote productive and beneficial employment relationships. As a ‘foundational system’ for New Zealand, it provides the parameters for how the entire labour market operates, and consequently is important for New Zealand’s economy, international reputation and social outcomes.

Elements of the regulatory system (in particular the collective bargaining and minimum standards components) acknowledge conditions can arise in labour markets where asymmetries of power and information can exist between employers and employees. The system also provides for a number of work-related conditions or rights (for example, to leave, pay or pay protection) which New Zealanders expect to be part of an employment relationship. Many of these conditions also fulfil obligations New Zealand has agreed to meet under international labour conventions.

The regulatory system therefore provides:

  • a contracting regime for employers and employees emphasising a duty of good faith
  • a dispute resolution framework encouraging lower-level interventions in the first instance
  • a minimum set of employment standards, and
  • enforcement activity to maintain regulated minimum standards.

Objectives

The objectives of the employment relations and standards system are:

  • Employment rights and standards that:
    • provide minimum requirements and obligations in employment relationships. These minimum requirements satisfy expectations New Zealanders have about the conduct of employment relationships
    • ensure employment relationships are structured in ways that meet labour market outcomes while still enabling other societal benefits, such as cohesion, stability, and well-being.
  • Labour market flexibility enabling employers and workers to enter and leave employment relationships and to agree the terms and conditions to apply in these relationships (subject to minimum requirements).
  • Efficient markets, by addressing market failures such as power and information asymmetries in employment relationships which can lead to the exploitation of workers.

Ministerial portfolio and key statutes

Portfolio Key statutes

Workplace Relations and Safety(external link)

  • Employment Relations Act 2000
  • Equal Pay Act 1972
  • Holidays Act 2003
  • Human Rights Act 1993 (administered by the Ministry of Justice)
  • Minimum Wage Act 1983
  • Parental Leave and Employment Protection Act 1987
  • Remuneration Authority Act 1977
  • Sharemilking Agreements Act 1937
  • Shop Trading Hours Act 1990
  • Trade Unions Act 1908
  • Union Representatives Education Leave Act Repeal Act 1992
  • Volunteers Employment Protection Act 1973
  • Wages Protection Act 1983

Regulatory agencies and their roles

An important role of the system is to resolve problems in employment relationships promptly. Specialised employment relationship procedures and institutions have been established to achieve this. They provide expert problem-solving support, information and assistance.

The employment relations institutions established under employment relations statute are:

  • Mediation Services (established in Part 10 of the Employment Relations Act 2000 (ER Act))
  • the Employment Relations Authority (established in Part 10 of the ER Act)
  • the Employment Court (established in Part 10 of the ER Act)
  • Labour Inspectors (established in Part 11 of the ER Act)
  • the Registrar of Unions (appointed as per section 27 of the ER Act).

The roles of MBIE and the different institutions involved the regulatory system are set out in the table below.

Agency Role

MBIE

MBIE supports the quality of regulation through:

  • policy and advice on employment relations and standards, service design and the general labour market strategy
  • information and education on employment relations matters – further information below
  • dispute resolution services, including by the Employment Mediation Service and the Employment Relations Authority – further information below
  • enforcement of regulation and minimum standards, particularly by the Labour Inspectorate – further information below.

MBIE files applications and receives information in line with the relevant authorising statute (for example, the ER Act), the High Court Rules, and any practice notes that the Employment Relations Authority or Employment Court may issue.

Labour Inspectors(external link)

Determine whether the relevant statutory provisions are being complied with by parties, take all reasonable steps to ensure such compliance, and monitor and enforce compliance with employment standards.

Employment Services Contact Centre(external link) and online services

The Contact Centre provides employment information for employers and employees via phone or email. 

Information to help employers and employees understand their rights and responsibilities is available online via:

Employment Mediation Services(external link)

Provide dispute resolution services to parties in a work-related dispute, which aim to help build productive employment relationships through the promotion of good faith.

Employment Relations Authority(external link)

Helps to resolve employment relationship problems by looking into the facts and making a decision based on the merits of a case.

Employment Court(external link)

Hears and determines cases relating to employment disputes, including challenges to determinations of the Employment Relations Authority, questions of interpretation of law, and disputes over strikes and lockouts.

Human Rights Commission(external link) and

Human Rights Review Tribunal(external link)

The Commission offers a free, informal enquiries and complaints and mediation service to deal with human rights and discrimination cases.

Following a complaint to the Commission, the Tribunal can hear complaints relating to breaches of human rights and privacy in employment, for example, discrimination, sexual harassment, racial harassment and breach of privacy under the Privacy Act 1993.

Registrar of Unions(external link)

Registers unions as required under the ER Act.

Collaboration and information-sharing between regulatory agencies

The Labour Inspectorate and Immigration New Zealand collaborate, co-locating inspectors and co-ordinating operational resources, and share information through a case management system and information products to support regulatory activities across systems.

The Labour Inspectorate also carries out joint work with WorkSafe (being co-located in a number of regions), Inland Revenue Department and various local authorities.

Regulated parties and main stakeholders

Regulation focuses on the relationship between employers and/or firms and employees, as these parties are the key drivers of labour market outcomes. Employers, employees and unions are all regulated parties.

Employer associations, occupational regulators, sector bodies, and unions are key stakeholders.

Processes for engagement with regulated parties and stakeholders

Employers, firms and employees can directly engage with the regulator through the Employment Services Contact Centre(external link) and its social media channels(external link).

Information and educational tools are available to regulated parties to support their compliance with employment rights, obligations and entitlements, including through:

MBIE engages with regulated parties and stakeholders through consultation during the policy process, including working groups, reports, discussion and options papers, and exposure drafts of legislation. Often we work collaboratively with social partners, specifically the Council of Trade Unions and Business New Zealand, through targeted or broader consultation or as part of an established group (eg tripartite group).

System’s fitness for purpose

This assessment was undertaken in mid 2017.

Effectiveness

System has some issues against criteria

The system is, overall, achieving its objectives. There is a need for ongoing monitoring and evaluation to ensure objectives are achieved, balance is achieved between objectives, and regulation is fit-for-purpose.

The Labour Inspectorate continues to find uneven compliance with minimum employment standards. The Inspectorate is using additional powers and funding to ensure it operates as an effective regulator of employment standards, and is working closely with regulators in other systems, particularly immigration, to leverage its effort to best effect.

There are still significant implementation issues to be resolved in relation to holiday pay. Work is also underway to implement changes to pay equity.

Efficiency

System performing well against criteria

We have completed a regulatory system assessment and published a regulatory charter for the system.

Resilience

System performing well against criteria

Technological change, globalisation and other factors are changing business models and working arrangements. Work is in progress to understand how best to ensure the regulatory system keeps pace with this changing nature of work.

Fairness and accountability

System performing well against criteria

Information about the system and tools to support worker and employer engagement are widely disseminated through a variety of channels through our websites, social media, newsletters and stakeholder outreach, business.govt.nz and by key stakeholders – and feedback about the quality of guidance and tools is generally very positive. Contact with key stakeholders is very regular and built into regulatory policy and design processes. The operation of the regulatory system is decentralised, but legislation is generally well understood (the Holidays Act being the notable exception) and Court decisions have set clear precedents for important elements of the system. Important areas for further work include clarity of Holidays Act requirements, increased understanding of rights within vulnerable groups, enhancement of Labour Inspectorate case management, and greater clarity about the role of the Employment Relations Authority.

Proposed regulatory changes

Matter name Policy intent Planned consultation Status

Parental Leave and Employment Protection Amendment Bill

Matter type:
Bill

Increases paid parental leave to 22 weeks from 1 July 2018, with a further increase to 26 weeks from 1 July 2020.

Completed.

Enacted. Further increase comes into effect on 1 July 2020.

Regulatory System (Workforce) Amendment Bill (No 2)

Matter type: Bill

Amendments to the Employment Relations Act 2000, Holidays Act 2003, Remuneration Authority Act 1977, Parental Leave and Employment Protection Act 1987 to clarify:

  • the ability of Labour Inspectors to investigate whether or not workers are employees
  • the Remuneration Authority can set the remuneration of Employment Relations Authority members who are delegated to take over the responsibilities of the Chief of the Authority
  • the maximum penalty for a person involved in an employment breach depends on whether the person is an individual or a body corporate
  • a spouse or partner of a biological mother can become the primary carer of a child in specific cases not already covered in legislation.

Consultation occurred through the select committee process.

Bill being considered by the Education and Workforce Select Committee. Due to be reported back to the House by 21 August 2019.

Equal Pay Amendment Bill

Matter type: Bill

Implements the Joint Working Group and Reconvened Joint Working Group recommendations on a new regime for addressing pay equity claims.

Consultation occurred through the select committee process.

Revised Bill reported back to the House by the Education and Workforce Select Committee. The next step is Third Reading of the Bill.

Screen Sector Workplace Relations

Matter type: Bill

Creating a collective bargaining system for contractors in the screen sector.

Consultation through drafting of the Bill. Further consultation will occur through the select committee process.

Drafting of Bill underway. Legislation expected to be introduced in late 2019.

Employment Relations (Triangular Employment) Amendment Bill

Matter type: Member’s Bill

Ensures people employed by one business, firm or organisation, but working under the control and direction of another, have sufficient ability to make a personal grievance.

Further consultation will occur through the select committee process.

Revised Bill reported the Education and Workforce Select Committee. The next step is Third Reading of the Bill.

Holidays (Bereavement Leave for Miscarriage) Amendment Bill

Matter type: Member’s Bill

Clarifies that the unplanned death of a foetus constitutes grounds for bereavement leave for the mother and her partner or spouse, and that the duration of the bereavement leave should be up to 3 days.

Further consultation will occur through the select committee process.

Introduced.

Minimum Wage Order

Matter type: Regulations

Order in Council to implement any increase in the minimum wage following the statutory annual review.

Indicative increases for the following two years are already publicly confirmed as part of the 2018 review. At a minimum, consultation will occur with key stakeholders.

Not commenced.

Order will be made late 2019 to early 2020.

Holidays Act review

Matter type: To be determined

A review to develop a clear and transparent set of rules for providing entitlements to, and payment for, holidays and leave.

A taskforce of employer, worker and government representatives was formed in 2018 to develop recommendations.

The taskforce will report back in mid-2019. A new regime is likely to be several years away.

Fair Pay Agreements

Matter type: To be determined

Designing and implementing a sector-level bargaining system, in order to establish minimum terms and conditions for all workers in an industry or occupation.

 

A working group composed of academics and social partners was set up and informed the proposed design for the bargaining system. The Government has indicated further engagement is likely.

MBIE is currently working on a detailed policy review of the recommendations and the gaps.

Planned service and operational changes

MBIE’s Employment Services Branch has a number of strategic and operational business improvements underway to continue the work outlined within its five year strategic regulatory plan (Changing the Game). These improvements include:

Sector strategy refresh – reviewing and updating the strategies driving our activity with the 11 sectors of focus.

Dispute Resolution Business Intelligence Project – optimising opportunities for collecting data within the dispute resolution function, enabling trends and broader insights to be gained from interactions.

Services and Channels Programme – implementing new service offerings across the dispute resolution continuum, increasing capability to enable parties to resolve disputes at the earliest opportunity and widen our technological options for mediations, including online services:

  • increasing the reach of, and improving flexibility and access to the Employment Mediation Service
  • supporting clients to resolve their employment disputes at the earliest possible point of contact within MBIE
  • supporting parties to resolve their own employment disputes.

Complete implementation of branch-wide change management and an ISO quality management system.

Optimise data and intelligence available from our new cross-MBIE investigations case management system to support the Labour Inspectorate’s work.

Continue our collaborative working and cross-agency collective impact approach by continuing to increase staff skills through programmes such as the cross-agency Government Regulatory Practice Initiative (G-REG).

Community Agency Approach – aimed to gain a better understanding of the operating environment for the various community groups (such as Citizens Advice, Community Law and Salvation Army) who provide support to those engaging with our regulatory systems (such as employment, immigration, housing and consumer protection). This work will also scope the potential to better support community agencies to deliver services into communities that government cannot service well.

Information Business Approach – exploring whether there is scope to make effective use of real time information on good employment practices and compliance with employment standards, to inform decision making by firms, employees, regulators and consumers.