Employment relations and standards regulatory system

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

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.

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:

• employment.govt.nz(external link) – provides information for employers and employees about their rights and responsibilities
• employment.elearning.ac.nz(external link) – a series of free interactive online learning modules about employment laws targeted to employers, employees, youth and migrants
• business.govt.nz(external link) – provides tips and tools for small businesses, including an employment agreement builder and a workplace policy builder.

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

• Learn more about the fitness-for-purpose assessment and ratings

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.