National Labour Law Profile: New Zealand
Contributed by Geoff Davenport
Last update, May 2001
General legal framework
New Zealand's legal system is not based on an enacted
legal constitution. Legal rights and obligations in New Zealand
stem primarily from statutes enacted by the New Zealand Parliament
and from the common law developed by the Courts that make up New
Zealand’s judiciary. Statutes applying in various areas of
the law (although not in employment law) are also increasingly
incorporating principles set out in the Treaty of Waiting. This
Treaty was entered into in 1840 by representatives of Great Britain
and a large number of Maori Tribes in New Zealand.
From a constitutional perspective, the most significant statute is
the New Zealand Bill of Rights Act 1990. This Act seeks to affirm,
protect and promote human rights and fundamental freedoms in New
Zealand and to affirm New Zealand's commitment to the International
Covenant on Civil and Political Rights. This Act expressly
recognises a number of fundamental rights including the freedom of
expression, the freedom of association and the freedom of movement.
Web links to the Constitution:
http://www.uni-wuerzburg.de/law/au00000_.html
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Labour legislation
A general overview
New Zealand labour law derives from two sources; statute (Acts of
Parliament) and common law (principles developed by Courts and
Tribunals). There are a series of statutes that make up what is
frequently referred to as the "minimum code". This series of
statutes sets out the minimum entitlements of New Zealand
employees.
Of these statutes, the most important is the Employment Relations
Act 2000, enacted on 2 October 2000 (the "ER Act"). The ER Act
repealed the Employment Contracts Act 1991 (the "ECA"). The ECA
attracted considerable international attention when it was enacted
in 1991 and subsequently, because it adopted a classical
contractual approach to the employment relationship and was based
on the assumption that employers and employees had equal bargaining
power. Although opinion on the value of the ER Act remains divided
in some sectors, the predominant view is that this latest Act
introduces a considerably more orthodox and moderate approach to
labour market regulation.
The ER Act is supplemented by a number of other
statutes that have implications for the employment relationship and
the labour market (see the next section below). Where litigation or
disputes arise between parties to employment relationships, and
those disputes involve the interpretation or application of one or
more of these statutes, the task of interpreting and applying the
statute falls to the Employment Relations Authority, the Employment
Court and the New Zealand Court of Appeal. On matters relating to
labour law, there is no appeal from the New Zealand Court of Appeal
to the Privy Council (unlike in a number of other areas of New
Zealand law).
Although these various statutes establish the minimum
entitlements of New Zealand employees, they do not amount to a
“Labour Code” in the true sense of the concept. There
is considerable scope for courts to apply and develop common law
principles. For the most part, these principles derive from the
British common law.
Collective agreements and individual employment
agreements also record rights of obligations of employers,
employees and their representatives and are enforceable under the
ER Act. Although these documents are binding on the parties
concerned, they do not constitute "law" as such.
Major Sources of Labour Law
The most
important statutes applying to the labour market and to the employment
relationship in New Zealand are:
- The ER Act - this Act enacts a number of core provisions on freedom
of association, recognition and operation of unions, collective
bargaining, collective agreements, individual employment
agreements, employment relations education leave, strikes and
lockouts, personal grievances, disputes, enforcement of employment
agreements, the Mediation Service, the Employment Court, the
Employment Relations Authority and labour inspectors;
- The Bill of Rights Act 1990 - sets out fundamental freedom such
as freedom of association, freedom of peaceful assembly, freedom
of
expression and the like;
- The Holidays Act 1981 - sets out minimum entitlements to three
weeks paid annual holiday; five days special leave (for sickness,
bereavements and the like) for each 12 month period of employment;
and 11 days of public holidays per year;
- Parental Leave and Employment Protection Act 1987 - sets out
entitlements of employees to parental leave (at this stage unpaid,
although there is currently a proposal before the New Zealand
Parliament for the introduction of paid parental leave);
- Minimum Wage Act 1983 - sets out minimum wage rates for employees;
- Privacy Act 1993 - sets out various privacy principles including
those on the collection, use and disclosure of personal
information. Personal information includes information held
about employees;
- The Equal Pay Act 1972 - an Act which seeks to remove and prevent
discrimination, based on the sex of an employee, in the rates
of remuneration paid to employees;
- The Health and Safety in Employment Act 1992 - this Act requires
employers and employees to take steps to maintain a safe work
place;
- The Accident Insurance Act 1998 - this Act sets out the no fault
scheme in New Zealand whereby employees who suffer an injury
at work have an entitlement to compensation from a State funded
insurance scheme. As a result of this scheme, employees are
not able to sue at common law for compensatory damages for such
injuries;
- The Human Rights Act 1993 - this Act expressly prohibits
discrimination on certain stated grounds including sex, race,
family status, political opinion and the like. The ER Act
expressly incorporates these prohibitions into the employment
context.
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Contract of employment
The majority of employees in New Zealand work under
employment agreements of an indeterminate duration, which can be
terminated for just cause. However, fixed term employment
agreements are permissible provided the employer has genuine
reasons based on reasonable grounds for specifying that a
particular employee's employment will come to an end at the
conclusion of a specified term.
Collective employment agreements must include an expiry date, which
provides for a term of no longer than three years. Upon the expiry
of such agreements, the employment of the employees who were
covered by those documents continues on the same terms, albeit on
an individual basis, until such time as a new collective agreement
is agreed to, if at all.
It is also permissible to have part-time, casual, and
apprenticeship employment agreements, and such agreements are
enforceable in the same fashion as employment agreements of an
indeterminate tenure.
There is no provision in New Zealand law for the
suspension of a contract of employment in times of plant closure or
economic downturn. Such cases are dealt with by way of redundancy
termination. Employment agreements can, however, be suspended
during industrial action where, because of strike action taken by
their colleagues, there is no longer work available for particular
employees. Although the employment relationship continues during
periods of such suspension, the employer has no obligation to pay
wages while the suspension remains in force.
Under the ER Act, the termination of any employee must
be for sufficient cause and carried out in a procedurally fair
manner. Where an employee's employment is terminated in a manner
inconsistent with these two requirements, that employee can
commence a personal grievance claim, the remedies for which include
reinstatement, an award of lost wages and benefits, and
compensation for humiliation and distress. Reasons for justifiable
termination include redundancy (where an employee's position of
employment is surplus to the requirements of an employer), poor
performance, serious misconduct, and inability to perform
employment due to continuing illness.
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Hours of work (including overtime compensation)
Hours of work and overtime payments are matters to be
agreed between each employee and their employer. The usual working
week is 40 hours, although there is nothing to prevent employees
and employers agreeing to a great or lesser number of working hours
during the week. In many professions there is no additional payment
for overtime, although in a number of blue-collar sectors,
collective agreements and individual employment agreements
specifically provide for overtime payments. Where employees work
on one of the 11 annual public holidays, and that day is usually a
working day for that employee, then by law the employee is entitled
to a paid day off at a later date.
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Paid leave
The entitlement to a minimum of 3 weeks paid holiday
per year after 12 months continuous employment is set out in the
Holidays Act, as is the entitlement to at least 5 days special
leave for each 12 month period of employment after the first 6
months continuous employment. Special leave can be used for such
matters as illness of the employee, his or her spouse of
dependants, and bereavements.
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Maternity protection; maternity leaves; paternity
leave
The Parental Leave and Employment Protection Act 1987
provides minimum entitlements to unpaid parental leave for both
mothers and fathers in respect of the birth or adoption of a
child. The leave entitlements under the Act are for periods not
exceeding 14 weeks (for maternity leave) 2 weeks (for paternity
leave), a total of 52 weeks (for extended parental leave), and 10
days (special leave, which can be taken by a female employee who is
pregnant, before she takes maternity leave, for reasons connected
with her pregnancy).
The New Zealand Parliament is currently considering a
proposal to introduce paid parental leave. The details of this
proposal are still being finalised by the Government, but early
indications are that the scheme may involve 12 weeks paid leave at
80% of salary.
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Equality
The Equal Pay Act 1972 prohibits any employer from
refusing or omitting to offer or afford any person the same terms
of employment, conditions of work, fringe benefits, and
opportunities for training, promotion and transfer as are made
available for persons of the same or substantially similar
qualifications employed in the same or substantially similar
circumstances on work of that description, by reason of the sex of
that person.
The Human Rights Act 1993 also expressly prohibits
discrimination on various grounds including sex, which includes
pregnancy and childbirth, marital status, religious belief, ethical
belief, colour, race, ethnic or national origins, disability, age,
family status and sexual orientation.
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Minimum wage fixing
Minimum wage rates are set in New Zealand through
Minimum Wage Orders (Regulations brought into force under the
Minimum Wage Act 1983). At present, there are separate minimum
wages for workers between the ages of 16 and 20, and for workers 20
years of age and upwards. Employees aged 20 years and above are
entitled to a minimum gross wage of $302 per week, $7.55 per hour,
or $60.40 a day depending on how they are paid. Employees between
the ages of 16 and 20 years are entitled to $182 per week, $4.55
per hour, or $36.40 per day.
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Trade union regulation
By international standards, the regulation of unions in
New Zealand is not excessive. The Trade Unions Act 1908 sets out
the legal basis for Trade Unions. In addition, various provisions
in the ER Act provide a simple process for registration and
operation of unions. These include sections dealing with:
- the need for a union to file an annual return of members;
- when a society is entitled to be registered as a union;
-
how a society obtains registration; and
- the circumstances in which a union's registration can be cancelled.
Perhaps the most notable feature of these provisions is
the requirement that in order to be registered as a union, a
society must be independent of, and constituted and operated at
arm's length from any employer.
Unions can represent their members' collective
interests and their individual interests. The minimum number of
members required to form a union is 15.
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Collective bargaining and agreements
In contrast to the ECA, a primary objective of the ER
Act is to encourage collective bargaining. Indeed, section 3 of the
ER Act states that 1 of the 2 objectives of the ER Act is to
encourage compliance with ILO Conventions 87 and 98.
Collective bargaining can occur at any level within the
labour market, including nationally, and at the level of industry,
multi-employer, specific enterprise and enterprise. A collective
agreement can, by law, bind as few as two employees.
The ER Act enacts for the first time in New Zealand a
statutory duty to bargain in good faith. This duty applies to
unions and employers bargaining for a collective agreement.
Collective bargaining commences by the issuing of an initiating
notice by either a union(s) or an employer(s). Although the duty to
bargain in good faith sets out certain minimum requirements (such
as the obligation to meet and consider and respond to proposals
made by each party) the duty does not compel agreement on any
particular term or the ultimate settlement of a collective
agreement.
There is no provision for arbitration to deal with
instances where parties are unable to settle a collective
agreement, although mediation services are available. Both
employers and employees are entitled to engage in economic
sanctions (strikes and lockouts) to support their bargaining
claims.
Collective agreements may contain any matter agreed to
by the parties, provided it is not contrary to law or the ER Act.
Collective agreements must contain certain minimum provisions
including:
- a coverage clause;
- a clause dealing with the rights and obligations of employees if
their work were to be contracted out or if part of the business of
the employer were to be transferred or sold;
- a plain language explanation of the services available for
resolving employment relationship problems;
- a variation clause; and
- an expiry date.
Where a new employee commences employment in a work
place and a current collective agreement exists in the workplace
that covers the type of work that employee will perform, the
employee's terms and conditions for the first 30 days of their
employment shall automatically be those set out in the collective
agreement. At any time during the 30 days or thereafter, the
employee has the right to join the union, which negotiated the
collective agreement, and upon doing so the employee becomes bound
by the collective agreement. Where there is no applicable agreement
in the work place, or the employee chooses not to join the union
that negotiated that agreement, the employee's terms and conditions
will be those set out in an individual employment agreement entered
into by the employer and the employee.
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Strikes and lockout regulation
Strikes and lockouts are unlawful during the tenure of
a collective agreement (except in certain circumstances, such as
where the strike or lockout relates to health or safety or it
occurs in the last few weeks of a document's term in support of new
collective bargaining).
Where employees who work in an essential service wish
to strike and that strike will affect the public interest, a
prescribed period of notice must be provided to the employer and
the Chief Executive of the Department of Labour. Under the ER Act,
mediation services are to be made available to parties in essential
services before they strike so as to enable the parties to
endeavour to mediate their differences and avoid industrial action.
Lawfully striking employees cannot be lawfully dismissed, nor can
they be discriminated against by reason of the strike.
Under the ER Act, it is lawful for an employer to ask
staff members to perform the tasks of their striking or locked out
employees, provided the employees asked to perform the work in
question:
- were already employed at the time the strike or lock-out commenced;
- are not employed principally for the purpose of performing the work
of a striking or locked out employee; and
- agree to perform the work in question.
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The mediation service, the employment relations authority and
the employment court
The ER Act places a heavy emphasis on mediation.
Wherever an employment relationship problem arises the parties are
encouraged to attempt to resolve it through discussions amongst
themselves. An employment relationship problem can be anything,
which causes a problem in the employment relationship such as a
personal grievance, a dispute about the operation of an employment
agreement or claim of breach of a statutory entitlement. If parties
are unable to resolve the problem themselves, either party can seek
the assistance of a mediator from the Department of Labour.
If mediation is also unsuccessful in resolving the
problem, either party can ask for a determination (a decision) from
the Employment Relations Authority. The Authority has wide powers
to grant remedies and to determine the merits of a particular
problem. If either party is dissatisfied with the decision of the
Authority, it may ask to have the matter heard afresh by the
Employment Court. In limited cases, there is then a right of appeal
from the Employment Court to the Court of Appeal.
Disputes between unions and employers in the context of
collective bargaining or collective agreements are dealt with in
the same fashion and in the same institutions as described in the
previous paragraph.
In certain types of disputes, the Employment Court
rather than the Employment Relations Authority has jurisdiction in
the first instance to decide the claim. This includes applications
for injunctions to prevent a threatened strike or lockout.
Links
Official gazette
New Zealand Gazette. No. 1 (1 Jan 1859)-present; Wellington,
Published for the New Zealand Government at the Printer's Office,
1859-present.
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Selected publications
G. R. Barker: An Economic Analysis of Trade Unions and
the Common Law. Aldershot, Avebury, 1997.
Butterworths Employment Law Guide. 3rd ed., Wellington,
Butterworths, 1997.
P. Churchman, W. Grills (seminar leaders): Employment
Contracts Act Revisited. New Zealand Law Society
Seminar, Wellington, New Zealand Law Society, 1992.
A.J. Geare: Industrial Relations: A General Introduction
and the New Zealand System. 3rd ed., Dunedin, Firre, 1995.
G. Davenport: The legal obligation to bargain in good faith
in the New Zealand labour market : rhetoric or reality? New Zealand
Journal of Industrial Relations. Vol. 24, No. 1 (Feb. 1999).
M. McDowell, D. Webb: The New Zealand Legal System:
Structures, Processes and Legal Theory. 2nd ed., Wellington,
Butterworths, 1998.
R. Harbridge and A. Crawford: The effects of the Employment
Contract Act on representation and collective bargaining in the
thoroughbred racing industry in New Zealand. New Zealand Journal of
Industrial Relations. Vol. 25, No. 1 (Feb. 2000).
P. S. Morrisson (ed.): Labour, Employment and Work in New
Zealand (Conference Proceedings) Victoria University,
Wellington, 1994.
R. D. Mulholland: Introduction to the New Zealand Legal
System. 8th ed., Wellington, Butterworths, 1998.
New Zealand Recent Law Review. Auckland,
Butterworths, Vol. 1 no. 1 (Feb 1975) – present.
The Next Decade of Change. New Zealand Business Roundtable,
Wellington, 1994.
D. R. Nolan (ed.): The Australasian Labour Law Reforms:
Australia and New Zealand at the End of the Twentieth Century.
Sydney, Federation Press, 1998.
J. B. O'Keefe, W. L. Farrands: Introduction to New
Zealand Law. Wellington, Butterworths, 1980.
T. H. Reynolds, A. A. Flores: Foreign Law: Current
Sources of Codes and Legislation in Jurisdictions of the World.
AALL Publishing Services, Littleton Colorado, Rothman
&Co., Release 1/98.
J. L. Robson (ed.): New Zealand: the Development of its
Laws and Constitution 2nd ed. London, Stevens, 1967.
P. Spiller: A New Zealand Legal History.
Wellington, Brooker's, 1995.
K. Toogood, P. Muir (seminar leaders):Employment
Contracts Bill. New Zealand Law Society Seminar, Wellington,
New Zealand Law Society, 1991.
R. Wilson: The decade of non-compliance; the New Zealand
government record of non-compliance with international labour
standards 1990-98. New Zealand Journal of Industrial Relations.
Vol. 25, No. 1 (Feb. 2000).
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