Pro Legal

Expanding your business? Proceed carefully …

It’s great to see Hawke’s Bay’s economy steaming ahead and to notice lots of positive signs that our business environment is thriving.As your business improves and demand increases you may be thinking about expanding by hiring new staff.

Before you start making offers however there have been a number of changes to employment law recently that you need to be aware of.

Change to 90 day trial period

The most important change if you’re thinking of new hires is to the 90 day trial period. From 6 May 2019 businesses that have 20 or more employees are no longer able to include a 90 day trial period in their employment agreements.

This means that if you are a larger business and employ 20 or more employees then you will no longer have a “get out of jail free card” for dismissing new employees that aren’t working out. You will need to revisit your employment agreements to remove trial period provisions. I recommend that you include comprehensive probationary period provisions instead – these would still allow you to dismiss an employee at the end of a probationary period provided that you follow a fair process and have a fair reason for dismissal. Unlike the 90 day trial period provisions however your employee will be entitled to bring a personal grievance if you haven’t followed due process.

If your number of employees fluctuates around the 20 mark then you will need to ensure that you are aware of exactly how many employees you have as at the date an employment contract including trial provisions is signed. If the business employs 20 or more employees at that date then you will not be able to utilise the trial period provisions if you later decide it is necessary to dismiss your new employee.

Smaller business can still use trial periods
Smaller businesses with less than 20 employees can continue to use trial periods, but you should be aware that any flaw in either the wording of the provision or in the way the contract was signed will mean that you can’t rely on the trial period when dismissing an employee. For a trial provision to be valid the employee must have had a chance to review and seek advice regarding their employment agreement before signing it, and the agreement must be signed prior to the first day of employment.

Be careful if you’re considering dismissal of an employee
I recommend that any employer considering terminating a worker’s employment using a 90 day trial provision, or in fact dismissing an employee for any reason, seek legal advice before doing so, as you may not be entitled to do so if you have not followed the right process, no matter how obvious it might seem to you that a dismissal is justified. Mistakes in process can be costly, so it is better to make sure you get it right.

Other changes to employment law

Along with the changes to the trial period there have also been a raft of other changes introduced, some of which took effect from December 2018, and the rest of which will be effective from 6 May 2019. These include changes to union access and collective bargaining processes and a greater emphasis on reinstatement if employees have been unfairly dismissed. The protections around restructuring for vulnerable workers have been expanded so that employers with less than 20 employees are no longer exempt.

Rest and meal breaks

Another change is to employees’ rights to set rest and meal breaks. Currently employees are simply entitled to ‘reasonable breaks’ and there are no specific rules for when or how long such breaks should be. The new law sets out the number and duration of breaks which employees are entitled to in relation to how many hours they have worked. This is actually a roll back to the pre-2015 position so many employers and employees won’t notice a significant difference if they hadn’t made any changes to breaks since then. I recommend that employment agreements include specific rest and meal break times that suit your business, as if this isn’t agreed then the default timing for breaks will apply.

Review your employment agreements
The changes I’ve mentioned are not an exhaustive list of the amendments to the Employment Relations Act. This article is only intended to give a general overview and alert you to the fact there have been changes. I recommend that all employers regularly review their employment agreements and better yet that you seek legal advice to make sure that your agreements are fit for purpose and fully comply with current legislation.

 

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