With the formation of the National-ACT-New Zealand First coalition government, significant changes to employment laws are on the horizon. These reforms are set to impact businesses and employees alike, with two key areas drawing particular attention:

1. Repeal of the Fair Pay Agreement (FPA) Regime

The incoming government has announced plans to repeal the Fair Pay Agreement framework. This change will halt unions and employees from initiating or continuing negotiations for FPAs. Industries such as early childhood education, hospitality, commercial cleaning, and supermarkets, which have FPAs in progress, will see those applications paused or terminated.

For businesses, the repeal aims to reduce regulatory burdens and enhance flexibility in setting employment terms. However, employees in industries reliant on FPAs may lose collective bargaining advantages that aimed to ensure fair wages and conditions.

2. Expansion of 90-Day Trial Periods

Currently, only businesses with fewer than 20 employees can include a 90-day trial period in their employment agreements. The new government plans to extend this option to all businesses.

This change gives employers the flexibility to terminate employment within the first 90 days if the role or employee is not a good fit, without facing potential personal grievance claims. However, employers must still comply with several legal obligations:

• Good Faith Obligations: Employers must act fairly and transparently throughout the employment relationship.
• Written Agreements: Trial periods must be explicitly outlined in the employment agreement, signed by both parties before work commences.

For employees, this extension may create some uncertainty, particularly for those moving to new roles. Understanding the terms of any employment agreement is critical before signing.

How These Changes Affect You

Employers should prepare for the new legislation by updating their employment agreements and ensuring compliance with employment law obligations, including good faith requirements. For employees, reviewing employment agreements carefully, especially those including trial periods, is essential to protecting your rights.

Get Expert Employment Law Advice

Whether you are an employer navigating these changes or an employee needing advice on a proposed agreement, Core Legal Wellington is here to help. Our employment law specialists can guide you through the complexities of the evolving legal landscape to ensure your interests are safeguarded. Contact us today for tailored advice and support.