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Employment Law Changes under Labour

Updated: Nov 3, 2020

With the 2020 general election returning the Labour Party with a landslide victory, and enough seats to govern alone for the next three years, what does this mean for employers and the employment landscape?

Wages / Salary

Well first of all, we can expect the minimum wage to increase from 1 April 2021 to $20 an hour. Labour are also looking beyond 2021 to continue to have a balanced approach to minimum wage increases to ensure the lowest paid workers benefit from economic growth. This means employers can expect some continuation of increases to the minimum wage for at least the next three years. This will place some financial burden on those businesses that are struggling to recover from COVID-19 and who find that their economic position is not as positive as the government might be expecting.

The Labour government will also be extending their commitment to the Living Wage by requiring all public service contracted security guards, cleaners, and caterers to be paid a Living Wage. They have also signalled that they will extend this commitment to cover contracted workers to the wider state sector, including DHBs, as COVID recovery allows.

Expect the Labour government to also improve transparency for women ensuring there are better pay records of pay equity across the country, including by ethnicity and age, as well as gender. Labour expect this will enable people to better see where pay equity problems lie and will build on the work they have done to streamline the process for women to negotiate equal pay settlements.

Sick Leave

Labour campaigned on increasing the minimum statutory right to sick leave from five days per year to ten. Expect Labour to implement changes to the Holidays Act 2003 within their first 100 days to increase sick leave to 10 days a year.

Fair Pay Agreements

This was something Labour wanted to introduce in the last term of government, however, was prevented from progressing by NZ First. Now that they have no “hand-brake” on them, expect to see movement of progressing Fair Pay Agreements. These Agreements are stated to make it easier for workers to receive fair wages and conditions and to avoid what Labour calls a ‘race to the bottom.”

Fair Pay Agreements are between Unions and employers and set minimum terms and conditions of employment for all workers in an entire industry or occupation. The key provisions for these Fair Pay Agreements that Labour will introduce include:

  • Agreements that cover both employees and independent contractors

  • Workers would be represented by registered unions during bargaining and only unions would be able to initiate bargaining for the first agreement

  • Concluding an agreement would need over 50% support from workers and over 50% support from employers.

Once agreed, Fair Pay Agreements would cover all employers in the sector but there would be an ability to negotiate regional variations and exemptions of up to 12 months for employers facing severe financial hardship.

Holidays Act 2003

Labour will look to strengthen and simplify the Holidays Act and allow sick leave to be taken when needed. In their first term of government Labour states they will establish a tripartite group of employers, unions, and government to work through how to make the Holidays Act work best in today’s modern work environment and to provide certainty and transparency around leave calculations for both employees and employers.

Expect Labour to allow employees to take sick and annual leave as their leave accrues over time rather than having to wait until they have been employed for six or twelve months. Expect some changes to bereavement and domestic violence leave, allowing employees who are eligible for this leave to be able to take is as it is needed.

Employment Relations Act 2000

Labour will look to make it harder for employers to pass on gains from collective bargaining to non-union employees (in unionised workplaces).

Vulnerable Workers

Labour have stated that they will legislate protections for dependent contractor. This includes allowing dependent contractors to bargaining collectively, requiring them to have written contracts, and introducing good faith dealings between parties.

Labour will also include security officers as a category of vulnerable workers to afford them greater protection when firms undergo restructuring.

Health and Safety

Labour intend to lift the age limit for entry into hazardous work from 15 to 16 to align with the school leaving age.

They will also re-introduce the right of workers in small businesses to be able to elect their own health and safety representatives.

The next three years will see these and potentially other changes to employment legislation that will have an impact on how employers and business owners operate their business and look after their staff.

We will endeavour to keep you informed of these changes as details come to hand.

Photo Credit: Marcus Winkler on

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