Practice made personal
Posted by De Novo Legal - last updated 31 January 2024
When seeking guidance from Australia on New Zealand employment issues, it helps to understand the local terminology and key differences between the two systems - if only to know where to start looking for answers.
We've prepared this guide to point you towards some of the key day to day differences between the two jurisdictions that (in our experience) crop up most commonly, to help Australian practitioners navigate their way through the New Zealand employment law system. It goes without saying that we've kept it brief - specific advice should always be sourced for your specific situation.
New Zealand employment law is developing at a fast pace. Take this dictionary as a point-in-time guide, and be sure to check back for updates.
Agreements and Awards
Under Australia's workplace relations system, employees’ terms of employment are generally governed by:
Other minimum legal entitlements also apply, including those in the National Employment Standards.
In New Zealand, employees’ terms of employment are generally governed by either:
Legislative minimum entitlements also apply.
New Zealand does not operate under an Award system like Australia. In late 2022, a new "Fair Pay Agreement" scheme was introduced, permitting NZ Unions with sufficient representation within an industry or occupation to initiate bargaining for industry or occupation-wide agreements setting minimum terms of employment. This represented a significant change for New Zealand's labour relations system, however it was later repealed in 2023 following a change in Government.
Compliance and enforcement
In Australia the Fair Work Ombudsman monitors compliance and enforcement of minimum employment standards.
New Zealand's nearest equivalent is the Ministry of Business, Innovation and Employment's Labour Inspectorate.
Dispute resolution
In Australia, the Fair Work Commission is the first port of call for most employment disputes.
In New Zealand, the Employment Relations Authority is our nearest equivalent. Mediation typically occurs as a first step, facilitated by the Ministry of Business, Innovation and Employment's Mediation Service.
Family and domestic violence leave
As of 1 February 2023, amendments to the Fair Work Act introduced paid family and domestic violence leave (10 days per 12 month period) for full-time, casual and part-time employees dealing with family and domestic violence, in the case of Australian businesses with 15 or more employees. Employees may use the full 10 days’ entitlement at any time from the commencement of employment, although unused leave does not accumulate from year to year. Previously, the Fair Work Act only provided employees with 5 days’ unpaid family and domestic violence leave per year.
Employees of small Australian business employers (those with fewer than 15 employees) have access to the new paid entitlement as of 1 August 2023. Until then, they continue to have access to the previous unpaid entitlement.
NZ is ahead of the curve on this entitlement, and has made paid family violence leave available to all employees as of 2019 (10 days per 12 month period), although paid leave is only available once an employee has completed six months’ employment (or worked a minimum number of hours over a six month period). Similar to Australia, in NZ unused family violence leave does not accumulate from year to year.
High income threshold
In Australia, applications for unfair dismissal cannot be raised by employees whose earnings exceed a certain high income threshold.
In New Zealand, a personal grievance for unjustified dismissal can be raised by an employee regardless of income level. See our recent article discussing the implications of this for New Zealand employers.
Legislation
The Fair Work Act 2009 (Cth) underpins Australian employment law. Among other legislation, State-based work health and safety laws also apply (such as The Work Health and Safety Act 2011 (NSW)).
Key New Zealand employment legislation includes:
Long service leave
In Australia, State and Territory legislation provides employees with minimum entitlements to long service leave.
In New Zealand, there is no statutory entitlement to long service leave. An employee will only be entitled to long service leave if it is included in their terms of employment.
Minimum employment periods
Under Australian legislation, new employees are generally required to serve a statutory minimum employment period before they can bring a claim for unfair dismissal (either 6 or 12 months, depending on the employer’s size).
In New Zealand, there is no statutory minimum employment period that an employee must serve before they may bring an unjustified dismissal claim. See our recent article discussing the implications of this for New Zealand employers.
However, New Zealand employers may use contractual trial periods of up to 90 days which, if valid, will limit an employee’s right to bring a personal grievance if notice of termination is provided during the trial period. Strict requirements must be met to ensure the contractual trial period provision is valid. Prior to December 2023, only small New Zealand businesses (employers with fewer than 20 employees) were permitted to use contractual trial periods. Following a change in Government in late 2023, all NZ employers are now permitted to use trial periods.
Notice periods for termination of employment
In Australia, the Fair Work Act prescribes a minimum notice period for termination of an employee's employment.
In New Zealand, an employee's notice period for termination will be determined by whatever is agreed in their terms of employment - there is no minimum notice period prescribed in New Zealand legislation.
Redundancy compensation
In Australia, the Fair Work Act prescribes minimum redundancy pay for employees whose employment terminates on grounds of redundancy.
In New Zealand, an employee's redundancy pay is determined by whatever is agreed in their terms of employment - there is no minimum redundancy pay prescribed in New Zealand legislation.
In 2022 the NZ Government floated the concept of an income insurance scheme intended to support workers with up to 80% of their income for up to seven months in the event of redundancy. The intention was for the proposed scheme to be funded by levies on wages and salaries, with both workers and employers contributing. The scheme was put on hold indefinitely in 2023, pending a "significant improvement" in NZ's economy.
Sexual harassment and Respect@Work laws
In 2022, new Australian legislation came into effect reinforcing existing workplace health and safety laws by introducing a positive obligation on Australian employers to take reasonable and proportionate measures to eliminate, as far as possible, sexual harassment, sex-based harassment and discrimination, hostile work environments and victimisation, whether it occurs at the hands of workers, agents or third parties such as customers or clients. While other obligations were also introduced by the new laws, one of the main objectives behind the new positive obligation is to clearly place the onus on employers to take proactive measures to protect workers and stamp out systemic issues in the workplace.
In NZ there is some overlap with Australian law – legal action may be taken against an employer who has engaged in or failed to take practicable steps to prevent sexual harassment from occurring, and other laws exist to protect employees from bullying, victimisation and unlawful discrimination. NZ law requires employers, so far as reasonably practicable, to provide a healthy and safe working environment, including by eliminating risks to workers or, if a risk can’t be eliminated, by minimising risks so far as is reasonably practicable. It goes without saying that a healthy and safe workplace will be one that is free from sexual harassment.
NZ law does not (yet) go as far as exactly replicating the positive elimination obligation introduced by the Respect@Work laws. However, in practical terms, taking positive elimination measures in NZ will go a long way to reducing the risk of infringing NZ laws. For this reason, a Trans-Tasman businesses updating its Australian policies following the introduction of the new Respect@Work laws should consider the merits of rolling the same changes across the ditch to their NZ operations.
As of 23 June 2023, the time period within which an employee in NZ may raise a personal grievance for sexual harassment increased from 90 days to 12 months, starting from the date the sexual harassment occurred or came to the employee’s notice. NZ employers should update their standard employment agreements to reflect this change.
Superannuation
Australia operates a compulsory superannuation savings system, with employers required to contribute a minimum per cent of an eligible employee's earnings into their superannuation fund (currently 10.5% of the employee's ordinary time earnings).
KiwiSaver is New Zealand's national superannuation savings regime, which is a voluntary scheme. While joining KiwiSaver is not compulsory for employees, there is an obligation for New Zealand employers to check new employees' eligibility and automatically enrol them in KiwiSaver if they are eligible for membership (if the employee does not wish to participate in KiwiSaver, they may opt out).
If an employee is a KiwiSaver member, their employer must contribute a minimum of 3% of the employee's before-tax salary from the age of 18 up until the employee is eligible to make retirement withdrawals. Employees who are KiwiSaver members must also contribute to KiwiSaver from their salary or wages (at the rate of either 3%, 4%, 6%, 8% or 10% of their before tax pay).
Employers may also provide access to other (non-KiwiSaver) superannuation schemes.
Time limits for dismissal-related claims
In Australia, unfair dismissal claims must be lodged by an employee with the Fair Work Commission within 21 calendar days after the dismissal took effect.
In New Zealand, personal grievances must generally be raised by the employee within the period of 90 calendar days beginning with the date on which the action alleged to amount to a personal grievance occurred or came to the notice of the employee, whichever is the later.
Importantly, as of 23 June 2023, the time period within which an employee in NZ may raise a personal grievance for sexual harassment increased from 90 days to 12 months, starting from the date the sexual harassment occurred or came to the employee’s notice. This is not limited to circumstances where the employee has been dismissed - a personal grievance for sexual harassment may be raised during or after the termination of employment.
Workers' compensation
In Australia, each State and Territory has its own workers' compensation scheme and a regulator that oversees it.
New Zealand's compensation scheme is commonly referred to as "ACC", and is administered by the Accident Compensation Corporation, a New Zealand Crown entity. The Accident Compensation Corporation provides accident insurance cover for both work and non-work injuries, on a "no fault" basis, meaning coverage doesn't depend on who was at fault in causing the injury.
The ACC scheme is funded in large part by levies, with all New Zealand businesses required to pay levies to the the Accident Compensation Corporation (quantum dependent on the nature of the business, overall wage liability and claims history), and to deduct an ACC levy from their employees' wages.
