Essential HR

Changes we should expect to see from the new GovernmentNew Blog Post

Wednesday 11th November 2020

As the new Labour lead Government gets to work, there are a number of significant changes we should be expecting and preparing for in the business sector.

I have given some thought to some of the more immediate ones, with some guidance on how they might impact you, along with information on the Government support for small businesses.

In this update:

-          Small business support from government

-          Increase in the number of sick leave days

-          Minimum wage increase (April 2021)

-          Dependent Contractors - issues

-          Pay Equity record keeping

 

Small business support from government

The Prime Minister announced that the Labour Government’s top economic priority, before Christmas, is small business support.

This includes:

i.    Extending the Small Business Loan scheme to three years (you need to apply before Christmas) with an interest free period of two years.

For more information on the loan scheme, or for information on how to apply, refer to https://www.ird.govt.nz/covid-19/business-and-organisations/small-business-cash-flow-loan

 ii.   Initiating the roll out of the Flexi-Wage job support programme.

This is designed to enable those who are facing long term unemployment due to Covid-19 to get into paid employment. The scheme supports businesses to be able to afford to take on new employees and re-train them as needed. Refer to the following website https://www.workandincome.govt.nz/employers/subsidies-training-and-other-help/flexi-wage.html#null

 iii.    More infrastructure projects will go through the RMA fast-track process and there will be a focus on boosting export options.

 

Increase in sick leave entitlement

We can expect to see sick leave entitlements increase from a minimum of 5 days to a minimum of 10 days per year by the New Year. Employees are likely to be able to take this leave as it accrues, rather than having to wait 6 months.

On a practical note, you should start budgeting for this change now. You can envisage an increase of 2% in labour costs where you provide cover.

Two systemic things you need to ensure:

a)       You and your managers are confident in your processes around staff taking sick leave and have a clear process for managing staff who show undesirable patterns of sick leave.

b)      Consider all part-timer contracts as sick leave entitlement is in days, not weeks. Ideally you should seek to spread part-time work across as many days a week as possible (for example: someone just working Saturdays will become entitled to 10 weeks’ sick leave per annum!!)

 

Minimum wage increase

It is almost guaranteed that, in April 2021, minimum wage will increase to $20 per hour.

Again, I encourage you to plan and budget for this now. There will also be a flow on effect and a possible need for wage increases for those who are earning just above the minimum wage now. A clear planned budget will help to minimise the implications of these increases when they do come into effect.

Minimum wage increases are designed to narrow the gap, so percentage increases shouldn’t be duplicated up the line.

 

Dependent Contractors issues

The government have indicated a commitment to increasing protection for vulnerable workers (For example: by including Security Guards) and this commitment is extending to protecting those who work as contractors.

As you plan ahead you need to be very aware that “Dependent Contractors” could become as protected as employees.

“Dependent Contractors” are loosely described as contractors who are effectively controlled by the employer and usually depend on one company for most of their income. They also, generally, do not have the same flexibility or control of work as independent contractors or sub-contractors.

If you use anyone who fits this definition, you should strategically consider how you use them before the law traps you. We can help advise on this.

 

Pay Equity record keeping

The Government is committed to improving transparency to aid the Pay Equity process by ensuring better payroll records are kept. This is likely to mean that employers are required to hold thorough employee records that document the employees’ gender, ethnicity, and age in relation to their pay. Please check your payroll system has this data.

 

Others

Watch this space as we prepare for action on the Holidays Act; Fair Pay Agreements and changes to Health and Safety requirements.

 

Essential HR are here to help.  For ongoing help, contact Mike on 027 2808546 or mike@essentialhr.co.nz and Beccy on beccy@essentialhr.co.nz or 027 2909070 – and if you phone our landline 03 6590377 you can leave a message that gets delivered to us automatically.  Please bear with us if you can’t get straight through – we are getting many calls!  I’m happy for you to pass this on to others.

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