Published Human Resources Magazine Autumn 2024

Successful businesses tend to be agile and adapt to changing circumstances. Finding the right solution for the employer is as important as managing the change to resolve the situation.

Failing to manage that change may result in the employment relationship being terminated with the employer facing substantial claims, as the employer found in the recent case of LNF v Department of Corrections in the Employment Relations Authority.

In 2019 Corrections advertised a role with a position description that was dated 2007. The intention was for the role to be split 80% in one team and 20% in another team, and while it required some administrative work in both teams the work was at a more senior level. While it was the intention to explain the position more thoroughly through the interview process, this was not successfully communicated.

Corrections has a complicated organisational structure, which was further complicated with managers and staff being seconded into alternative positions for periods of time. The situation became “messy” within the first few weeks of LNF’s employment. LNF started raising issues with her managers about her role, including where she sat in the team structure. There was additional conflict with a colleague regarding boundaries between their two roles, with the colleague believing that LNF was stepping into her role.

Her manager saw the situation as a personality conflict and suggested that LNF move into his team. LNF was not persuaded that the move would improve the situation. Matters came to a head and there was an altercation between LNF and her colleague. A mediation was proposed, but LNF was not prepared to attend mediation.

LNF was moved into her manager’s team on a full-time basis. Although her manager believed that all the parties were content with the arrangement, LNF continued to have an issue with the lack of clarity she perceived in her role. Her manager tried to define what work LNF had been doing and to find meaningful full-time work for her. He started discussions about “how do we fill in your day” and discussions regarding a job description. LNF started to look for other work at Corrections because she felt like she was still getting caught in the crossfire.

A formal letter was given to LNF offering her a variation of employment with a confirmation of duties. LNF did not agree and contacted her union. Numerous meetings where held with LNF and her representative. LNF received a payrise, the explanation being that there were no performance issues as there was no job description to measure performance against. Mediation was again discussed.

LNF’s managers then considered disestablishing the type of role LNF was employed to do on the basis that the support in the region was more administrative than advisory. LNF was the only employee in that type of role in the region, so LNF was the only employee effected. LNF provided feedback that the current state was that the role she was employed to do did not exist; that she had worked in an undefined role; and that her manager had failed to actively and constructively remedy this for two years. She said that the proposal had been specifically drafted to remove her from the organisation.

After a mediation was attended, LNF was advised that her role was disestablished and Corrections would work with her to explore alternatives. There was no discussion with LNF about redeployment, partly due to there being no agreement about her tasks. Months later LNF received a formal notice of severance.

LNF raised personal grievance claims and argued that Corrections used a restructure process to terminate her employment, following a long-lasting and unresolved employment relationship problem.

The Employment Relations Authority agreed, and found that the redundancy was not genuine and was used to justify the termination of LNF’s employment. LNF was awarded 6 months lost remuneration and $23,000 compensation.

As part of its reasoning it appears that the Authority thought that Corrections could have initiated a formal review of LNF’s role, and the basis of the review findings would have supported Correction’s position. The Authority appears to have significantly downplayed the many discussions that were held with LNF regarding her role and attempts to find her meaningful alternative work.

The decision demonstrates that it is important in change management to clearly understand the issue, identify possible options and engage promptly with staff likely to be effected.   Read more...

Human Resources Magazine

Peter Boshier has been the most recent Chief Ombudsman for New Zealand. His appointment in December 2015 followed a distinguished career as a Judge. In May 2020 he was reappointed for a second five-year term.

Boshier turned 72 last week on 16 March. "The law is that I must resign from office upon reaching the age of 72” he said.

New Zealand’s Constitution Act recognises three branches of government; Parliament, the Executive (Ministers and government departments), and the Judiciary. Each operates independently of the others, commonly called "the separation of powers".

The Chief Ombudsman is one of three officers of Parliament independent from the Executive. The other two are the Parliamentary Commissioner for the Environment, and the Controller and Auditor-General. Neither of those two roles have a mandatory retirement age.

In the Judiciary, judges must retire from full-time judging at the age of 70, although they may be appointed for a further two years on an acting-warrant. It is said that security of tenure (permanent appointment), with a compulsory retirement age, are key protections for judicial independence.

Chief Executives in the Executive branch of government (government departments and crown entities) have no such security or independence. Under our Public Service Act and Crown Entities Act chief executives are appointed for terms of no more than 5 years, although there is the possibility of reappointment. Of course, this is an easy way to remove a Chief Executive who is perceived as being too old to do the job.

For our Members of Parliament there is no mandatory retirement age, although they do need to secure their seat in Parliament for the parliamentary term.

Our current Deputy Prime Minister turns 79 next month and is our oldest person ever to lead a party back to Parliament and into power (as part of a power sharing arrangement). His nearest rival was Labour’s Sir Walter Nash was 75 when he won the 1957 election. After being Prime Minister, Nash did go on to stay on as a Member of Parliament until his death at the age of 86, making him our oldest parliamentarian.

In the United States, President Joe Biden and his predecessor, Donald Trump, are set for an election rematch in November after clinching their respective parties’ nominations.  The contest will be between two candidates that many opinion polls suggest that many voters do not want. At 81, Biden is already the oldest president in US history with Trump being only a few years younger at 77.

Trump is facing 91 felony counts in four criminal cases, involving his handling of classified documents and his attempt to overturn the 2020 election, among other alleged crimes. Biden potentially faced charges over his handling of classified documents. However, the Special Counsel appointed to investigate decided not to bring charges. He cited Biden’s memory lapses in a bombshell report. His report described Biden as a “well-meaning, elderly man with a poor memory”, who “did not remember when he was vice-president” or “even within several years” when his son Beau had died.

For most of us in New Zealand, age is a prohibited ground of discrimination under the Human Rights Act, the Employment Relations Act, the Residential Tenancies Act and the New Zealand Bill of Rights Act.

However, there are a few limited exceptions to this. There may be a particular age or a particular age group that has a genuine occupational qualification for employment. For example, some foreign countries prohibit pilots-in-command aged above 60 years from operating certain aircraft. In this situation, it may be justifiable for an airline to establish a policy which prohibits those over 60 from holding that position.

At the other end of the spectrum, New Zealanders have to be 18 years old to vote for our Parliament. The minimum legal age of marriage is 18 years. However, a person from age 16 can be married with consent from a Family Court judge.

For young workers under the age of 18, the law is fraught with exemptions. School-aged students (under the age of 16) work hours must be outside of school hours and must not be between 10pm and 6am. There is a special exception for the agricultural sector which allows young people doing contract work who are over the age of 12 years to use tractors for agricultural work provided they are fully trained or they live on the property. An under 14-year-old cannot work as a babysitter or nanny without adult supervision because it’s an offence to leave any child under 14 unsupervised. An under 15-year-old cannot work in hazardous worksites such as a logging site or construction site. To join the Defence Force a person must be at least 16 and a half to submit an application and must have turned 18 by the time they graduate from the recruit course.

We may throw comments around such as “70 is the new 50” or “age is just a number” but the reality is that our age may be important. Of course, those age barriers are potentially discriminatory.  Read more....

The Prime Minister’s flip-flop on whether he will continue to claim a $52,000 accommodation allowance for living in the Wellington apartment he owns is important.

Parliament has enacted a safety net of minimum employment entitlements for New Zealanders, such as a minimum wage and entitlements to paid leave such as annual leave, sick leave and parental leave. For good reasons, the power of setting the pay of key public office holders is given to an independent body, the Remuneration Authority, which sets an annual salary for our Prime Minister, Ministers and MPs and certain other roles.

The Prime Minister plays on his background in big business; former CEO roles, business mergers and acquisitions - and so on. He is used to negotiating his own salary and terms and conditions of employment. While there is no doubt that the role of Prime Minister is a huge and difficult job, it comes with a salary of $471,000 plus certain other allowances and benefits. Mr Luxon took a big pay cut when he opted out of the private sector and took on a career of public service.

One of the most popular moves the Ardern lead government made was to freeze the pay of politicians back in 2018. The pay freeze is due to end this year, and a new review by the Remuneration Authority for setting politicians’ pay may mean that MPs get a huge increase to make up for six years of standing still. The outcome of the review may be contentious, particularly as the cost-of-living crisis continues for many New Zealanders.

Chief Executive roles are essentially about providing leadership and strategic direction to an organisation. Leadership is often seen to have an expectation to model behaviours that an organisation strives for. High profile companies and their leaders often face scrutiny by the public and their shareholders.

Mr Luxon’s, successor at Air New Zealand, Greg Foran, offered to reduce his base pay of $1.65 million by approximately 15 per cent ($250,000) at an early stage in the Covid pandemic as he led his team through the huge changes, including voluntary and involuntary redundancies, that were necessary at the time.

Last year, Air New Zealand’s competitor Qantas, experienced shockwaves when it was accused of allegedly selling tickets to flights that had already been cancelled over a three-month period in 2022. Late last year, it’s then CEO Alan Joyce, brought forward his retirement but he is still reported to have been paid over $20 million for his final year.

Fletcher Building Chief Executive Ross Taylor recently announced he was stepping down as he delivered news that the company had made a net loss of $120 million in the first half of its current financial year and downgraded its earnings guidance for the full year. The Board chair Bruce Hassall also resigned.

In the United States, Tesla was taken to task by a shareholder in the State of Delaware where the company is incorporated. In January 2024 the Judge decided to void the pay package that the Board awarded Elon Musk and helped him make the world’s richest person by ordering Tesla to cancel stock options worth about $US50 billion awarded to him as its Chief Executive Officer.

In January 2024 Stats NZ advised that the Consumers Price Index increased 4.7 percent in the 12 months to the December 2023 quarter and that the cost of living for the average New Zealand household increased 7.0 percent in the 12 months to the December 2023 quarter. Yet the new government which sets New Zealander’s employment safety net recently announced that the minimum wage will increase by only 2 percent, from $22.70 to $23.15, from 1 April 2024.

The housing allowance available to MPs is to assist those based outside of Wellington to find accommodation in the capital. Few prime Ministers have claimed it, with Mr Luxon being the first in at least 34 years. He is one of New Zealand’s wealthiest Prime Ministers, he told journalists “It’s an entitlement and I’m well within the rules,”. “I’m entitled to the entitlements that everyone else has.”

Mr Luxon has now said that he will not claim the allowance and will repay the allowance he has already been paid. Under the law, we should all know our rights. That is different from doing what is right. Read more...

While it is early days for New Zealand’s new coalition government, the cost of living crisis is still hurting a lot of working New Zealanders.

The National Party campaigned on tackling the crisis. “Our plan is carefully targeted to ensure that those who will benefit the most are working New Zealanders. It’s about time they got some relief from Labour’s cost-of-living crisis and National will deliver that to them”, Christopher Luxon said.

The minimum wage effects a significant proportion of our workforce and helps to enable many of our most vulnerable working New Zealanders support themselves and their families. Ministry of Business, Innovation and Employment (MBIE) figures show that there were estimated to be just under 80,000 people earning between the current minimum wage of $22.70 and $23 last year.

Last month Stats NZ advised that the Consumers Price Index increased 4.7 percent in the 12 months to the December 2023 quarter and that the cost of living for the average New Zealand household increased 7.0 percent in the 12 months to the December 2023 quarter.

Yet the new government recently announced that the minimum wage will increase by only 2 percent, from $22.70 to $23.15, from 1 April 2024. Workplace Relations and Safety Minister Brooke van Velden said given economic headwinds with a softening labour market and high net migration, a cautious approach was required to raising the minimum wage.

MBIE reviewed a range of scenarios on the wage increase. It recommended an increase of 4 percent to $23.60. It said adopting this increase would be "prudent" because the cost of living crisis was likely to remain an issue and the labour market will be more sensitive to minimum wage increases compared to the past two years, as unemployment looks to be increasing.

But it is understood that in a Cabinet paper that the Workplace Relations and Safety Minister had proposed and recommended that Cabinet only adopt a 1.3 percent increase.

Of course the Labour Workplace Relations and Safety spokesperson Camilla Belich said the "tiny" increase was not enough to help low income earners in a cost of living crisis. "This pathetic increase is beyond disappointing. As the price of goods and services continue to climb, the coalition government has chosen to turn a blind eye to our most vulnerable income-earners by not increasing minimum wage to a level in line with inflation."

Last year the then Labour government increased the minimum wage to $22.70, a boost of 7 percent (in line with inflation last year). The former Prime Minister Chris Hipkins said "I do understand that a number of small businesses will have concerns about this decision, however in a cost of living crisis we can't leave those on the lowest incomes behind".

The Employment Court has said that the Minimum Wage Act “is a statute of fundamental importance in the sphere of employment law in New Zealand. It is a statute that is designed to impose a floor below which employers and employees cannot go. It is directed at preventing the exploitation of workers, and is a statutory recognition of the diminished bargaining power in low paid employment”.

The CTU has argued that “A low minimum wage keeps New Zealand’s general wage levels low and traps many workers and employers in a low-wage low-skill equilibrium. It consequently has negative consequences for productivity, equality, poverty, the gender pay gap and labour participation rates”.

The issue of course is complicated. Increasing low pay is not the same as alleviating poverty. It is not uncommon for parents to work two or more jobs to support their family. Reports of students working up to full-time to help their family are becoming more common. Even workers paid above the minimum wage may face poverty if they need to support a large family, and low-paid workers may live in so called “high-income” households.

What is clear is that our lowest paid workers will continue to go backwards as the cost of living continues to increase. Future minimum wage increases by this government are also likely to fall well short of inflation and the cost of living. There is no sign yet of that relief promised by National in their election campaign.

Where does the pay for our most vulnerable workers cross the line from a minimum level of fair pay into exploitation? Read more...