As we are nearing the busiest time of the year for New Zealand retailers, it is timely to reflect on the changes to New Zealand employment law that will be affecting retailers and their employees, and the challenges ahead. Laura Scampion, Partner, Melissa Johnston, Special Counsel, Julia MacGibbon, Senior Associate, Nick Valentine, Special Counsel and Jordan Jeffcoat, Solicitor from DLA Piper provide all the key developments and challenges New Zealand retailers need to know.
Has there been a change to the minimum wage and how have retailers responded?
The minimum adult wage is now $17.70 per hour. The Government has indicated it will increase again in 2019 to $18.90 and from 1 April 2021 to $20.
Many big retailers have started paying their staff the living wage. Currently, the living wage stands at $21.15.
In July this year, approximately 800 retail employees protested at St Lukes shopping mall for the living wage. Kmart, Bunnings, and H&M are three larger employers who have all committed to paying their staff the living wage, and the Employment Relations Authority has gone so far as to impose the living wage on Mitre 10 in Mosgiel and Dunedin in its collective employment agreement.
How has the market changed for retailers in the past 12 months?
It is a difficult and disruptive market for retailers. The Financial times (FT) recently reported that 60,000 retail jobs had been lost in the last year in the UK. This is linked to the increase of online shopping, increased automation, falling consumer confidence, higher costs and excess physical space. It was also reported that retail jobs have moved to hospitality and service sectors as has consumer spending. There has also been an increase in the number of employees in warehouse distribution centres, and presumably those that support the online retailers. It was noted that most of those roles have gone to males, but the majority of sales and customer service roles were held by females. According to the FT, there are no statistics showing where those female retail employees have been re-employed. The level of disruption does not appear to have reached New Zealand yet.
Recently the Massey University Retail survey reported although online sales are increasing, customers and retailers still value bricks and mortar. The larger issues for retailers are staff shortages and the arrival of large global retailers. The greatest challenges in the next 12 months were identified as international competition, seasonal demand fluctuations; the weak New Zealand dollar; increased business costs; competing with larger franchise stores; government policies; and recruiting quality employees and retention.
Could you tell me about the developments in regards to the 90-day trial period?
In May, we saw the end of trial periods for employers with 20 or more employees. Trial periods have been useful tools for retailers, providing the opportunity to ‘try out’ staff, and see if they are suitable for the job.
Retailers with 20 or more employees may now instead wish to implement probationary periods but these do come with greater obligations than trial periods when it comes to disciplinary/performance processes and dismissal.
What are the legal requirements for rest and meal breaks for a typical day?
In May, prescribed meal breaks were introduced requiring that employers now give rest and meal breaks to employees. If breaks cannot be agreed, the default timing under the Employment Relations Act 2000 (ERA) applies. For a typical eight-hour day, workers are entitled to two paid 10-minute breaks either side of a 30-minute unpaid meal break.
Retailers need to consider how they will navigate these changes and accommodate breaks, particularly where a store may be looked after by one staff member. A retailer may have to consider having someone come into the store to cover breaks, or allow an employee to close the store while they take a break.
When do employers need to pay staff before and after work?
Last year, the Employment Court held that the employees of Smiths City were entitled to be paid for attending meetings before work. Each morning Smiths City stores had held a meeting of sales staff before opening for business. The meetings started at 8.45am and the stores opened at 9am. Staff were expected to attend these meetings, the purpose of which were to provide sales staff with information and tips to be more effective sellers. The Employment Court was asked to consider whether employees who attended daily morning meetings were ‘working’ for the purposes of the Minimum Wage Act. The Court considered the meetings were work, and held that the employees were entitled to be paid. It follows that retailers need to consider if their employees are spending time on work related activities that are unpaid, and if they are, providing appropriate compensation for that time.
What is the decision from Postal Workers Union of Aotearoa v New Zealand Post Limited (‘Postal Workers’)?
In a very recent decision of the Employment Court, the Court said that employees may not be obligated to work additional hours. The lesson from Postal Workers is that if employers require their staff to be available to work beyond the guaranteed hours in their employment agreements, employees must be given reasonable compensation for their availability or the requirement will be unenforceable.
Retailers should check employment agreements are complaint with the availability provision.
And finally, what are the legal issues that retailers need to be aware of in regards to collecting consumer data?
Retailers are in the unique position of being able to collect and generate data based on their own actual interactions with consumers. The pace at which retailers are able to generate data based on sales, marketing and other customer interactions is continuing to increase exponentially and so too are the techniques and technologies that are being applied to generate deeper, richer insights into consumer behaviour.
However, consumer awareness of the value of their personal information has also increased – we’ve all heard that data is now the world’s most valuable resource. As the value of data has increased, as well as the public awareness of that value, so too has the expectation that organisations will do their utmost to protect individuals’ personal information. A data breach is no longer seen as a technical glitch, and organisations are no longer seen as the victim of a cyber-attack – it is seen as a breach of trust, which can be hugely damaging for a business’s reputation.
This is reflected locally in New Zealand through upcoming changes to the Privacy Act (due to come into effect in March next year) which will, among other things, introduce mandatory data breach reporting obligations and restrictions on offshore transfers of personal information. Overseas, regulators are ramping up enforcement action – you only need to look to the highly-publicised fines for Google (€50m for a GDPR breach), British Airways (£183 million for a GDPR breach caused by a cyber-attack) and Facebook (US$5bn for the Cambridge Analytica privacy violations) to get the picture that regulators are starting to wield the big enforcement sticks given to them by legislation like GDPR. Of particular relevance to retailers is the ACCC’s recently released draft report on customer loyalty schemes in Australia. The report raises concerns about the actual benefit to consumers of these schemes and the use (or rather misuse) of consumers’ data.
With changes to the Privacy Act here and investigation and enforcement action ramping up overseas, now is the right time to review your data protection policies and resilience to cyber threats. In particular, you need to ensure you are ready for the introduction of mandatory data breach reporting, which includes having clear data breach policies and an incident-response team with clearly defined roles. Retailers with an e-commerce channels also need to be particularly vigilant about their exposure to privacy laws in other countries – for example, you could find yourself captured by the extraterritorial scope provisions of the GDPR, bringing into play the potentially massive fines that cannot be imposed under New Zealand law.
Proactively addressing the above areas before they become an issue will ensure that employers and employees can work cohesively towards providing the best customer experience.
Laura Scampion focuses on employment and health and safety law. She has a wide range of experience in the United Kingdom and in New Zealand. Laura has experience in appearing before various courts and tribunals in both the United Kingdom and New Zealand, and regularly represents clients in mediation. She was recently instructed by one of the NZSX’s largest investment entities with regard to its health and safety risk profile, and has particular expertise in employment restructuring. Connect with Laura via email
Melissa Johnston has experience in general employment matters. Melissa acts for both employers and employees on a range of matters, including redundancies, restructuring, health and safety, personal grievances, and employment documentation. She has experience in appearing before various courts and tribunals both in the United Kingdom and New Zealand and regularly represent clients in mediation. Melissa also has experience in medico-legal law. She has worked for the professional regulators in the United Kingdom and for a substantial international indemnity organisation that indemnifies the majority of medical and dental practitioners in New Zealand. Connect with Melissa via email
Julia MacGibbon has acted on a range of matters, including personal grievances, health and safety, Holidays Act audits, restructuring, redundancies and immigration. Julia has appeared in the Employment Relations Authority, District Court and High Court. Connect with Julia via email
Nick Valentine advises public and private sector entities on large-scale business process and IT outsourcing and systems integration; software development and licensing; data protection and privacy; telecommunications services agreements and infrastructure rollouts; media rights and online content distribution; supply chain and logistics; and brand protection. Nick’s clients value his commercial approach – combining technical excellence with an ability to make the complex simple and understand the strategic objectives of a deal. Connect with Nick via email
Jordan Jeffcoat has experience advising clients on general employment matters including dismissals and performance management. She has also acted on health and safety matters in relation to drugs and alcohol and assisted in drafting and reviewing internal policies. Jordan has a varied commercial background, having worked with listed entities, a range of private sector clients, and private individuals, both domestic and international. Connect with Jordan via email