Two Bills introduced to enhance existing employee entitlements
On Parliament’s agenda are two new Private Member’s Bills which, if enacted into law, will have implications for employees’ parental leave and KiwiSaver entitlements.
Parental Leave and Employment Protection (Shared Leave) Amendment Bill
The Parental Leave and Employment Protection (Shared Leave) Amendment Bill was plucked from the Ballot in December 2022. Put forward by National Party Deputy Leader Nicola Willis, the Bill aims to ‘modernise and enhance’ the current parental leave system.
Under the current law, a primary carer can transfer part or all of their parental leave to their spouse or partner, but the leave cannot be taken together.[1] The Bill aims to change this by allowing parents to split their leave and take it at the same time, provided that the total paid parental leave taken by the couple does not exceed the maximum leave provided for a single primary carer.
Willis says the flexibility of the Bill would enable new parents to design leave arrangements that best suit their individual circumstances, and allow them the chance to bond as a family unit. The explanatory note states that the Bill offers this new flexibility without increasing the operating costs of providing paid parental leave.
Despite being introduced to Parliament over six months ago, the Bill is yet to have its first reading. However, Willis has said the Bill will be passed into law should the National party succeed in the upcoming election.
Employment Relations (Protection for KiwiSaver Members) Amendment Bill
The Employment Relations (Protection for KiwiSaver Members) Amendment Bill was introduced to the House last month. The Bill aims to address an existing loophole in KiwiSaver contribution practices that effectively allows employers to circumvent paying their compulsory contribution.
The introduction of the Bill is timely in light of Consumer New Zealand’s recent call for change in this area. In April of last year, the organisation drew attention to employers taking advantage of the “total remuneration clause” that is sometimes included in individual employment agreements. The clause allows the employer to deduct the employer’s compulsory contribution to the employee’s KiwiSaver fund from the employee’s pay packet, rather than paying the contribution in addition to the employee’s pay packet.
This practice has long been a subject of contention. While some employers argue it is a means of ensuring equal benefits for all employees, regardless of their participation in the KiwiSaver scheme, the alternative view is that total remuneration clauses result in employees effectively paying their KiwiSaver contributions twice – once for themselves, and once for their employer.
The Bill seeks to eliminate this loophole. It establishes a clear obligation for employers to contribute a minimum of 3% of a worker’s pay if the employee is signed up and making their own contributions to KiwiSaver. Importantly, the Bill removes the option for employees to agree for the employer’s contribution to come out of their remuneration package, ensuring that the employer bears the responsibility for this contribution.
This Bill is also awaiting its first reading in the House. It will be interesting to see whether it is considered prior to the election, as the Labour and National parties have had conflicting views on the practice in the past. In 2007, the Labour government prohibited total remuneration clauses, but the 2008 National government re-introduced them.
[1] Section 71E, Parental Leave and Employment Protection Act 1987.
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If you have any questions about potential changes to existing employment law, please contact our specialist Employment Team.
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