All staff update
Alcohol licensing lawyer Pervinder Davies explains what the recent employment law changes could mean for your business...
Running a hospitality or alcohol-related business in New Zealand already involves navigating a complex regulatory environment and now, recent changes to the Employment Relations Act 2000 add another layer that employers in the hospitality and alcohol sector should understand.
The reforms are intended to clarify employment relationships and provide greater flexibility for employers. For an industry that often relies on casual staff, contractors, and shift-based work, these changes could have practical implications for how businesses engage and manage their workforce.
Clarifying the Contractor vs Employee relationship
One of the most significant reforms introduces a clearer framework for determining when a worker can be considered a contractor rather than an employee. This distinction has long been an area of uncertainty, particularly in industries like hospitality where contractors are sometimes engaged for roles such as DJs, event promoters, marketing consultants, or specialist services.
Under the new approach, certain criteria must be met before a worker can be treated as a contractor. For example, the arrangement should be set out in a written agreement, the worker must have the freedom to work for other businesses, and they must have a meaningful opportunity to seek independent advice before signing the contract.
“Documenting incidents, warnings, and disciplinary steps can become critical if a dispute arises later.”
While the changes aim to give businesses greater certainty, employers should still be cautious. Simply describing someone as a contractor will not automatically make it so. If the practical reality of the relationship looks more like employment – such as fixed working hours, close supervision, or restrictions on working elsewhere – the arrangement may still be challenged.
Changes to Personal Grievance remedies
Historically, employees could receive compensation even where their own behaviour contributed to the situation that led to the dispute. The updated law gives the Employment Relations Authority or Employment Court greater discretion to significantly reduce compensation (by up to 100%) if an employee’s actions played a role in the events giving rise to the grievance.
For hospitality businesses, this highlights the importance of maintaining clear records when dealing with performance concerns or misconduct.
In a busy bar, restaurant, or bottle store environment, managers are often required to make quick decisions during hectic shifts. However, documenting incidents, warnings, and disciplinary steps can become critical if a dispute arises later.
A new threshold for high-income employees
The amendments also introduce a new threshold affecting high-income employees. While most frontline hospitality workers will fall below this threshold, the change could affect senior roles such as venue managers, general managers, or regional managers in larger hospitality groups.
Workers earning above a specified income (> $200,000) level will generally not be able to bring a personal grievance for unjustified dismissal unless their employment agreement expressly provides for that right. Businesses employing staff in these positions may wish to review their employment agreements to ensure they reflect the new framework.
Trial periods still require careful use
Trial periods remain an important tool for employers, particularly in industries with high staff turnover. Hospitality businesses often need to recruit quickly and determine whether a new employee is suitable for the role.
The clause must be included in the employment agreement and agreed to before the employee starts work. If it is not properly drafted or implemented, the trial period may be invalid, exposing the employer to potential personal grievance claims.
Practical steps for hospitality and alcohol businesses
While the reforms are not intended to make employment law more complicated, they do reinforce the need for businesses to review their current employment practices.
A sensible starting point is reviewing contractor agreements to ensure they clearly reflect the nature of the working relationship. Businesses should also take the opportunity to review employment agreements, particularly those containing trial period clauses or those applying to senior staff who may fall within the new high-income threshold.
Equally important is ensuring that managers and supervisors understand the basics of employment law. In many hospitality venues, the person making employment decisions is often a duty manager rather than the business owner.
Providing basic guidance on handling misconduct, documenting incidents, and following fair processes can significantly reduce the risk of disputes.
Taking the time to review agreements, strengthen documentation practices, and ensure managers understand their responsibilities will help businesses adapt to the new framework while continuing to focus on what they do best: serving their customers and running successful venues.
Pervinder Davies specialises in alcohol licensing law and is a director of Pervinder Davies Law in Christchurch.
pervinderdavieslaw.co.nz
