Legislative changes affecting the construction sector

The Government has recently announced that minimum wages will increase to $17.70 an hour on 1 April 2019.

By Marcus Beveridge and Tina Hwang from Queen City Law

We would assume that nobody in the construction sector is paying the minimum wage and therefore the labour force will remain unaffected. However, there will undoubtedly be flow-on affects including general rises in material and costs which will affect projects.
Cost escalations clauses could expressly increase the costs of the project for the principal.  The absence of this clauses empowering a contractor to increase payment claims may instead result in alternative pressures being added to the project through the “back door” such as variations or other claims.
Furthermore, trial periods will now be a thing of the past with only “small businesses” with under 20 employees being able to implement trial periods which were often the golden way to test employees’ capabilities without recourse to personal grievance claims.
Employers will still be able to implement probation periods, but good faith and due process must be followed and the employee will have rights to bring a personal grievance claim for any unjustified dismissals.
Employers must now also be aware of sensitivities in dealing with domestic violence for workers even though the incidents were suffered outside of work in the employee’s house for example.
As of April 2019, employers will now have new obligations to provide a sensitive process and up to 10 days paid leave for such workers affected by domestic violence.
Flexible hours may be another resolution and the need to deal with such matters sensitively and confidentially will mean employers will need to have proper procedures in place to deal with this before such incidents arise.
Recently migrant exploitation cases were exposed with the offenders being “named and shamed” in the news media, including certain directors that were made personally liable for the offending and consequent penalties.
We have seen Immigration New Zealand and the Employment Relations Authority really wanting to tackle this issue head-on especially in the hospitality and construction sectors.
So construction companies must be acutely aware of the visa status of their employees and other workers on site with proper records in place.
The need to ensure minimum entitlements of workers are strictly adhered to is vital as labour inspectors are showing zero tolerance to minimum right breaches.
Contractors should therefore take care to ensure all workers on site (including their subcontractors – perhaps by inserting a clause into the subcontracts) are legally compliant and entitled to work, otherwise they could face investigations and liabilities.
Another growing issue is health and safety. The introduction and concept of PCBU (Persons Conducting a Business or Undertaking) or “Officers” under the Health and Safety at Work Act 2015 is still widely unappreciated.
If you are in the construction industry and you are asking “what is a PCBU?” you are in trouble. A PCBU or “Officer” (often the director or senior officers) will be held personally liable if the primary duty of protecting workers and other people near the site are not implemented properly.
A PCBU will generally have a duty to consult, co-operate, and co-ordinate works with other PCBUs. A construction company will have multiple PCBUs and Officers that must work together to promote and enforce health and safety.
You can no longer simply “tick the box” by issuing a standard health and safety policy for the project and consider yourself protected. The requirements go well beyond this.
Breaches can result in criminal proceedings ranging in four category offences with the most serious being a category one offence resulting in a $3M fine to a company, $600,000 fine and/or up to five years imprisonment to an individual Officer, and $300,000 fine and/or up to five years imprisonment to an individual worker.
The responsibilities are shared across the board including employees and workers on site.  Minor offences include a failure to maintain proper records of notifiable events which could result in a fine of $25,000.  The results are serious.
Accordingly, compliance could be described as something of a Pandora’s Box of issues.