With the number of Australian based companies entering or operating in New Zealand, it is surprising how little is written about the human resources and employment relations implications of this, particularly in the small to medium business space.
We are seeing more Australian businesses either establishing a small footprint in New Zealand to “test the water”, coming into New Zealand following an acquisition or alternatively making decisions to sell direct, rather than rely on a New Zealand distributor. So, what are the human capital elements that Australian companies need to consider and where do the key differences lie?
Essentially there are two key factors:
- Getting to know the employment relations environment differences that exist between the two countries
- The philosophical approach to take toward employment conditions of employees in New Zealand compared to employees in Australia
WHAT’S DIFFERENT IN NEW ZEALAND?
The first question Australian companies need to ask is: “what don’t we know about New Zealand employment law?”. This question arises regularly from companies who are well versed in operating across borders and dealing with legal differences yet it is surprising how often this fundamental question is not asked when it comes to their Kiwi cousins. It is not unusual to see Australian employment agreements used in New Zealand that do not meet some of our fundamental requirements around employment protection provisions, dispute resolution procedures, payment for public holidays and so forth. The table below illustrates where differences in employment law can emerge.
Australian companies entering or operating in New Zealand should take advice from New Zealand based advisers before entering into employment agreements, to ensure they start on the right foot.
SAME OR DIFFERENT AS AUSTRALIA?
Australian companies need to consider the philosophical approach to take regarding employees in New Zealand. At a macro level, we see two choices being made: a decision to ensure consistency between their Australian and New Zealand employees by applying the same employment conditions (e.g. superannuation, restraints of trade, car allowances and leave); or making a conscious decision on having New Zealand employees’ conditions reflect the New Zealand market. The most frequent choice is to “harmonise” conditions, which sounds relatively easy but can, in fact, be quite complex. Australian employment agreements and policies simply transplanted into New Zealand can be wrong in law, can incur unnecessary costs for the Australian owner, and can leave New Zealand employees confused with policy decisions. At the end of the day, neither choice is right or wrong, as both have their advantages, but it is important to do this thinking up front to avoid problems.
As in most areas of business, any Australian entity entering or operating within New Zealand should never assume anything even though, to all intents and purposes, we might look and sound the same. Due diligence and getting the right advice is fundamental to success.
AREAS OF POTENTIAL DIFFERENCE FOR NEW ZEALAND AND AUSTRALIAN EMPLOYERS
- Sick and bereavement leave
- Minimum wage
- Requirements for consultation
- Hours of work
- Restraints of trade
- Redundancy compensation
- Paid parental leave
- Wage protection requirements
- Car allowances
- Long service leave
- Fixed term agreement requirements