By Robyn Walker
The Labour Party has had an interest in reforming redundancy laws for a number of years, and the latest step toward this is a proposal to introduce a compulsory national insurance scheme. If implemented, the scheme will provide workers with an income substitute if they are made redundant or are unable to work on medical grounds. Comments on the proposals are open until 26 April 2022 and it’s important that all workers (including contractors and self-employed persons) and employers understand the breadth of proposals and take the opportunity to provide input.
Indications are that the scheme could take effect from 2023, which is an ambitious timetable considering the fundamental changes to employment relations that are proposed.
A copy of the discussion document summary is available here and the detailed discussion document is available here.
The detail
The proposals are set out in a 178-page discussion document, the length provides an indication of the complexity within its pages. The terms for each type of cover are similar but slightly different. Set out below are some of the key proposals:
Who is required to contribute |
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Who is eligible to claim |
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What is received |
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What do employers need to pay |
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What are the criteria to claim |
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What is the maximum claim period |
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What requirements are there for claimants |
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Can a claimant earn other income |
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Other points to be aware of |
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Who is required to contribute |
|
Who is eligible to claim |
|
What is received |
|
What do employers need to pay |
|
What are the criteria to claim |
|
What is the maximum claim period |
The insurance scheme will pay out for up to 6-months. |
What requirements are there for claimants |
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Other points to be aware of |
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Questions
Most people are likely to agree that dealing with COVID-19 and the ubiquitous concept of the “future of work” makes it clear that there is a need to do something to ensure New Zealand continues to have a productive workforce. The question is, is the proposed New Zealand Insurance Scheme the right answer? The discussion document poses 94 questions for submitters to provide feedback on. Given the impact such a scheme could have, we think as many people as possible should provide feedback so that informed decisions can be made on the way forward.
Additional questions not included in the discussion document which possibly warrant consideration in the design of any scheme include:
Finally, bearing in mind that there are several really difficult issues to grapple with in creating a scheme that is widely supported and sustainable, are the timeframes for implementing a New Zealand Income Insurance Scheme long enough? It is proposed that legislation is introduced in 2022, with the scheme applying from late 2023, a potential 23-month window from discussion document to application. A more generous timeline for the New Zealand Income Insurance Scheme may allow more time for upfront policy design and robust scrutiny of the legislation through Parliamentary processes, and of course ensure there is adequate time for employers, employees and the government itself to get ready once legislative processes are completed.
Submissions can be made online, and there is an option to complete an anonymous online survey that seeks to gauge the level of agreement with a range of statements.
If you’d like to discuss how the New Zealand Income Insurance Scheme could impact your business, please get in touch with your usual Deloitte advisor.
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