Labour's Fair Pay Agreements legislation will be scrapped, and 90-day trials for employees will be brought back, the Government has announced.
Workplace Relations and Safety Minister Brooke van Velden announced the changes today at the regular post-Cabinet press conference, alongside Prime Minister Christopher Luxon.
Van Velden said extending 90-day trial periods to all employers would give businesses confidence to hire new people, and it would increase workplace flexibility.
The move was officially announced by the coalition government on Monday afternoon, to a mixed response. (Source: 1News)
“Whether a business has 2 or 200 employees, bringing on any new employee costs time, it costs money and it is in the best interests of any business to find the right fit.
“The extension of 90-day trials also provides greater opportunities for employees. They allow employers to employ someone who might not tick all the boxes in terms of skills and experience but who has the right attitude, without the risk of a costly dismissal process."
The Government would adopt ACT MP Todd Stephenson’s member’s bill on 90-day trials, she said, enabling the bill "to progress quickly and provide certainty to businesses".
“The extension of 90-day trials will not affect other aspects of employment relations, such as the requirement to act in good faith, or worker protections regarding pay, conditions, leave, and health and safety."
The change would not mean all employees necessarily had 90-day trials, she said.
"Rather it provides the option to include this provision in employment agreements."
She said the bill to extend 90-day trials would be passed under urgency before Christmas.
Van Velden said the Government was also "moving quickly" to remove Fair Pay Agreements legislation before fair pay agreements were finalised and the "negative impacts are felt by the labour market".
She said fair pay agreements undermined the flexible labour market which had been a "pillar for New Zealand’s economic success for the past three decades".
“They do not help employees. Instead, they make life harder for businesses so they’re more hesitant to employ people."
She said National and ACT felt fair pay agreements would reduce flexibility, choice and agility in workplaces.
“To increase the wages of workers and ensure lower prices for consumers, there needs to be improved productivity and an environment where business can operate competitively.
“To lift productivity and drive economic growth there needs to be agile and flexible workplaces where employers and employees can agree terms that suit their unique situation.
“These agreements were a blunt tool that could be initiated by a union and a small number of employees, yet they applied to every employee and every employer within coverage."
She said there would be no impact on current terms of employment for workers as no fair pay agreements had been finalised to date.
Luxon said a “core belief” of the coalition government was that when business thrived, the economy thrived, and that was how “Kiwis get ahead”.
He said small and medium businesses deserved a government that “empowers them”.
The Government wanted to make it easy for people to find work, and bringing back 90-day trials would make that possible, he said.
Fair pay agreements were introduced by the Labour Government last year, and allowed for binding agreements on minimum employment terms for all employees at an industry-wide level.
National and ACT opposed it at the time and both promised to repeal it if elected to power.
The former National-led Government introduced 90-day work trials, which allowed businesses to dismiss staff within the first 90 days of employment without a reason, but the last Labour Government scrapped them for all businesses except those with fewer than 20 staff.
A Treasury-commissioned study in 2016 found 90-day trials did not help jobseekers and did not boost employment numbers.
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