Venkat Raman
Auckland, December 11, 2023
Workplace Relations and Safety Minister Booke van Velden brought smiles back on the faces of employers with two bills that are expected to become law this side of Christmas.
In two separate communiques, the ACT Party Minister said that the Coalition government will introduce to Parliament this week two bills to repeal the Fair Pay Agreements Legislation and restore the 90-Day Trial Period for all employers providing for early termination of employment contracts.
Ms van Velden said that her government was moving quickly to deliver on the election promises.
“Fair Pay Agreements undermine the flexible labour market which has 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. National and ACT opposed this law when it was introduced and feel strongly that fair pay agreements would reduce flexibility, choice and agility in workplaces,” she said.
The Fair Pay Agreements System
The previous Labour government introduced the Fair Pay Agreements System last year, bringing together unions and employer associations to bargain for employment terms for all covered employees in an industry or occupation.
This means organisations will meet to discuss and agree on a set of employment terms for the work being done within an industry or occupation.
Fair Pay Agreement bargaining is between an employee bargaining side and an employer bargaining side. Eligible unions that are approved to be an employee bargaining party bargain on the employee bargaining side for employees. The employee bargaining side must bargain for all employees, including non-members of unions. If workers are covered by the Fair Pay Agreement, the employee bargaining side must bargain on their behalf. Eligible employer associations approved to be an employer bargaining party bargain on the employer bargaining side. These organisations must also bargain on behalf of employers that are not their members.
Wage increase and productivity
Ms van Velden said that productivity should be the measure for wage increases, in addition to a congenial commercial environment for businesses to invest and carry on their activities.
“To increase the wages of workers and ensure lower prices for consumers, there needs to be improved productivity and an environment where businesses 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,” she said.
Ms van Velden said that the Fair Pay 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.
“There will be no impact on the current terms of employment for workers as no Fair Pay Agreements have been finalised to date. We are focused on boosting productivity, becoming more competitive, and creating a healthy economy. That is why we are preventing more bureaucracy from being piled onto businesses and backing them to grow,” she said.
Ninety-Day Trial returns
The second bill proposed by Ms van Velden relates to the reintroduction of 90-day trial periods that will be applicable to all employment contracts.
Under the current Employment Law, only employers with 19 or fewer employees (at the beginning of the day on which the employment agreement is entered into) may employ a new employee on a trial period for up to the first 90 calendar days of their employment. An employee cannot be on a trial period if they’ve worked for that employer before. If employers are hiring people on certain work visas, they must consider immigration requirements relating to the use of trial periods.
Ms van Velden said that extending 90-day trial periods to all employers will give businesses the confidence to hire new people and increase workplace flexibility.
“Whether a business has two 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,” she said.
Ms Velden said that by extending 90-day trials to all businesses (not just those with fewer than 19 employees, businesses will also have greater confidence to employ more New Zealanders.
“By adopting ACT MP Todd Stephenson’s Member’s Bill on 90-day trials, the government is able 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,” Ms van Velden said.
She said that the extension of 90-day trials to all companies or employers did not mean that all new employees would have trial conditions.
“The move provides the option to include this provision in employment agreements,” she said.
BusinessNZ Chief Executive Kirk Hope welcomed the moves saying that businesses throughout New Zealand will be relieved.
“Fair Pay Agreements would have proved a disappointment for those covered by them. The Ministry of Business, Innovation and Employment had advised that the costs of FPAs would outweigh the benefits and that there were better ways of dealing with categories of vulnerable workers. The cumbersome rules would have meant the collective agreements taking months if not years to complete,” he said.
Mr Hope said that these Agreements would not have helped businesses grow.
“The 90-Day Trial Periods are a useful tool for helping a prospective employer and employee work out whether they are a good fit together before committing to an employment relationship. It means that for someone perhaps without a good work history, there are opportunities to demonstrate they can do the job and get into full employment,” he said.
