Coalition government will make labour laws more flexible for employers

Business / news

Coalition Government will expand 90-day trials and get rid of Fair Pay Agreements to create flexibility for employers

11th Dec 23, 4:36pm by Dan Brunskill

Act MP Brooke van Velden on Election Night 2023

The Coalition Government will allow all employers to use 90-day trial periods when hiring new staff and will axe the Fair Pay Agreement laws before going on Christmas break.

Brooke van Velden, the Minister for Workplace Relations and Safety, said this was the first step towards creating a more flexible labour market in New Zealand.

The National and Act parties opposed Fair Pay Agreements on the basis they would have reduced “flexibility, choice and agility in workplaces”.

“They do not help employees. Instead, they make life harder for business so they’re more hesitant to employ people,” she said in a press release.

“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”.

FPAs would have allowed unions and employer associations to negotiate minimum employment terms for all workers in a particular sector.

It was a sort of industry-wide collective bargaining that was championed by unions and workers in jobs that can have difficult conditions.

Applications have been lodged by bus drivers, cleaners, supermarket workers, and early childhood educators, however no agreements have been struck in any sector yet.

“We are moving quickly to remove this legislation before any fair pay agreements are finalised and the negative impacts are felt by the labour market,” said van Velden.

A leaked cabinet paper showed officials had warned the decision would have disproportionately impacted women, Māori and Pasifika and young people.

However, van Velden said these groups would benefit from employers being able to take on more staff due to having lower overall operating costs.

“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”.

“We are focused on boosting productivity, becoming more competitive, and creating a healthy economy. That’s why we’re preventing more bureaucracy from being piled onto businesses and backing them to grow”.

The coalition government will also adopt Act MP Todd Stephenson’s Member’s Bill on 90-day trials. This will allow businesses of any size to dismiss new employees within three months.

Van Velden said the trial periods would provide “greater opportunities for employees” by reducing the risk that comes with hiring new staff.

“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.”

“It is also important to note that extending the availability of 90-day trials does not mean that all new employees will have trial conditions, rather it provides the option to include this provision in employment agreements”.

Prime Minister Christopher Luxon said the rule changes would make it easier for employers to take a chance on hiring staff members they would not have otherwise.

“The previous Government made hiring staff way too difficult and too expensive, and it disincentivized employers from taking risks”.

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46 Comments

by solardb | 11th Dec 23, 4:56pm 1702267005

I'm sure workers are going to love the flexibilty of been laid off just before Xmas.

by refactornz | 11th Dec 23, 5:06pm 1702267592

That's not what this is about. Unless they start a new job before Xmas too.

The Coalition Government will allow all employers to use 90-day trial periods when hiring new staff and will axe the Fair Pay Agreement laws before going on Christmas break.

by OldSkoolEconomics | 11th Dec 23, 5:11pm 1702267916

Its just the same nat-labour/boom-bust cycle repeating itself.

If you are an employee and dont like your new job being at risk... stay where u are or become an employer. If not then prepare for the bad times in the good times and suck it up..

by the Joneses | 11th Dec 23, 5:37pm 1702269421

By 'suck it up', do you mean 'stop complaining'?

by Nzdan | 11th Dec 23, 5:11pm 1702267863

Was a victim of the 90 day trial a few years back. Tried my luck in another industry, an external role with "company car" among other promises. What transpired was sharing the car with another person, selling a boutique product in competition with Mitre 10/Bunnings who had 90% market share with a basic equivalent.

Despite pulling through a few decent orders from cold calls, was gone on the 89th day. Found out later this company does it all the time.

by dumbthoughts | 11th Dec 23, 5:41pm 1702269696

Small world, same thing happened to me. I got let go on day 89 of the 90 day trial. The managers of the business at the time (who were in the process of being pushed out by other partners) later reached out to me and admitted that they had just hired staff to plug gaps or be ready for anticipated demand. In my case, I was hired along with another lady to get ready for some anticipated big projects. These fell over about the same week we started; she was able to go back to her old job (where she still works to this day) while I was not.

I spent 89 days making cups of tea, doing the airport pickup and drop off and all that.

I was actually able to negotiate my termination as being a 'resignation' (with good reference) as the employer cocked up on two accounts. Firstly, they never got me to sign my contract until the day they fired me. Secondly, it was agreed multiple times in writing that I'd have a regular performance review every month to ensure I was on track - and that as long as no issues were raised the 90 day trial wouldn't be used.

It still took a fairly expensive lawyer to get them to see the error of their ways ... but thankfully what they coughed up covered his fee.

Despite all this I'm not actually opposed to the 90 day trial concept. Many years deeper into my career, I see time and time again employers hire contractors/freelancers/agencies to do work because although the rate is much higher it's easy to let them go if you get a wrong 'un. However, I do think 90 day trials need to have clear requirements e.g. documented communication of any performance issues with an opportunity to rectify.

by Nzdan | 11th Dec 23, 8:57pm 1702281454

Thankfully I don't burn bridges, my previous boss touched base over LinkedIn to offer me my old position back roughly a month after I was let go.

I'm also on the fence about the 90 day trial. I've seen plenty who are at work to "ride the bus", it's frustrating when colleagues take home a similar pay for 1/3rd the output. But as you say trials are ripe for abuse, because how can someone prove they weren't a terrible employee? A huge "negative proof" fallacy.

by dumbthoughts | 11th Dec 23, 9:15pm 1702282528

Having been on the receiving end, I think we are both on the same wavelength here (also agree that you should never burn bridges. Heck I just picked up a nice little project from a former client whose previous manager told me I was an idiot, and that I didn't deserve time off because I'm a contractor and I'm paid to be there all the time even when on holiday. All because I was polite to him and the rest of the team, and now he's gone they want me back).

I really do think there are some positives to allowing employers to take a bit more of a punt on an employee. I've also seen just how destructive a bad employee can be in all manner of ways, from team morale to sales performance that directly affects the capability of the business to pay its other staff. I also think the argument that businesses just want a revolving door is dumb (as it takes time to get somebody up to skill).

However, the real risk in the 90 day trial that needs addressing is the employer dishonestly using the system as a form of discounted short-term labour hire, as opposed to paying bona fide contractor/freelancer rates. The policy should require a mandated approach to performance reviewing, e.g. the employee must receive a documented performance review at month one and month two, and any issues affecting suitability must be documented in advance of the end of the trial with an opportunity given to correct. If the process is not followed to the letter, or it can be demonstrated that the employer was being unreasonable, then the trial is voided.

Yes, you'll still get some bad apple employers, but it does also give the good ones an opportunity to take more of a calculated risk.

Disclosure: I run a business, it's just me (and no staff, and I'd rather close the business before taking on the stress of employees). A significant portion of my work comes from tidying up the mistakes of employees who talked a big game and didn't deliver. A significant portion of my work also comes from giving business owners a dose of truth.

by skip-- | 12th Dec 23, 12:24am 1702293881

Maybe just a register for how often a business has ended an employment arrangement via a 90 day trial like the Covid wage subsidy register?

That way a prospective employee could weigh up the risk on their side before choosing to go with the employer and it reduces a power imbalance through potential information asymmetry. Also keeps the employer honest as it’s not a great look.

by In Vino Veritas | 11th Dec 23, 10:57pm 1702288649

If that is all there was to your issue and release Dan, you should have PG’d them. You do realise they have to manage you over the 90 days, ie monitor performance against requirements? If they gave no requirements and didn’t let you know whether you were achieving what they wanted, you could have torched them (if what you are saying is the complete picture). So you getting removed is a you problem, whichever way it went.

by Nzdan | 12th Dec 23, 10:32am 1702330321

Let's just say I was young and naïve to my rights. I should have 100% PG'd them in hindsight, however things worked out as my previous employer reached out about a month later so I just moved on.

If being young and naïve is a "me" problem then so be it. I learnt a valuable lesson. Doesn't take away the employer didn't act in good faith. I know some on here have a fetish for a bit of "tough love" towards victims, because there's absolutely no excuse for being conned, it's all on the victim.

by K.W. | 11th Dec 23, 5:11pm 1702267905

Its like the tenancy rules. Without the ability to get rid of a bad tenant, landlords just become very picky about who they choose. They favour professional couples with no children, while single mums and unemployed people get passed over, and ultimately they end up on the public housing waitlist because they cannot get a rental property anymore. Also tenants who know they can be evicted without cause make more of an effort to look after the property and not do anything to jeopardise their lease.

Likewise the inability to fire an employee means employers become very picky, so picky that they may choose to just bring in someone experienced from overseas rather than train up a local person who may or may not work out. Also likewise, a employee who knows they can be fired will make more of an effort at work than someone who knows they cant be sacked for being a slacker.

by the Joneses | 11th Dec 23, 5:44pm 1702269895

There are only so many rental properties. Someone needs to fill them all or the landlord goes without rent. If landlords start choosing the bad ones, the good ones end up on the public housing waitlist.

Regarding the workers, now they just have to look good for 90 days, then they can be slackers for the following years?

Funny coincidence that in both these cases, National just happens to side with the smaller group of individuals that has the most capital.

by K.W. | 11th Dec 23, 5:51pm 1702270272

When there is a shortage of rentals and jobs then its those on the lowest rung of the totem pole that get shafted. If only we had more rentals and more jobs than people, then the power balance would shift. But that isnt going to happen, not under National and never under Labour.

by the Joneses | 11th Dec 23, 6:03pm 1702271038

All it means people are less likely to move to another job. Would you give up a stable job if you knew a new employer could fire you without any reason in the first 90 days. People can lose their house with that sort of situation.

by M0ralHazard | 12th Dec 23, 9:26am 1702326372

Research commissioned by Treasury in 2016 found “no evidence that the ability to use trial periods significantly increases firms' overall hiring” and “no evidence that the policy increased the probability that a new hire by a firm was a disadvantaged jobseeker”.

by K.W. | 12th Dec 23, 12:14pm 1702336441

Talk about selective quoting! The policy was limited to companies who employed less than 20 people, hence it was severely restricted in terms of application. The last sentence from that report states "However, our results suggest that the policy increased hiring in industries with high use of trial periods by 10.3 percent." So small companies who could utilise 90 day trial periods, did hire more people. If the policy had been extended to all companies, then the others would have benefited as well.

by AncientCompass | 12th Dec 23, 7:39pm 1702363162

Talk about selective reading comprehension.

Between 2011 and 2017, the policy applied to all companies.

I quote from the report you just quoted from:

In March 2009, an amendment to the Employment Relations Act 2000 came into effect that introduced the option of 90-day trial periods in employment for firms with fewer than 20 employees. In April 2011, the option of using 90-day trial periods was extended to firms of all sizes.

by lfk | 11th Dec 23, 5:14pm 1702268075

“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”.

So this assumes 1) equal bargaining power between employers and employees (or potential employees) and that 2) the only way to grow productivity or have economic growth is through ensuring wages are low; being a country that actively disincentivise investing in capital and staff development.

Delightful.

by OldSkoolEconomics | 11th Dec 23, 5:39pm 1702269597

Doesnt mention any of that.

We live in a capitalist society the value of an employee is determined by their industry, education, experience, skills and values etc.

If an employee decides to select a good career, adapt it, build those qualities and work hard then they will be of value to multiple employers and will be well rewarded and able to negotiate froma strong position. If not.. well they will be a commodity and easily let go when times are tough.

As always its about hard work and personal accountabilty. It shouldnt be that govt or an employer is a protective entity for the lazy peeps... they know they are doing it.

by Middleaged | 11th Dec 23, 8:08pm 1702278533

Unless the system refuses to recognize your skills, hard work etc. The recent pay agreements across the public health system are an admission that these invaluable and hard working professionals have been underpaid for a long time.

Now that hospital health workers are getting properly paid, there is a distortion across the wider health sector. In private health care, for example, the ACC funding monopoly has been squeezing health workers for decades, giving absolutely zero recognition of experience or higher skills.

by redcows1 | 11th Dec 23, 8:44pm 1702280665

Two things make a complete mockery of your assertions on capitalism.

Firstly the recent lockdowns left lots of supposedly essential workers working hard for sfa while other completely superfluous highly paid managers etc did sfa. You would expect the hard workers to be rewarded yes?

You'd also expect that experience and hard work would be well rewarded at other times especially during high employment, but as many workers in many industries will attest their industry leaders scream loudly for immigrants to be allowed in to lower wages.

by K.W. | 11th Dec 23, 5:55pm 1702270540

Alternatively, we just get rid of the people, outsource everything to the country with the lowest labour costs (thanks covid for proving how well WFH works, now we can have WFO - working from overseas), or substitute labour completely with AI.

by Hastings | 11th Dec 23, 6:25pm 1702272302

Do we get a ninety day trial on this f@#&show of a government?

by sharetrader | 11th Dec 23, 8:03pm 1702278233

and hopefully we don't have to pay them out the full 3 years when we sack them in an early election.

by Averageman | 11th Dec 23, 7:24pm 1702275841

Employees have still had the option for quick exit under 90 days. Had one leave two days short of the 90 limit. Wife got a new job in Aussie, acted like it was a surprise...yeah right.

Recruiter very pissed as full refund just before Xmas.

by Middleaged | 11th Dec 23, 8:12pm 1702278775

Hasn't unemployment been running at about 3% for the last three years? I guess that with this new legislation we will see unemployment hit 2% by early next year.

Tui advert.

by agnostium | 11th Dec 23, 8:26pm 1702279581

Productivity for capital not workers or the country.

How to make rich pricks richer.

by In Vino Veritas | 11th Dec 23, 11:00pm 1702288851

Dumb people are invariably poor agnostium. It has been so since forever. Thoug poor people have never been richer than they are today. So don’t have too big a sook.

by agnostium | 12th Dec 23, 12:03pm 1702335809

"Dumb people are invariably poor agnostium."

Sure, you keep telling yourself that if it makes you feel good.

by K.W. | 12th Dec 23, 12:20pm 1702336845

I think its designed to encourage private firms to soak up all the useless deadwood that is about to be released from the public sector.

by treadlightly | 11th Dec 23, 9:35pm 1702283728

Jurassic Park all over again and we know how that movie ended. We have let the dinosaurs loose again.

by Xristina | 12th Dec 23, 11:22am 1702333322

Yes and they're really loud right now. I'm really appreciating hearing from a wider range of commentators in this post and others than just our usual suspects. :)

by The Person | 11th Dec 23, 11:06pm 1702289196

The flipside is it makes hiring harder because employees are reluctant to leave a job when they no they can be sacked for no cause from the next one.

by ikimpaul | 12th Dec 23, 8:10am 1702321836

All contracts can be rewritten, if you can prove your a good employee, have good references, good tenure and worth hiring then ask the employer to remove the 90 day trial from the contract. If the employer seems reluctant - then that might be an indicator that they are not the "fair and transparent" employer you are looking for.

by M0ralHazard | 12th Dec 23, 8:39am 1702323588

I'm sure minimum wage, vulnerable workers will be straight on that..

by middleman1 | 12th Dec 23, 9:18am 1702325936

One of our family businesses that employs well over 100 people allowed managers to exercise their judgement by giving people with a 'past' a chance if they believed the person really was committed to turning their lives around. We have more than a few valued staff members with colourful histories. When the 90 day rule was abolished this discretion policy had to be immediately terminated.

by Xristina | 12th Dec 23, 11:25am 1702333500

Hopefully you can now reinstate this policy so that you're not missing out on some amazing people going forward. I find a lot of people find it very hard to present well in CV/ interview (I've rewritten a LOT of CVs) but are really good employees.

by middleman1 | 12th Dec 23, 11:36am 1702334189

Agree. People find themselves on the job seeker benefit for all sorts of reasons. Those who are genuine victims of circumstances can make useful employees. Working with a capable MSD facilitator to find best match for a persons skillset can deliver good results. But still plenty who deliberately sabotage the interview process.

by K.W. | 12th Dec 23, 12:24pm 1702337075

When the unemployment benefit pays more than the median wage, you can understand why.

by phalanax | 12th Dec 23, 9:59am 1702328354

lol...Good staff are hard to come by in my industry...plenty of young folk addicted to their cellphones...I dont think the 90 day will change anything...still shortages everywhere...Funny story young lad started a few years back ...called in first day sick...lol worked next day half a day...took next day off sick worked a few days...then boss couldnt make contact for all of the next week ...the next week the lad turned up Mon morn told boss he had left his wallet at home ...boss said yep nip home and grab it quickly...lad never came back ,boss was fuming all that day...next day lad turns up and works rest of week...then never comes back for a month but is seen driving around town with his mates...boss says 'last chance' lad worked earnestly for the next 3 months never skipped a beat...then one morning tells boss hes got job with the competition....lol ...

by middleman1 | 12th Dec 23, 11:42am 1702334559

Great story, made me smile. Regrettably not uncommon. But just a fact of life you gotta deal with in our purported 'labour shortage' environment. I'd add to your observations the need to be skilled at managing X/Y & millennial career expectations which sometimes can be unrealistic. Having said that, get your managing younger people culture right and business will hum.

by Nzdan | 12th Dec 23, 12:03pm 1702335787

Yeah hilarious. A bit like the "back in my day" memes Boomers share on Facebook about glass soda bottles, drinking from the garden hose and playing on metal slides

And we wonder why young people hit (return) Boomers with sweeping generalizations. But I understand, it's just the generational cycle. Boomers were just as useless when they were young. And their parents were just as useless. And millennials will say the same when they start growing gray hairs.

by middleman1 | 12th Dec 23, 4:50pm 1702353032

Boomers would say 'fizzy drink' bottles. Soda is an affectation typical of the mindless mass adoption of American culture which defines younger generations.

by Nzdan | 12th Dec 23, 7:46pm 1702363567

Ironically the memes that are shared are often American, my use of the word "soda" was deliberate.

The meme in question usually shows a supermarket aisle from the 70's with shelves filled with glass bottles. They gloat, yet the bottles turned plastic when they became adults. Interesting....

by Dr Who | 12th Dec 23, 7:27pm 1702362468

A bit of context would be useful to this article - specifically the 1991 - or was it 1990 - Employment Contracts Act. This, inter alia, significantly reduced the ability of unions to negotiate collective agreements and provided more flexible employment arrangements for employers. As I understand it, the Fair Pay Agreements were a step to reinstate some of the rights of workers and unions lost in that 1991 legislation. As regards the Coalition governments claim that abolishing the FPA Legislation will increase productivity - really? I doubt that actions that are likely to lower wage rates will increase productivity - e.g. as the ability to lower wages or reduce upward pressure on wage rates lower incentives to invest in improving productivity. The higher wages in Australia don't seem to have reduced their productivity compared with NZs - if my understanding of comparative productivity figures is correct.