Labour law changes promote growth - Key

Prime Minister John Key. File photo / Natalie Slade.

Sweeping changes to labour laws, including changing the test for reasonable dismissal to make it easier for employers to fire workers, have been announced by the Government today.

At the National Party annual conference this morning, Prime Minister John Key confirmed plans to extend the 90-day trial for new workers to all businesses.

Currently the trial, under which workers can be dismissed within 90 days without being able to take a personal grievance case, is only available to companies with less than 20 workers.

Click here for John Key's speech

Mr Key also announced tighter union access to workplaces. Unions will need the consent of employers, which cannot be unreasonably withheld.

The policy was part of the party's 2008 manifesto, but has enraged unions.

Among other changes to the Employment Relations Act, the test for justified dismissal will be changed from what a reasonable employer "would" do, to what a reasonable employer "could" do.

The change makes the test easier to justifiably dismiss a worker.

Further changes to the Employment Relations Act include:

* Promoting mediation by ensuring that the Employment Relations Authority gives priority to mediated cases

* Developing a Code of Professional Conduct for employment representatives

* Enabling Authority members to throw out frivolous or vexatious cases at an early stage

* Allowing Authority members to award penalties against parties who fail to attend investigation meetings without good cause

The changes come as hundreds of workers and union officials protested outside the conference at Auckland's SkyCity Convention Centre.

Mr Key said the changes were important to promote growth.

"Employment growth happens because a business is prepared to give someone a chance - often someone they have never met before and know very little about.

"The extension of the 90-day trial period to all workplaces is all about giving prospective employees a shot at work, and giving employers the confidence to hire."

A Department of Labour report, released yesterday, showed that 40 per cent of employers who had used the scheme said they would not have hired the workers, or were unlikely to have, if the scheme had not been available.

But it also found anecdotal evidence of employers abusing the system and mistreating workers.

Social Development Minister Paula Bennett said the changes would mean more young people can get into work.

"This will open up the way for more employers to give young people a go, which is particularly important in the current economic climate," said Ms Bennett.

She said the Department of Labour report showed the original legislation had achieved its purpose.

"I'm acutely aware of the pressure young people are under as New Zealand recovers from a recession and the Government has been focussed on alleviating that," said Ms Bennett.

Labour Minister Kate Wilkinson said the changes would save time and money.

"While the current system generally works well, it can prove time-consuming and costly. The changes resolve disputes quickly and inexpensively."

The changes come from the perception that the current process focuses too much on process, and not enough on outcome.

Cases of clear wrongdoing from a worker could see the person re-instated simply because the proper steps were not followed.

They also aim to promote mediation and ease the workload on the Employment Relations Authority.

The Government also announced changes to the Holidays Act, including being able to trade the fourth week of holiday leave for cash, if employers and employees both agree.

Political reaction

The Labour Party had introduced a bill to repeal the extension of the 90-day probation period for workers.

Phil Goff said no New Zealander deserved to be sacked without good cause

"Allowing all New Zealanders to be sacked during their first three months of employment without any reason being given is not a plan for growth and jobs," he said.

"John Key's proposal to stop union access to workers without the employer's consent breaches an undertaking he gave the Council of Trade Unions that this was off the table."

Labour MP Carmel Sepuloni said workers needed to know their jobs were secure in a time of economic uncertainty.

"We always knew the Government would look to expand the provisions of this legislation. The National Party has proven itself time and time again to be working for the interests of the few, against the many," she said.

Maori Party MP Te Ururoa Flavell said allowing all businesses to take advantage of the 90 day probation period could add "even more salt to the wounds of Maori youth who are already finding it hard to get jobs".

"This country is facing an unemployment crisis, particularly among Maori and Pacific youth, so the Government should be focusing on ways to get them into work, and keeping them there, rather than making it easier for big business to boot them out.

"Our party will be vigorously opposing any move that further marginalises our youth, especially given the current unemployment crisis," Mr Flavell said.

Green Party co-leader Russel Norman said extending the 90 day probation legislation amounted to the breaking of a pre-election policy by the National Party.

"National's pre-election policy paper clearly stipulated the probationary period is for businesses with fewer than 20 staff," Mr Norman said.

"Taken together with National's other policy of allowing employers to keep union officials out of workplaces this is the biggest assault on workers rights since the Bolger-Richardson Government of the early 90s," said Dr Norman.

Act Party leader Rodney Hide has praised the Government and said the changes to the 90-day probation period for workers will boost employment through job creation.

"These steps are a move in the right direction to free up the labour market, giving more options to more people and removing barriers to job growth. This will encourage further improvements in productivity that are the basis of higher incomes, and thus better lifestyles for all," Mr Hide said.

Other changes are:

* Workers with irregular hours will have their pay for sick leave, bereavement leave, public and alternative holidays calculated by averaging gross earnings for the preceding 52 weeks or whatever lesser period the employee has been with that employer

* Employers and employees will be able to agree to transfer the observance of public holidays to another (identified) working day

* Employers will be able to ask for proof of sickness or injury of an employee taking sick leave, but will have to cover the employee's reasonable costs in obtaining proof

* Maximum penalties for non-compliance with the Holidays Act will double from $5000 to $10,000 for an individual employer, and from $10,000 to $20,000 if the employer is a company

There will be no change to holiday and leave entitlements.

A bill to make the changes will come to Parliament shortly, where it be referred to a select committee for public submissions.