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Ministry report: National Government changes not working

Ministry report: National Government changes not working

The Ministry of Business, Innovation and Employment (MBIE) has released its report into the changes to the Holidays Act and the Employment Relations Act the National Government made in 2011.

“This report clearly shows that this set of changes by the National Government to employment law are failing New Zealanders. This report shows that they have failed to increase employment and failed to help disadvantaged workers.” CTU President Helen Kelly said.

“The infamous 90 day trial period is a flop. There is no evidence that 90 day trial periods have led to the creation of a single job. In fact it shows that tens of thousands of workers are being dismissed under 90 day trials each year. There’s not a shred of evidence that trial periods have created any additional employment – which was the primary justification the government provided for wanting to implement this law change. It is clear that employers like trial periods (one surveyed called it a safety blanket) but also that they are a cause of huge distress to workers who have been unfairly dismissed with no recourse to justice. There is no evidence that it has helped disadvantaged workers find jobs. Instead they are more vulnerable to being laid off. This policy is a huge and ongoing cause of human misery with no real gains for the economy as a whole. It should be scrapped.” Kelly said.

“Cashing up of annual leave is being used primarily by workers on low incomes to supplement their inadequate take home pay in lieu of a pay increase (within the context that 46% didn’t get a pay rise last year). The purpose of annual leave is to provide workers with an opportunity to spend time with their families, and for rest and recreation. The opportunity to have a break has been proven to have a positive impact on productivity.“ Kelly said.

“The rights of workers is clearly an election issue. Workers are entitled to employment law which supports and ensures fairness at work.” Kelly said.

Key points

90 Day trial periods
• Last year 27% of employers dismissed at least one person on a trial period. This is up from 19% the year before. Since at least 69,000 employers used trial periods this equates to tens of thousands of workers dismissed.

• It is notable that MBIE hasn’t managed to find any workers who have been dismissed on trial periods to talk to (perhaps because they only spoke to 19 workers including only 2 in retail, 1 in construction).

• Trial periods are generally imposed as a standard clause without negotiation in employment agreements. Most workers surveyed did not know that trial periods were negotiable (p 43).

• International evidence suggests that initiatives like trial periods can lead to more ‘churn’ by increasing both hiring and firing. Trial periods are no substitute for good recruitment and performance management processes. By suggesting to employers that they can skimp on these can lead to bad hiring and HR practices.

• Employee survey results indicated a broad range of people were starting on trial periods, rather than groups that could be seen to be at a labour market disadvantage. Employers are using them as standard practice for all employees, and skilled technicians and tradespeople are more likely to be affected. However recent migrants were one-and-a-half-times as likely to start on a trial period (51 % versus 34%). Notable in light of acknowledged problems of migrant exploitation.

• Employers, employees, unions and employment experts have all indicated that 90 day trials have encouraged some employers to adopt short term hire and fire patterns (p 40).

• Note that there appear to be some missing sections such as whether changes to the 90 day trial period have increased the balance of fairness (p 44).

Cashing up of annual leave
· These changes have had low uptake (8% of workers in the last year p 29) and those who were requesting cashing up were low paid workers.

· It appears that, in breach of the law, some employers may be forcing their workers to cash up their annual leave or allowing them to cash up more than a week (34% of workers in the UMR survey who had cashed up leave had cashed up more than a week of leave in the past year p 30).

· One Auckland security firm said they believed their staff didn’t want or expect annual holidays and would rather have the cash (p 30).

Union access
· Most employers with a union presence in their workplace noted that they already had a good constructive working relationship with unions (p 34).

· No unions thought that the changes had a positive effect and 17% thought that the changes had negatively impacted on workplace relations.

· Only one of the 19 employees surveyed belonged to a union (p 34).


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