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Malcolm Aitken on the 90 day 'fire at will' Bill

On the 90 day ‘fire at will’ Bill

by Malcolm Aitken

An injection of labour market flexibility that’s good for New Zealand employers and workers alike in the face of on-going economic turmoil, or a draconian right-to-fire with no right of appeal that borders on the Dickensian?

The Employment Relations Amendment Act is now law and comes into effect in March. Malcolm Aitken looks at some of the arguments.

The war of words over the Key Government’s provision for 90-day “trial employment periods” in the new amendment Act is refusing to go away.

The Council of Trade Unions was fast to label the legislation the “Fire-at-Will” Bill. Significantly, the Human Rights Commission also expressed serious concerns about the Bill and its speedy passage through Parliament.

“Rushed legislation is potentially risky legislation and this is a fundamental change to employment law which requires serious consideration,” the Commission’s Equal Employment Opportunities Commissioner, Dr Judy McGregor, was reported as saying.

On the other hand, the legislation has its champions. Business New Zealand’s Chief Executive, Phil O’Reilly, was pretty quick to get himself in front of TV cameras to assure workers that this apparent dilution of their rights was best for them. This was all about the opportunity to be taken on. Employers would be much more willing to give a worker a go if they did not risk, it was implied, getting stuck with a dud. Mr O’Reilly’s critics may have seen this as an act of Orwellian doublespeak –what seems to hurt you actually helps you.

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Some employers want to take things further. The Otago Daily Times reported last week that Otago-Southland Employers Association Chief Executive Duncan Simpson thought the new legislation “light-handed and [it] would not be seen as the magic bullet for businesses”.

"This is low-calorie legislation. It is only for 90 days, it is only for businesses employing fewer than 20 staff and it is voluntary.”

Mr Simpson also reportedly said there could also be tension around whether employees understood there was a trial period and whether or not they willingly agreed.

Defending the idea that employers may be crafty in putting employees on more than one trial period, Mr Simpson said: “some employers would see the trial period as a way of ‘recycling people’ every 90 days, but if they did that, they would not survive in business. “

In addition to a lot of favourable media commentary, a well-known Auckland University labour law expert who spoke with Scoop, Professor Bill Hodge, for one, did not see the Bill as a huge departure from the status quo.

Professor Hodge said that the Bill would simply take New Zealand back to before the Employment Relations Act extended protection from unjustified dismissal for workers.

He stressed that in Germany there’s provision for probation periods, in England a year’s probation and that in Australia much bigger firms (with 99 or fewer employees), could apply a probation period, although the Rudd Government that had inherited this law from John Howard’s Liberals was paring it back.

Getting to the heart of the issue, it seems the main change is the repealing of the employee’s rights to fight dismissal via a Personal Grievance during a probationary period. As with under Labour, employers and employees in businesses of 20 or fewer could “agree” on a 90-day probationary period but now workers have virtually no recourse if they are fired, whether on day 89 or at any other time during the life of the “agreement” (more on that later).

It seems whatever your ideological outlook, the objective fact is that worker’s rights have been diminished under this Act; people who were for the Bill supported this, people who were against it did not.

Furthermore, Labour Minister Kate Wilkinson’s insistence that bad employers will not be tolerated and that anyone who loses their job during this period will not face a dole stand-down period, may be cold comfort for vulnerable people who lose a job, two or more, because of a bad employer’s personal dislikes or simple prejudices.

Labour has promised to repeal the Act when is next in power and has been highly critical of the speed at which the legislation was passed. EPMU National Secretary, Andrew Little, even took the rare step of (unsuccessfully) petitioning the Government-General for the Act’s Royal assent to at least be delayed. This Act has had the parties squaring up on ideological grounds in a way not seen for some time; National and Act with the employers, Labour with the unions. The Greens Employment Spokesperson Sue Bradford said that the legislation was “likely to be just the first of a series of bitter attacks on the rights and wellbeing of ordinary workers.”

The Parliamentary passage of the Bill has definitely divided opinions too. Although Professor Hodge doesn’t generally like bills being rushed through under Urgency, the matters covered in this Bill, he said, were given a thorough airing in the debate surrounding National MP Wayne Mapp’s similar Private Members bill in 2006. His comments very much echo those of Phil O’Reilly, John Key and ACT.

The Human Rights Commission, Labour and the CTU were adamant however that this earlier “thorough airing” was enough.

Perhaps one of the strongest arguments in defence of the Act is that National did– as Mr Key is keen to stress– make it clear in its election manifesto that it would legislate to this end. A quick perusal of the manifesto confirms this as true. But, you could argue, the democratic process doesn’t always produce what everyone considers a democratic outcome.

Council of Trade Unions president Helen Kelly said the worst thing about the new legislation was that it allowed workers to be treated with impunity.

“They’ve even removed the requirement for employers to justify their dismissal. This Act strips workers of dignity and is disrespectful. It ignores the importance of work to working people and ignores the serious consequences of losing a job. “

Ms Kelly noted that the CTU had supported the Employment Relations Act as it was under the Labour-led government with a “voluntary” 90-day probation period and fair dismissal process but this new legislation “introduces the right to be unfair.”

Although the 90-day probation was supposedly by agreement, if a potential employee was asked about probation in an interview, Ms Kelly said, two things were likely to happen.

“If the interviewee is asked whether they would accept a 90-day probation period and they say ‘no’ the employers eyebrows are going to raise and they aren’t very likely to be offered the job.”

On the day the legislation was passed, a group of well-known New Zealand employment lawyers made a public statement advising people not to take jobs in small companies now that the Bill was through.

The lawyers – Helen White, Simon Mitchell and Greg Lloyd – were reported as saying that anyone who can't afford to lose their job should not accept one with a small company, especially if they are already in secure jobs.

They reportedly said the new Act exposed everyone who started a new job in a company where there were fewer than 20 employees to the risk of being sacked without even being told the reason, let alone having any ability to do anything about it. Again, it seems undeniable, this is a dilution of employee’s rights, however necessary or fair you think that is.

Ms Kelly noted how Labour’s Trevor Mallard tabled an amendment to the Act that would have meant that if employers had used the 90-day probation as a condition of employment, the agreement would be annulled. National rejected this amendment and this shows that the Government doesn’t have a commitment to the Act being fair, Ms Kelly said.

She said it’s likely that, as they have signalled, the Government will extend the Act’s provisions to businesses with over 20 staff.

“But I don’t think they will abolish the minimum wage. They haven’t said they would do it.”

National Party Prime Ministers are generally keen to assert the supremacy of Parliament over what they see as muscle-flexing by trade unions.

Little surveying has been done of public opinion on this legislation. However, as the harsh reality of the new approach to labour law sets in, this could just, ironically, become one National policy that most challenges the Party’s Parliamentary supremacy at the next election because of its lack of popularity.

We will see: time and economic pressures will tell.


Malcolm Aitken is a Wellington freelance journalist. He can be contacted at

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