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Employment Relations Amendment Bill Speech

Hon Kate Wilkinson Minister of Labour

11 December 2008

Employment Relations Amendment Bill First Reading Speech

This bill amends the Employment Relations Act 2000 to implement Government policy on trial employment periods for new employees of small and medium sized businesses - those employing fewer than 20 employees - and to support Government policy on Kiwisaver that is being enacted through amendments to the Kiwisaver Act 2006 by repealing the provisions of the Employment Relations Act that deal with Kiwisaver.

This Government is committed to getting New Zealanders into jobs and providing the right encouragement to employers to employ them. This is important in the current challenging economic times.

Given the pressure that small and medium sized employers and employees are under, the government believes it is important that the measures contained in this Bill are acted on quickly. This Bill will increase the willingness of employers to take on new staff. Greater flexibility for employers will provide much needed assistance. The Government's policy both on KiwiSaver and the 90 day trial periods have been well signalled prior to the election.

First, the Government is making changes to the KiwiSaver scheme through the Omnibus Tax Bill. One of these changes will require employer contributions to KiwiSaver to be on top of an employee's existing pay when the employee joins a KiwiSaver scheme. This change will safeguard the ability for employers and employees to negotiate changes to this arrangement in good faith. There will, therefore, no longer be a need for similar KiwiSaver 'discrimination' provisions contained in sections 103(1)(h) and 110A of the ERA.

Secondly, this bill provides for trial periods of up to 90 days for new employees who want to be given a go - who want the opportunity to get their feet in the employment door, to back themselves, to say "give me a go and I will prove how good I am" Currently, there are no provisions for trial periods in our existing employment legislation. In fact we are one of the few countries internationally that do not have a trial period for employees.

This bill will enable employers in SMEs being those with fewer than 20 employees to determine a prospective employees suitability for permanent employment, without the risk of legal proceedings for unjustified dismissal in the event that the employment relationship does not work out. It will encourage small businesses to give a new employee a go and to take on new employees

Accordingly under this bill a new employee who agrees to a trial period of up to 90 days will be unable to raise a personal grievance for reasons of unjustified dismissal. The introduction of the Government's proposed 90 day trial period will encourage more small and medium sized businesses, which can find it difficult to absorb costs associated with giving new employees a go, to take on new employees. This will benefit many people at the margins of the labour market.

This bill is not about taking away rights - it is about giving opportunities. It has safety mechanisms to ensure that it is fair and balanced and a win - win for both employer and employee.

The Bill will amend the Employment Relations Act 2000 (the ERA) so that an employer with fewer than 20 employees may agree in good faith with a new employee to a trial period of up to 90 calendar days as part of a written employment agreement signed by both parties at the beginning of the employment relationship.

Firstly the trial period will only be entered into by agreement. No one is being forced into a trial period, no existing employees can be put onto a trial period but it is an option that will be available to employees wanting to be given an opportunity to work in small and medium sized business.

Secondly it is very specific in that it only relates to the ability to take a personal grievance in the first 90 days of an agreed trial period for unjustified dismissal. Other rights are specifically retained - so that the employee still has the same protections, whether or not they have agreed to a trial period - under the Act for unjustifiable action by the employer, the same protections against discrimination, sexual and racial harassment and duress. Those protections still remain. The Bill preserves the right of an employee to raise a personal grievance under the discrimination provisions of the ERA.

The Bill also ensures that an employer and an employee may only agree to a trial period once. So if the employment relationship ends and the employee is subsequently re-employed, the option of a trial period will not be available. That means that the trial period cannot be used as for example an 89 day rollover. In other words the employer can only under this bill employ an employee with a trial period if that employee has not previously been employed by the employer.

The Bill also specifically ensures that an employee whose employment agreement contains a trial provision is, in all other respects - in all other respects - including access to mediation - including being subject to the good faith provisions - to be treated no differently from an employee whose employment agreement contains no trial provision or contains a trial provision that has ceased to have effect. Mediation will be available. Good faith will continue to apply.

And finally we have stated that beneficiaries who agree to a trial period and find that the trial just does not work out for them - those beneficiaries may then be able to return to the benefit without having to wait the stand down period. It will give beneficiaries the confidence to step onto that employment ladder knowing that if it doesn't work out through no fault of their own that they can fall back on the safety net of the benefit.

Mister Speaker, this Bill responds to the needs of employers in uncertain times while safeguarding the basic rights of employees. The Government believes that this Bill is in step with international employment law and is a simple and commonsense response to the needs of New Zealanders. The SBAG Report in 2003/4 had as it's first and foremost recommendation a trial period for new employees. This bill has already been extensively debated and consulted on a couple of years ago when there were 618 submissions to Dr Mapp's private members bill. This bill addresses the concerns expressed during that consultation. This bill will give businesses the confidence to take on new staff - and it will give new employees the opportunities to get on the employment ladder. It will provide opportunities for those who might suffer disadvantage in the labour market for example employees who are new to the workforce or are returning to the workforce after some time away or specific groups at risk of negative employment outcomes.

I commend this Bill to the House.


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