Workplace Relations Minister Brooke van Velden responds to questions from reporters at Parliament. Photo / Mark Mitchell
Van Velden told reporters at Parliament the premise of the law changes was to “build some business confidence to make it easier to hire people across the wider economy”.
“We know there are many companies out there that are actually quite fearful of [having] a go on a new worker because they are afraid of what will happen if it doesn’t work out.”
Personal grievances
Greater weight will be given to the behaviour of employees when setting remedies for personal grievances. In these cases, no remedies would be available if an employee is dismissed for serious misconduct.
Meanwhile, lesser misconduct could reduce remedies by up to 100% with no option for reinstatement or compensation for hurt and humiliation if an employee was found to have contributed to their personal grievance.
According to law firm Dentons, “while employees will still be able to sue, many employers will feel able to dismiss employees without any process where remedies cannot be awarded”.
“This amendment may also encourage employers to dismiss an employee who they deem to have contributed to any potential personal grievance without due process (for example, where there are significant performance concerns), knowing that the consequences for them will be limited due to the reduced remedies available for the employee.”
$200k threshold
Under the sweeping changes to personal grievances, people who earn more than $200,000 per year will not be able to pursue an unjustified dismissal claim against their employer. This is unless they had opted out of this clause by contract.
The legislation says these earners were “likely to have high bargaining power” and the changes would provide greater “flexibility and certainty in the dismissal process for employees who have a significant impact on organisation performance”.
The legislation includes a definition of a contractor. Photo / NZME
Who is a contractor?
The legislation defines who is an “employee” and who is a “contractor”. It comes swiftly after the landmark Supreme Court ruling where Uber drivers won their battle to be treated as employees (and therefore be subject to employee entitlements like minimum wage and leave) rather than contractors.
According to law firm Buddle Findlay, “the wider impacts of this decision will likely be countered by the Employment Relations Amendment Bill” which introduces a new “gateway test” that limits a workers’ ability to challenge their employment status.
And as Douglas Lawyers explains, under previous 2000 employment law, individuals who were working as independent contractors could apply to the Employment Relations Authority (ERA) or the court to claim that the “real nature” of the relationship is that of employment.
Under the law, a person would be a “specified contractor” if the following “gateway test” is met:
There is a written agreement that specifies the worker is an independent contractor.The business does not stop the worker from working for others including competitors. The worker isn’t required to work at certain times, days, or for a minimum period and is able to sub-contract the work. An employer can request the subcontractor is vetted. The business cannot terminate the contract if the worker does not accept additional work.
If all the above factors are met, that contractor will not be able to raise legal claims with the court regarding their employment status.
‘30-day rule’ gone
If the legislation is enacted, the “30-day rule” will be scrapped. Currently, new employees are automatically covered by a unionised collective agreement for the first 30 days of their employment before choosing whether they want to join the union.
Under the amendments, employers would only be required to inform new employees of the existence of a collective agreement and provide a copy. In essence, repealing the “30 day rule” means employers and employees can negotiate an individual agreement from the start.
Law firm Dentons said this would “indirectly support the expansion of 90-day trials”.
PSA national secretary Fleur Fitzsimons. Photo / Supplied
Fleur Fitzsimons, national secretary of the country’s largest union the PSA, said if passed in its current form, the law would “radically change every New Zealand workplace by introducing insecure employment for every working person”.
She described the changes as the biggest “destruction of critical worker rights since 1973” when personal grievance legislation was introduced.
“It is fire at will right here in New Zealand. If passed into law, the bill will accelerate a widespread destruction of crucial worker rights,” she said.
“Such rights are already significantly limited in New Zealand. The bill will destroy the central fabric of those that still remain.”
In a speech to Parliament, NZ First Minister for Rural Communities Mark Patterson said the party had some “concerns and tweaks” they would want to see reviewed. The party often saw itself as the “arbiter” between National and Labour on employment relations bills, Patterson said.
“This is the impact we hope to have on this piece of legislation, as well,” he said.
“The personal grievance provisions, in particular, are really important. There’s a power imbalance there,” he said, questioning how this could be addressed without overcorrecting to the detriment of “genuine personal grievances”.
NZ First MP Mark Patterson during Question Time in Parliament. Photo / Mark Mitchell
“We have heard the concerns, we are reading the submissions, and we are talking to representatives of both the unions and of business. We will continue to engage with the minister on this.
“We will continue to support the bill through the process, but we do have some concerns and some tweaks that we would like to see.”
As the bill is shifted off the Parliamentary Order Paper and its third and final reading expected to now be next week (rather than today), Labour’s Workplace Relations spokesperson Jan Tinetti said NZ First still had the chance to “stand up for the working New Zealander and the battler” and not support the bill.
“This will hurt the hard-working person. It might be down the track but it is going to make a big, huge issue in their life.”
Julia Gabel is a Wellington-based political reporter. She joined the Herald in 2020 and has most recently focused on data journalism.