`
Submission
by the New Zealand Council of Trade Unions –
Te Kauae Kaimahi and Te Runanga o Nga
Kaimahi Maori o Aotearoa
to the
Transport and Industrial Relations Committee
on the
Employment Relations (Probationary
Employment) Amendment Bill 2005
19 May 2006
1.
Introduction
1.1
The New Zealand Council of Trade Unions – Te Kauae Kaimahi (CTU)
is the internationally recognised central trade union centre in New
Zealand representing 37 affiliated unions with a membership of
approximately 350,000.
1.2
Te Runanga o Nga Kaimahi Maori o Aotearoa is the representation
structure within the Te Kauae Kaimahi (CTU) representing, and giving
voice to, Maori members of the affiliated unions. Te Runanga o Nga
Kaimahi Maori o Aotearoa supports the CTU submission but has also
developed a supplementary submission which is appended and which
will be orally presented by the CTU Vice President Maori jointly with the
CTU submission.
1.3
The CTU and Te Runanga o Nga Kaimahi Maori o Aotearoa are
absolutely opposed to the Employment Relations (Probationary
Employment) Amendment Bill 2005 (“the Bill”).
1.4
The CTU submits that the Bill not only removes fundamental
employment rights but also will not genuinely assist employment
opportunities.
1.5
The Bill essentially creates a category of employee as a ‘disposable
worker’. The disposable worker would be stripped of many employment
rights. Fundamentally, the worker can be dismissed for any reason
without any rights of appeal or any requirements of procedural fairness.
The employer does not need to provide a reason, does not need to
give notice, and does not have to give an explanation nor enter into
any discussion with the sacked worker. And the dismissed worker has
no remedy in law. At a time when the key labour market issue is how to
attract and retain staff, this Bill is completely misplaced. Perversely the
Bill’s supporters claim that the Bill is actually designed to help workers
stripped of employment rights.
1
1.6
This Bill is a fundamental attack on employment rights.
1.7
The CTU urges the Committee to reject this Bill.
2.
Key Points
2.1
The key reasons why the CTU is opposing this Bill are set out below.
2.2
The Bill is incorrectly titled. It is not about a genuine probationary
period. Instead it creates a category of ‘disposable worker’. There is
already a provision in the Employment Relations Act (“the Act”) for
probationary employment. The new test for justifiability of dismissal in
section 103A of the Act requires an objective test "in the
circumstances" which could include how long they have been
employed among other matters. The Bill also does not meet the tests of
a genuine probationary period.
2.3
The Bill affects all workers. We would find it no less objectionable if it
was targeted to those described by Don Brash as “too old, too young,
or too brown”. But the point is that although much of the commentary
about the Bill suggests it is aimed at young workers, the Bill applies to
all 2 million workers in the labour force. In addition, most workers
average about 6 jobs in a lifetime. That is a total of 18 months of
employment when they have no appeal rights against unjustified
dismissal.
2.4
Workers are at their most vulnerable when they first start a job. It is a
time when they are trying to fit in – with other workers, with the
requirements of the job, with new arrangements on working hours,
travel and so forth. It is a stressful time. In fact it is a time when workers
need more protection rather than less. This Bill turns natural justice on
its head. It removes rights from people when they most need them.
2
2.5
The Bill encourages discrimination against the young, the old, migrants
and the ‘brown’.
2.6
The Bill is a breach of natural justice as it removes personal grievance
provisions.
2.7
There is no evidence that personal grievance rights in the first 90 days
of employment are a barrier to job creation. There are few Employment
Authority cases involving workers appealing against a dismissal in the
first 90 days of employment.
2.8
The Bill undermines the integrity of the Employment Relations Act
which recognises the inherent inequality between employer and
individual employee, and also that there are vulnerable workers that
need additional protections, rather than a removal of employment
rights.
2.9
The Bill would prejudice future employment prospects for employees
who are dismissed with no right of appeal to argue their case but need
to declare such a dismissal when they apply for a new job.
2.10
Employment law has removed the right to strike against dismissal but
then provided for personal grievance remedies. This Bill removes the
personal grievance provisions but does not allow workers to strike over
a dismissal that occurs within the first 90 days of employment.
2.11
The Bill would disqualify dismissed workers from claiming a benefit as
the automatic stand down period is usually not waived if there is no
personal grievance being pursued.
2.12
The Bill removes a significant number of rights in addition to removing
personal grievance remedies for unjustified dismissal.
3
2.13
The Bill would have harmful effects on workers who are dismissed with
no right of appeal.
2.14
The Bill will reduce labour market flexibility. Workers will be reluctant to
start a new job if it involves being a disposable worker for 90 days with
no appeal rights against unjustified dismissal.
2.15
The Bill essentially creates a negative workplace culture. Any worker in
their first 90 days of employment knows that any suggestion or query
they make could result in dismissal.
2.16
The Linked Employer Employee Data shows that in the last 5 years
there has been worker turnover of 17% per quarter. This means that
many workers are in their first 3 months of employment. There is also
the prospect of some workers constantly being in the first 90 days and
therefore having no appeal rights. Seasonal workers would usually
therefore be subject to dismissal with no rights.
2.17
In some service sector industries where there is high labour turnover a
majority of employees could be subject to unfair dismissal with no
rights of appeal. The Bill allows irresponsible employers to base their
‘hire and fire’ policies on their right to dismiss workers with no right of
appeal. It therefore creates a new category of worker – the 90 day
casual. Such workers will not be able to build up sufficient length of
service to qualify for sick leave, annual leave and so forth.
2.18
The preservation of remedies through the Human Rights Commission
is not a satisfactory substitute for the removal of rights under the
Employment Relations Act.
2.19
The proponents of the Bill argue that New Zealand is out of step with
the OECD. In fact we have among the lowest unemployment anywhere
in the OECD without such a Bill. In addition, teenage unemployment is
higher in a number of countries with such provisions.
4
2.20
Proponents of the Bill are being self-serving in their use of low
unemployment statistics. Presumably if unemployment was much
higher they would say that we need this Bill to get unemployment
down. Now that we have relatively low unemployment, they are
essentially arguing that those left unemployed are too risky to employ
and therefore the Bill is needed to help those labour market ‘outsiders’.
2.21
The Bill is an attack on union rights. The protection against duress for
joining (or not joining) a union is removed during the first 90 days of
employment.
2.22
The CTU believes that there are much better ways to promote
employment opportunities for long-term unemployed or disadvantaged
groups of workers. Essentially we support general and targeted
schemes to invest in the capability of such workers rather than regard
them as disposable workers. A strong economy with active labour
market arrangements is the best way to ensure there are good
employment opportunities rather than the removal of fundamental
employment rights.
2.23
A similar proposal considered by the National/NZ First Government in
1998 was rejected. We submit that this was a correct approach and
that since then we have seen a considerable fall in unemployment
generally and much greater employment of Maori, young workers and
women.
3.
The Bill is not about ‘Probationary Employment’
3.1
This Bill is incorrectly titled. There is already provision for a period of
probationary employment in the Employment Relations Act. In essence
the Bill simply disqualifies a new employee from access to normal
employment rights. It creates new categories of worker such as the ‘90
day casual’ and the ‘disposable worker’.
5
3.2
The Bill does not provide for a genuine probationary employment
period. In Nelson Air Ltd v NZ Airline Pilots Assn [[1992] 1 ERNZ 632
(CA)] the Court of Appeal set out a number of key issues relating to
“trial” or “probationary” employment:
-
It is distinguishable from non-probationary employment to the
extent that “[the] whole purpose of a probationary period is to
enable the employer to assess the suitability of the employee
. . . normally in terms of skills, diligence and personality”.
-
A probationary employee must be taken to realise that he or
she will be under “close and critical assessment” and that
permanent employment will be assured only if the employer’s
standards are met.
-
The employer, for its part, must “not simply be a critical
observer, but must be ready to point out shortcomings, to
advise about any necessary improvements and to warn of
the likely consequences if its expectations are not met”.
-
If it becomes apparent to the employer that the trial is not a
success, on the basis of a fair and reasonable assessment,
fair warning of termination must be given.
3.3
The Employment Court in Greens Industries Limited v Barton (EC,
Auckland AC 55/04, 8 October 2004), states that the requirements of
procedural fairness are satisfied if the employer:
-
conveys its concerns to the employee;
-
provides an appropriate opportunity for the employee to
comment; and
6
3.4
considers the employee's explanation in a fair manner.
This is hardly a great burden for a reasonable employer. Yet the Bill
wipes out even these minimal requirements.
3.5
In essence the current situation preserves a right for employees to be
heard, and for the employee’s views to be considered fairly.
3.6
In addition the new test for justifiability of dismissal in section 103A of
the Act requires an objective test "in the circumstances" which could
include how long they have been employed among other matters.
4.
This Bill affects all Workers
4.1
This Bill will affect all workers. It has been estimated that most workers
have around 6 jobs in their lifetime. This is probably a conservative
figure. It means that every year there are thousands and thousands of
people starting a new job. In some cases, people will have several jobs
in a year.
4.2
The Bill means that on average a worker could have up to 18 months
with fundamental employment rights stripped from them
5.
The Bill removes employment rights at a vulnerable time
5.1
When a worker starts a new job it is a vulnerable time. The new worker
is trying to absorb a lot of information, note the important requirements
of the job, develop new workplace relationships, learn some new tasks,
and adapt to perhaps new hours of work or travel arrangements. It is a
time when the reasonable employer would ensure there are good
support systems in place.
5.2
But this Bill marks out the new worker as someone with fewer rights.
The new worker becomes easily disposed of under this Bill. The many
7
good employers in the New Zealand labour market will continue with
good induction periods, proper training, opportunities for feedback and
other features of a supportive workplace environment. But the
unreasonable employer will have been handed a licence for
exploitation safe in the knowledge that at any time in the first 90 days
the employer can simply dismiss the worker with no concern of any
appeal. The employee will have no right to be heard. There will be no
right for his or her views to be considered. The employer can make
unreasonable demands and when the employee finally says enough –
then he or she can simply be dismissed. This is a highly retrograde
step. The first few months in a new job are a time when more support
is needed, not less.
6.
The Bill promotes discriminatory employment practices
6.1
Phil O'Reilly, Chief Executive of Business NZ has stated that
“...employers can be reluctant to employ people without a previous
positive employment record, and the proposed legislation would help
overcome the risks of doing so.”
He sees that the Bill would
particularly benefit teenagers, new migrants, and “other groups whose
unemployment rates exceed the average.”1
6.2
The Leader of the National Party, Dr Don Brash has said in support of
this Bill that, “a rational employer will take care not to hire people
perceived as a bit ‘risky’ – people who may be ‘too young’, or ‘too old’
or ‘too brown’”.
6.3
Both these statements imply that certain groups may be targeted by
employers for disqualification of employment rights for 90 days. Indeed,
the statement by Don Brash amounts to encouraging employers to use
the 90 day ‘disposable worker’ provisions specifically for young, or old,
or Maori and Pasifika peoples.
8
6.4
These dangers were recognised back in 1998 (Office of the Minister of
Labour, Review of Employment Contracts Act Personal Grievance
Provisions: Development of Reform Package, paper attached to
Cabinet Economic Committee paper ECO (98) 60, 17 April 1998, para
30) The paper recognised that unfair pressure could be applied to the
young and those on work-tested benefits.
6.5
However this Bill, in the full knowledge that discrimination on the basis
of age or race is unlawful due to the discrimination provisions of the
Employment Relations Act 2000 and the Human Rights Act 1993,
suggests that employers will be able to target certain categories of
workers for a 90 day period without appeal rights for unjustified
dismissal.
6.6
An analysis by Brosnan and Walsh found that women were more than
twice as likely as men to be casual workers2. A review of precarious
non-standard employment found that precarious workers (which
includes job termination with little prior notice, irregular hours and
earnings, and no explicit contract for ongoing services) are more likely
to be women, young, an ethnic minority, and less-skilled.3
6.7
So this means that these groups already have to cope with much more
precarious work arrangements. Adding probationary employment will
only add to the discrimination faced by these workers – not lessen it.
7.
The Bill breaches natural justice
7.1
The Bill removes the right to be heard from an employee in the first 90
days of employment. If they are subject to a dismissal or action to their
disadvantage, they are denied the right to appeal using the personal
grievance provisions under the Employment Relations Act. They also
1
2
www.businessnz.org.nz/print/1006
Brosnan, Peter and Walsh, Pat (1996) ‘Non Standard Employment in Australia and New Zealand’.
9
have no recourse to mediation. The promotion of mediation is stated in
section 3 of the Act to be one of its key objects. Mediation services,
however, do not apply during the 90 day ‘disposable worker’ period.
Even mediation on an employment relationship issue that does not
involve dismissal is not available to the worker in the first 90 days.
7.2
The Bill also removes the right to notice. If the employer breaches a
notice period in the agreement no remedy is available under the Bill
because the Bill states that the agreement can be terminated
“forthwith” “during or at the end of the probationary period”.
7.3
The right to natural justice has been a fundamental aspect of
employment legislation and common law in this country for decades. It
is a disgrace that this Bill proposes to remove such rights.
7.4
The CTU sees no merit in the argument that the Bill requires the
employee’s “agreement” to what is misleadingly called a probationary
period (clause 69AA). The period of the Employment Contracts Act
introduced New Zealand workers to the “take it or leave it” method of
reaching agreement whereby employers simply said in effect, “this is
the agreement if you want the job”.
8.
Few Cases in first 3 months of employment
8.1
The exact number of cases involving employees of less than 3 months
taken to the Employment Relations Authority is not known to us at the
time of making this submission. We have requested this information.
However anecdotal reports suggest that they are a very small
proportion of the overall number of cases. In addition, the Small
Business Advisory Group in its 2006 Report4 argues for a 12 month
3
Deborah Tucker (2002) ‘Precarious’ Non-Standard Employment – A Review of the Literature. Labour
Market Policy Group. P.7.
4
Report of the Small Business Advisory Group (March 2006) Small and Medium Enterprises in New
Zealand.
10
performance-based-personal-grievance-free period but provides no
evidence or arguments in support of this request.
8.2
Many surveys suggest that employers are looking for skilled workers.
This implies that the real problem is investment in skills rather than the
need for a new law so that so-called “risky” workers can be sacked with
no right of appeal.
9.
The Bill undermines the Employment Relations Act
9.1
The Bill is at odds with the Employment Relations Act which not only
refers to the presence of vulnerable workers, and the inherent
inequality between individual employers and employees, but also is
based on good faith relationships and promotion of mediation.
9.2
Section 4 of the Employment Relations Act 2000 requires the parties to
employment relationships to be responsive and communicative with
one another. An employee can hardly be communicative if he or she
risks dismissal for making any suggestion that may not be appreciated.
9.3
The Bill will override protections under Part 6 of the Employment
Relations Act 2000 that were specifically designed to assist, in
particular, those vulnerable workers who had been treated unfairly
under the Employment Contracts Act 1991.
9.4
And the Bill repeals section 67 of the Employment Relations Act 2000,
which currently provides for written probationary or trial arrangements
without removing fundamental employment rights.
10.
The Bill undermines the Health & Safety in Employment Act
10.1
The Bill will undermine the Health and Safety in Employment Act and
the rights of employees under the Act to take up health and safety
11
issues in the workplace, to be Health & Safety Representatives, to
serve hazard notices when appropriate, and to refuse work likely to
cause serious harm.
10.2
The 1990s saw a growth in precarious employment: part-time jobs,
multiple job holding, home work, self employment and casual and
temporary employment (increasingly through labour-hire companies).
At the same time there was an increase in working hours and intensity
of work for some sections of the workforce. International research has
shown that the growth of these types of work arrangements are having
adverse effects on workers' health and safety and is associated with a
measurable deterioration in occupational safety and health.5
10.3
In addition, the 1990s in New Zealand saw:
•
The widespread weakening of employee participation in
occupational safety and health.
•
A lessening of employee knowledge and awareness of health
and safety issues.
•
A weakening of union representation and bargaining on health
and safety issues.
•
An increasing unwillingness of workers to report workplace
health and safety problems.
10.4
The 2002 Amendments to the Health & Safety in Employment Act
provided:
•
A legal requirement on employers to involve employees in
workplace health and safety processes and decisions
•
A strengthened right to information
•
A right to elect employee health and safety representatives.
•
A requirement that employers provide protective clothing and
equipment to employees at no cost
5
M Quinlan, C Mayhew and P Bohle "The Global Expansion of Precarious Employment, Work
Disorganisation, and Consequences for Occupational Health: A Review of Recent Research" (2001) 31
Int'l J Health Services 335.
12
•
A right for employees to refuse to perform work likely to cause
serious harm
•
A right for trained health and safety representatives to serve
hazard notices
10.5
Since these 2002 amendments were introduced in 2003 there has
been a significant drop in the workplace fatality rate.
10.6
The Bill will undermine these processes and rights in the Health and
Safety in Employment Act and there will be no redress for an employee
who is dismissed for, for example, for refusing to undertake work which
is likely to cause him or her serious harm, or insisting that the employer
provide protective clothing or equipment as required by the Act. A USA
example is referred to in paragraph 14.3.
11.
The Bill prejudices future employment prospects
11.1
When an employee is unfairly dismissed, they can challenge that
dismissal, go to mediation or even an Authority or Court hearing and
‘clear their name’. Many employers will ask on an application for
employment form whether or not the employee has been dismissed
previously. This Bill denies the opportunity for a worker to take such a
case. This means the employee in the future has no way of
demonstrating to a prospective employer that such a dismissal was
unjustified and was found to be so by an independent person.
12.
The Bill overrides an historic trade-off
12.1
It is unlawful in New Zealand to take strike action over the dismissal of
a fellow employee. However this has been balanced by the right to take
a personal grievance for unjustified dismissal. This was recognised
when the 1973 Industrial Relations Act introduced the personal
grievance process for unjustified dismissal. The Bill removes the right
13
to personal grievance coverage without restoring the right to strike over
dismissals, or even restoring the common law right to sue for breach of
contract for wrongful dismissal.
13.
The Bill prevents workers from claiming a benefit
13.1
The imposition of a 13 week non-entitlement period under s 60H of the
Social Security Act 1964 where employees are dismissed for
misconduct tends to be applied, in practice, by assessing the potential
for a successful personal grievance6. The Bill will mean that workers
dismissed during the first 3 months of employment will be more likely to
face a long stand down from a benefit entitlement. The knowledge of
this fact will make it even more difficult for workers to ‘speak up’ at work
about any issue.
13.2
Also beneficiaries can face graduated sanctions under the Social
Security Act 1964 if they fail to take up “suitable” offers of employment,
or if they have been dismissed for alleged misconduct. Given the policy
underpinning the work-testing provisions, i.e. acceptance of any job
offer that does not breach the minimum code, there is a very real
concern that a person who refused an offer containing a probationary
period with no employment rights would attract sanctions under the
Social Security Act.
14.
The Bill removes many existing rights under the Act
14.1
Under the Bill, an employee dismissed within the 90 day period will not
be able to raise a complaint of unfair bargaining relating to the
negotiation of the employment agreement under s 68 of the
Employment Relations Act 2000. This right currently applies, for
6
The current government has made the stand down discretionary. But Work and Income, under their
policy guidelines tend to operate the stand down in practice as if it was automatic and require evidence
that a personal grievance has been raised before they grant a benefit. In other words, in order to get the
benefit the applicant has to show evidence that s/he has raised a personal grievance and sign a form
promising to repay Work and Income the benefit from any compensation received.
14
example, to people who may be disadvantaged due to age, sickness,
mental or educational disability or communication difficulty. Far from
providing more support for those disadvantaged in the labour market,
the Bill clearly removes any remedies for workers in this situation.
14.2
The Bill will also remove any effective remedy under section 63A of the
Employment Relations Act 2000 where the employer fails to provide
basic written information about the agreement before it is signed (the
main employee remedy here being the unfair bargaining provision in s
68, which the Bill overrides).
14.3
Clause 69AD of the Bill also removes other fundamental enforcement
mechanisms under Part 9 of the Employment Relations Act 2000.
These include:
-
the right of access to a wages and time record (sections 130
and 132);
-
the right to bring an action for arrears of wages (section 131:
such an action might be brought as a breach of contract
under clause 69AD, but the Bill simultaneously removes the
jurisdiction of the Employment Relations Authority and the
Employment Court in the same clause);
-
penalty actions for breach of agreement (sections 133 - 136);
-
the ability to enforce the agreement (or aspects of other
legislation) by a compliance order under sections 137 – 140).
14.4
This illustrates that the Bill is designed to fundamentally disadvantage
the worker during the first 3 months of employment and put them in an
extremely precarious position.
15
15.
The Bill will have harmful effects on dismissed workers
15.1
In the USA, “an estimated 150,000 to 200,000 employees are fired
annually who could assert legitimate claims under the good cause
standard,” if it were available to them (Barber, 1993: 193).
15.2
In one case that has been heard in the last 6 years, an ex-teacher was
found to have been dismissed without warning, and without sustainable
grounds, after just a few days’ work (Martin v Parke & Clarke Ltd (EC,
Wellington WC 35/00, 5 July 2000, Judge Shaw).
This Bill would
remove from that worker any opportunity to appeal against such an
unfair dismissal.
15.3
We note the case in the USA of Mary Parsons. She worked for the
Bolton Plating Company and raised a concern about acid eating
through her work gloves. She took the matter up with her supervisor
but no action was taken. Then she went to the Occupational Safety and
Health Administration who upheld the complaint. Although they did not
reveal to the company that it was Mary Parsons who complained, it
was obvious to the employer that she was the source of the complaint.
Using the fact that she was in her 3 month trial period, the company
dismissed her.7
15.4
We also note cases in Australia of workers being unfairly sacked within
their probationary employment period8. These have included a young
security guard sacked on the last day of his 3 month probation for
refusing to sign a ‘take it or leave it’ individual contract that would have
cut his pay by almost $9,000; and a sales assistant fired by her
manager during her probationary employment period while away at her
sisters funeral, despite giving notice as soon as she could to the
assistant manager and two others.
7
Safety Compliance Letter, June 2004, i2442 p 3(1).
Australian Council of Trade Unions, August 2005. ‘Why Workplace Laws Are Important For
Working Families’.
8
16
16.
The Bill will reduce labour market flexibility
16.1
A dynamic labour market is often characterised as one which includes
a situation where highly qualified workers are able to move to new
positions so that their qualifications are best applied. However, faced
with a 90-day period where such a worker could be instantly dismissed
with no reason provided, such workers will think twice before seeking a
new job. While this may benefit their existing employer, it is harmful
overall if there is an unnecessary barrier to employment mobility.
17.
The Bill will create a negative workplace culture
17.1
The labour market of the future involves flatter management structures,
more use of tacit knowledge, employee engagement, partnership
arrangements, and encouragement of feedback, teamwork and
innovative work practices. This Bill flies in the face of these trends. It
instead implies a workplace where the new employee dare not speak
up, make suggestions, criticise unacceptable work practices, seek
some work-life balance, address an urgent family need, contribute to
team discussions and generally engage in the workplace except in an
ingratiating subservient manner designed to please the employer.
17.2
This may suit a minority of employers but it is no way to build a modern
workplace.
17.3
There is increasing recognition of bullying in the workplace. It is noted
that a study of bullying in the British higher education sector (Simpson
and Cohen, 2004) suggests that probation is disempowering, and so
would leave employees more open to unlawful and/or unethical
management behaviour.
17
18.
The Bill means many workers will remain without fundamental
rights (e.g. seasonal workers)
18.1
Some workers will face lengthy periods without employment rights. For
example, the unrestricted use of “revolving” short fixed term contracts
under the Employment Contracts Act 1991 led to employees being
denied personal grievance procedures indefinitely (because the ending
of a fixed term was not a dismissal). The Employment Relations Act
2000 redressed this problem by requiring a genuine reason for fixed
terms; that employees be informed of the reason; that fixed terms
should be in writing; and that fixed terms should not be used as
probationary periods (section 66).
18.2
Seasonal workers can also be dismissed within 90 days without any
reason being given. This means that the Bill adds to the precarious
nature of seasonal employment.
19.
Many workers will not qualify for sick leave and holidays
19.1
There will be many workers who will have their employment terminated
before they are able to accumulate sufficient service (e.g. 6 months) to
qualify for sick leave under the Holidays Act.
20.
Human Rights remedies are no substitute
20.1
The Human Rights Act 1993 does not cover many grounds for
dismissal that can currently be challenged in the first 90 days of
employment, such as dismissal on the basis of trade union activities,
dismissal for making a health and safety complaint, dismissal for
claiming the benefit of a contract, etc.
20.2
Also the process under the Human Rights Act is far more difficult and
more limited than the process under the Employment Relations Act, in
particular because the Human Rights Commission (in its own words)
18
“has a very limited financial capacity to participate in litigation” (Human
Rights Commission, Developing Human Rights Law, www.hrc.co.nz).
20.3
And most importantly, available remedies under the Human Rights Act
1993 do not include the primary remedy of reinstatement under the
Employment Relations Act 2000.
20.4
Hearings of the Human Rights Review Tribunal can take years to be
heard compared with the quick and easy access to mediation under the
Employment Relations Act.
20.5
We note also that the more limited monetary remedies under the
Human Rights Act 1993 have been criticised by the High Court as
being “lower and out of step with those awarded in comparable
jurisdictions” (Laursen v Proceedings Commissioner (1998) 5 HRNZ
18, 28-29).
21.
OECD comparisons misplaced
21.1
The proponents of this Bill argue that New Zealand is the only OECD
country without such a provision as contained in this Bill. However, we
have over the last several years had either the lowest or second-lowest
unemployment rate in the OECD. Therefore it cannot be said that the
absence of a 90 day period where fundamental employment rights are
denied has been a barrier to lowering the rate of unemployment.
21.2
The average unemployment rate in the OECD9 in 2004 was 6.9% when
in New Zealand it was 3.9%. Long term unemployment of 6 months as
a percentage of total unemployment averaged 47.1% in the OECD in
2004 compared with 23.9% in New Zealand10. Employment growth
averaged 2.3% in New Zealand from 1992 to 2002 compared with 1%
across the OECD. In 2004 the average for the OECD was 1.1%
9
OECD Employment Outlook 2005 p. 237.
Ibid. p. 258.
10
19
compared with 3.4% in New Zealand. There is no evidence that the
existence of probationary periods without employment rights is having
a significant effect on employment or unemployment in the OECD. It is
also abundantly clear that the absence of such arrangements in New
Zealand has not had a measurable effect on employment rates
compared with the OECD average.
21.3
It is also the case that disadvantaged groups in the labour market do
not seem to have lower unemployment rates relative to the general
level because of their disqualification from appeal rights against
dismissal. For example, in 2003, New Zealand’s unemployment rate
was 4.7%, but 10% for Maori, 7% for Pacific peoples, 7% for other
groups (mainly Asian), and 14% for 16-19 year olds (Statistics New
Zealand, 2004:
64-65). In 2003, Britain’s unemployment rate was
5.0%, just above New Zealand’s in the same year, but 7% for Indians,
15% for Pakistanis, 13% for blacks,11 and 15% for 16-19 year olds.12
21.4
It has also been shown that such probationary periods without
employment rights can lead employees to self-select meaning that
those concerned about the potential for non-performance will not take a
probationary job.13
21.5
Also the Bill does not actually copy aspects of the law as it applies in
the UK. For instance, the qualifying period on the UK as set out in
section 108 of the Employment Rights Act 1996 (UK) does not apply in
respect of claims relating to maternity; trade union membership; health
and safety; enforcement of certain statutory rights; or redundancy for
an inadmissible reason.
21.6
In addition, many other OECD countries have much stronger
employment rights in general. So although there may be an exclusion
11
www.tuc.org.uk/welfare/tuc-10172-f0.pdf
http://www.lda.gov.uk/server/show/ConMediaFile.781
13
Eng Seng Loh in Industrial and Labor Relations Review, April 1994 v49 n3 pp 471-486.
12
20
of rights for new employees for sometimes a considerable period, the
level of employment protection can include for instance much greater
rights to prevent dismissal due to redundancy. And in the UK for
instance there is significantly greater procedural protection in the case
of dismissals under the Employment Act 2002 (Dispute Resolution)
Regulations 2004 (UK) than under New Zealand law.
21.7
Although there are ‘probationary periods’ longer than 3 months in a
number of OECD countries, in eight OECD countries - Austria, France,
Greece, Italy, The Netherlands, Poland Spain and Switzerland –
statutory maximum probation periods are less than 3 months. Also, in
those OECD countries where statutory maximum probation periods are
3 months or greater, the actual employment rights that are altered are
often quite limited. For example, in Germany, where the statutory
maximum probation period is up to six months, the only significant
employment right that is affected is a halving of the statutory minimum
notice of termination from four weeks to two.
22.
Perverse use of ‘low unemployment’ to support the Bill
22.1
The CTU submits that it is cynical to use New Zealand’s relatively low
rate of unemployment to support this Bill. Do the proponents suggest
that if unemployment rises, such a Bill is redundant? The CTU submits
that if unemployment was at historically high levels in New Zealand the
proponents of this Bill would still be advocating for such a measure.
22.2
The CTU believes it is perverse to suggest that those who remain
unemployed are in this position because they are too risky to employ.
Even if that is true in some cases, the solution surely is not to make it
easy to sack such workers, but to directly address the “risky” elements
of their employability.
22.3
The proponents of this Bill seem to be saying in effect, “look we have
got unemployment down so low that we are really at the bottom of the
21
barrel. So let’s create a disposable worker category for these risky
types and then employers can take them on and quickly dump them
whenever they deem it necessary”. This is not only a disingenuous
approach to assistance for those who are disadvantaged in the labour
market; it also removes fundamental employment rights from all
workers at some time in their working lives.
23.
The Bill is an attack on union rights
23.1
A fundamental aspect of the Employment Relations Act 2000 is
freedom of association – the right to join, or not to join, a union. Clause
69AD(2)(a) of the Bill, however, removes the right of access to
personal grievances for discrimination on grounds of union activity,
under s 104 of the Employment Relations Act and duress in relation to
union membership under s 110. This cancels the protection against
victimisation for membership or non-membership of a union in the first
90 days of employment.
23.2
At the present time there is a resurgence of activity among young
workers. For example, in fast-food chains many workers are using their
employment rights to meet, discuss work issues, and enter collective
bargaining. Already workers with flexible hours are finding that if they
are active in the union, their hours are reduced. Clearly this Bill would
allow the employer to dismiss many of these workers (as they often
have less than 3 months’ continuous service).
23.3
Unions also promote safe work practices. But this Bill even excludes
the right to bring a personal grievance for dismissal after refusing to do
unsafe work or being elected as a health and safety representative
(clause 69AD (2) (a), removing use of s 104 of the Employment
Relations Act 2000). Not only does this override relevant provisions in
the Employment Relations Act 2000 and the Health and Safety in
Employment Act 1992, it also breaches Article 5 of ILO Convention
155.
22
23.4
In addition the discrimination provisions of the Human Rights Act 1993
do not cover these matters.
24.
There is a better way
24.1
The CTU submits that there is a better way to genuinely address
disadvantage in the labour market. The CTU has consistently
advocated an investment approach. We have suggested this approach
in the context of industry training and modern apprenticeships,
discussions on productivity, industry and regional development, Hui
Taumata and on many other occasions.
24.2
The CTU has also generally supported schemes to assist workers into
employment.
These
include:
TOPS
(Training
Opportunities
Programme); Job Plus; Taskforce Green; Youth Transition Services;
initiatives through the Mayors Taskforce for Jobs; Secondary Tertiary
Alignment Resource (STAR); New Zealand Conservation Corps;
Gateway; the Nga Kaiarataki Pathfinders pilot in Northland and Bay of
Plenty; skill enhancement initiatives such as Rangatahi Maia and
Tupulaga Le Lumana’i.
24.3
The CTU also submits that with relatively low unemployment there is
an opportunity for even more intensive and active case management to
make specific investments in people to improve their chance of steady
employment.
25.
This approach has already been rejected
25.1
An
Industrial
relations
Package
under
the
National/NZ
First
Government in 1998 thoroughly considered a similar proposal for a
period which would exclude employment rights such as personal
23
grievances. The issue was discussed in an Officials Background paper
and other papers.14
25.2
It was noted at the time that some employers would adopt a policy of
firing workers just before they ended their probation period and that
disadvantaged groups would include non-Pakeha, women and young
workers.
25.3
In essence the principles of natural justice including procedural fairness
were maintained by the National/NZ First Government at that time and
we submit that this stance should be supported now also.
26.
Summary
26.1
The CTU is completely opposed to this Bill.
26.2
We believe that the Bill removes fundamental employment rights for
workers at a vulnerable time of their employment.
26.3
The Bill undermines the core characteristics of the Employment
Relations Act.
26.4
The CTU submits that there are much better ways to address
disadvantage and the problems faced by ‘outsiders’ in the labour
market.
26.5
14
The CTU urges the Committee to reject this Bill.
See CAB (98) M 14/5B (1) 27 April 1998 and ECO (98) 60, 17 April 1998.
24
Submission
by Te Runanga o Nga Kaimahi Maori o Aotearoa
1.
Introduction and Key Points
Nāu te Rourou, Nāku te Rourou, Ka Ora ai te Tangata
Through Your Basket, and My Basket Combined: We can satisfy the
peoples.
The proverb continually reminds us that through the pooling together of
different strengths, skills and resources the difficulties society face can
be overcome.
1.1
Te Runanga o Nga Kaimahi Maori o Aotearoa (Te Runanga) is
opposed to the Employment Relations (Probationary Employment)
Amendment Bill 2005 (“the Bill”).
1.2
Te Runanga submits that this Bill fails to give workers a fair go.
1.3
This Bill creates an acceptance that workers are disposable.
Employers can hire and fire at will creating an unnecessary fear to
work.
1.4
The Bill creates an imbalance in employment power relationship by not
only removing employment rights but also will not genuinely assisting
employment opportunities.
25
1.5
Of concern to Te Runanga is that the Bill has the ability to lock Maori
into unemployment and poverty through unfair employment laws. This
Bill raises for us the issue of a 90 day rotation of the Maori work force.
Maori want security in employment not to be constantly casualised.
These changes encourage the casualisation of work and Maori are
already featuring highly in short term employment.
1.6
Removing the right of workers in any period of employment removes
procedural fairness in the employment relationship between employer
and employee. The employer does not need to provide a reason, does
not need to give notice, and does not have to give an explanation nor
enter into any discussion with the sacked worker. And the dismissed
worker has no remedy in law. At a time when the key labour market
issue is how to attract and retain staff, this Bill is completely misplaced.
Perversely the Bill’s supporters claim that the Bill is actually designed
to help workers stripped of employment rights.
1.7
This Bill is an attack on employment rights. It is an employment at will,
fire at will approach to employment.
1.8
Te Runanga urges the Committee to reject this Bill.
2.
The Bill undermines the investment approach
2.1
The Bill creates inconsistency with the Government’s approach to an
economic transformation for change which requires an investment in
people. (for the purposes of this submission the people is the workers).
A conflict exists in this Bill for employers’ twin objectives to screen or
match an employee to the job and invest in training of the worker. The
official briefing papers to the National Government on similar proposed
changes in 1998 recognised that the potential for particularly unfair
pressure to be brought on vulnerable workers such as the young and
Maori workers was a major risk of any qualifying period such as that in
26
the Bill.15 The papers also noted the inevitability of some employers
adopting an “ongoing policy of firing workers just before they become
covered by the standard regime”.16 This was seen to be especially the
case in low-skilled occupations where potential employees have few
alternatives.17
Given the situation of Maori workers in the labour
market as described below Te Runanga is extremely concerned about
the negative impact of this Bill on Maori workers, particularly at a time
when an investment approach appears to be working.
2.2
Employers prefer workers who will stay longer because recruiting and
training costs are lower for such workers. However research tells us
that people on employment probation tend to get less investment in
terms of training and one of the suggestions offered is that a
"temporary" labour pool is forming, of people that just go from one short
term job to another.
2.3
Skills and qualifications influence economic growth in two main ways:
through the influence they have on an individual's participation in the
labour market, and through their influence on that individual's
productivity as a worker. People with higher levels of skills and
qualifications are more likely to participate in the labour market and
work in jobs with higher levels of pay. Skills combine with capital and
technology to influence the productivity of firms. The Department of
Labour reported to the Hui Taumata 2005 that 65% of employed Maori
work in semi-skilled or elementary skilled occupations. That is a
vulnerable place to be in the labour market of the 21st century.
2.4
From the Statistics NZ report we see that the largest increase in the
Maori working age population between now and 2021 will be in the 40
to 64 age group. That group are already of working age now which
15
Office of the Minister of Labour, Review of Employment Contracts Act Personal Grievance
Provisions: Development of Reform Package, paper attached to Cabinet Economic Committee paper
ECO (98) 60, 17 April 1998, para 30.
16
Department of Labour, Personal Grievances: Options Paper, 1 October 1997, 97/005905, 75.
17
Officials Background Paper, note 2 above, 43.
27
emphasises the vital importance of work-based training and lifelong
learning. Although the Maori workforce of 2021 will be younger than the
general population, the largest increase in the number of Maori aged
between 15 and 24 years will occur before 2011. The next 6 years will
therefore be crucial in developing the skills of this group.
2.5
There have been significant positive developments in the skills and
qualifications of Māori in recent years. The following trends are
particularly important:
•
The proportion of Māori leaving school without qualifications
dropped to 30% for the first time in 2003 (Ministry of Education
(2004)).
•
The rate of Māori participation in tertiary education has grown
exponentially in the past few years, from 7.4% in 1998 to 20.2%
in 2003. It now exceeds the participation rate for all students
(13.4% in 2003) (Ministry of Education (2004a)
2.6
At the 2005 Hui Taumata it was reported that whilst this growth has
occurred there is still room for improvement.
2.7
The proportion of Māori students leaving school without qualifications
remains much higher than for other students (12% for all school
leavers). And while Māori are participating in tertiary education in large
numbers, they are more likely to enroll in diploma and certificate-level
programmes and continue to be under-represented in degree level and
post-graduate programmes. As for those who are already in the labour
market, about 65% of employed Māori work in semi-skilled or
elementary skilled occupations. (Department of Labour (2004).
2.8
International research suggests that a significant proportion of Māori
people aged 16 to 65 years have levels of literacy below that
considered to be the minimum “for coping with the demands of
everyday life and work in a complex and advanced society”
28
(International Adult Literacy Survey (IALS), 1996, cited by Ministry of
Social Development (2004). )
3.
Te Runanga emphasises to the select committee that Mana Maori is
being disregarded by the Bill despite the State Sector Act provisions
that special employment needs of Maori are to be met.
4.
The Bill is not only inconsistent with the State Sector Act provisions but
also with the government policy on the transformation of economic
change requirements that acknowledges the investment and
development of people is paramount to economic growth.
5.
Probationary periods precede regular employment contracts and are
commonly identified as screening devices for employers. These
periods provide opportunity for the employer to determine worker
quality without having to commit to a formal employment contract.
(Behavioural Effects of Probation Periods: An analysis of worker
Absenteeism, 1999, R. T Riphahn and A. Thalmaier.)
6.
Riphahn and Thalmaier identified in their analytical research that
because salaries are typically renegotiated after a probationary period,
better protections kick in and worker rights associated with benefits e.g.
superannuation schemes, insurance schemes, sick leave, holidays and
of course the benefits that come with seniority in the workplace provide
an incentive to workers to co-operate with the employer during the
probationary period.
7.
Te Runanga are very concerned that Maori workers who attempt to
secure employment will undertake unsafe work practices and working
conditions in hope of securing permanent employment. Unfortunately,
whilst the incentives may seem to have merit further study reveals that
employment probation induces self selection by workers. This means
that workers will tend to screen the employer and determine if there is
a match. These workers tend to be educated, skilled, qualified and
confident. These workers will also enjoy higher wages. Conversely,
those with less ability, skill, education and qualification are more likely
29
to avoid probationary jobs. (Employment Probation as a sorting
mechanism, Eng Seng Loh, 1994).
8.
Te Runanga consider that the Bill will create more unemployment for
Maori because we over represent in the semi skilled and unskilled
workforce. In accordance with the research findings one is able to
conclude that Maori who are currently unemployed with no skill or semi
skilled are likely to remain unemployed. And Maori who are currently
employed with none or some skills will remain extremely vulnerable to
casualisation and insecure employment.
9.
There is current provision in the Employment Relations Act (“the Act”)
for probationary employment. And provisions to ensure respect, dignity
and the mana of the worker are protected through procedural fairness.
What is peculiar about the Bill are the claims that the Bill will create
employment for the vulnerable when in fact research shows this claim
to be false. The unskilled and semi skilled workforce in particular Maori
will face greater insecurity as the Bill removes worker protections that
currently exist. Te Runanga considers this Bill is a deliberate attack on
the rights and job security of Maori.
10.
There has been quite a lot of discussion suggesting the Bill is aimed at
young workers but the Bill applies to all 2 million workers in the labour
force. In addition, most workers average about 6 jobs in a lifetime. That
is a total of 18 months of employment when they have no appeal rights
against unjustified dismissal.
11.
The Bill prevents workers from claiming a benefit. Maori workers who
have not secured permanent employment after 90 days probation will
not qualify for Work and Income assistance and will experience a 13
week stand down. If this Bill is successful Te Runanga regards this as
irresponsible governance. To be consciously aware that the creation of
poverty for Maori will occur is tantamount to institutional racism.
30
Also beneficiaries can face graduated sanctions under the Social
Security Act 1964 if they fail to take up “suitable” offers of employment,
or if they have been dismissed for alleged misconduct. Given the policy
underpinning the work-testing provisions, i.e. acceptance of any job
offer that does not breach the minimum code, there is a very real
concern that a person who refused an offer containing a probationary
period with no employment rights would attract sanctions under the
Social Security Act.
12.
The Bill Disadvantages Young Maori
12.1
Proponents of the Bill claim that the 90 probationary period will create a
more flexible labour market for young people, particularly young Maori.
This claim is rejected. International evidence concludes that this
approach is a short term gain for employers and does not lead to
sustainable long term employment for young people.
12.2
The Bill is short sighted in attempting to “enable people who might
otherwise be on the margins of the labour force to get a foot in the
door” (The Jobs Letter, 2006)18. The Bill has a short term focus and
does not take into account the need for labour market measures for
youth to centre on long term and sustainable work.
12.3
Sustainable employment is critical as the number of young people not
participating in education or employment is likely to become a growing
issue over the next decade. There will be increasing numbers of school
leavers over the next decade as the ‘baby blip’ cohort reaches 15-19
years of age. An increasing proportion of this cohort is Maori and
Pacific young people who have traditionally had higher rates of youth
inactivity (that is, not participating in employment, education or training)
compared to other New Zealanders (MSD, 2003)19.
18
The Jobs Letter (2006) Bill Proposed Probationary Period for New Workers, No.248, 10 March 2006.
Ministry of Social Development (2003) Executive Summary: Key Findings on Youth Transitions, Youth Transitions
Report Series 2003, Wellington
19
31
12.4
Ideally, young people would successfully complete their secondary
education and be assisted by well managed transition infrastructures to
move into the labour market.
But where young people do not
successfully complete their schooling, labour market programmes may
be useful policy instruments provided they attend to the principle of
development rather than quick entry into the labour market (Higgins,
2003).
12.5
The Ministry of Social Development, Youth Transition Report Series
2003, recommends that while it is a complicated process, youth
transition must focus on development rather than simply quick entry to
the labour market (Higgins, 2003). International evidence points to the
following important elements:
•
Training – intensive and long term training with appropriate
pedagogy (this means being creative in encouraging young people
to become interested in learning), includes work placement, and
linked to official and well recognised educational pathways;
•
Links to the local labour market – including networking in job
search, training in skills that are in demand locally, work placements
and subsidies into genuine jobs.
•
Case
management,
support
and
mentoring
individualized intensive case management.
–
providing
“This must be in
keeping with the developmental principles and should recognise
that quick entry to the labour market is only one option and may not
be the most appropriate for those who would benefit from additional
counselling, education or training. Assistance should be designed
with the individual needs of each job seeker in mind so that the
process of case management allows both staff and job seekers to
32
work through a plan that is well suited towards long term
employment goals” (Higgins, 2003)20.
13.
There is a better way
13.1
Te Runanga is pleased to see that the Government is taking a long
term focus on the employment needs of young people, particularly
young Maori.
13.2
Budget 2006 announced a range of measures that seek to support
appropriate and sustainable transitions of young people into the labour
market.
Additional funding builds on existing initiatives to improve
achievement in education, build a skilled workforce and lift labour
productivity.
13.3
The review of labour market programmes (Higgins, 2003)21 would
support the approach announced in Budget 2006 particularly where
opportunities are created young people including:
•
Funding to expand the number of Modern Apprentices – which links
training to work placement;
•
Funding to expand Gateway – which combines school-based
learning with structure workplace learning for senior students.
14.
Summary
14.1
Te Runanga is completely opposed to this Bill.
14.2
We believe that the Bill removes fundamental employment rights for
Maori workers at a vulnerable time of their employment.
20
Higgins, Dr J. (2003) Labour Market Programmes for Young People: A Review, prepared for the Ministry of Social
Development Youth Transition Report Series 2003, Wellington.
21
Ibid
33
14.3
The Bill undermines the core characteristics of the Employment
Relations Act.
14.4
Te Runanga submits that there are much better ways to address
disadvantage and the problems faced by ‘outsiders’ in the labour
market.
14.5
Te Runanga calls on the Committee to reject this Bill.
34