The Public Service Association is taking the Inland Revenue to the employment court over its plans to use psychometric tests on employees reapplying for their jobs.

The Inland Revenue is planning to cut the number of its staff by around 30 per cent by 2021 as part of its business transformation plans.

Erin Polaczuk, PSA national secretary, said workers, many of whom had been with the IRD for years - were being coerced into taking psychometric tests just so they can reapply to keep their jobs.

"Often these 'new' jobs involve the same work the employees have been doing for many years."

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"If you wanted to get a good sense of a person's skills and abilities, it would be more rational to consider the ample information stored within the department from years of performance reviews and evaluations."

Polaczuk said the move was offensive to long-serving staff and may breach the both Treaty of Waitangi obligations and the departments compliance with the State Sector and Human Rights Acts.

The union says originally the IRD made the tests compulsory for all employees, saying that if staff did not agree to the test they would not be considered for a role.

But following pressure from the union it decided to call the testing "optional", though it also cautioned in a letter to employees last week that non-participation "may mean that we have insufficient information that we can rely on to be satisfied of your capability to perform these new roles."

Polaczuk said the testing software was proprietary and expensive, and it was not clear how much taxpayer money would be be wasted on it.

Inland Revenue's Business Transformation restructure aims to modernise and simplify the tax system, but it is being carried out at the same time as a vast redesign of its computer systems.

The PSA considers this a risky concurrence, and has concerns about the integrity of New Zealand's tax system under these cumulative pressures.