Employers may soon be able to fire at will, writes Steve Hart
KEY POINTS:
Managers at small firms up and down the country will be able to act like Donald Trump and tell staff, "You're fired!" if National wins the election.
National plans to introduce a 90-day trial period for staff joining firms with fewer than 20 people. And while some
support the idea, others are worried that employees, particularly the young, will be exploited.
Kate Wilkinson, National's spokesman for labour and industrial relations, says that apart from one exception, New Zealand is the only country in the OECD that does not have a trial period for new staff - a claim questioned by Andrew Little, national secretary of the Engineering, Printing and Manufacturing Union.
Wilkinson says if her party's policy is introduced, it will give smaller employers the confidence to take people on, safe in the knowledge that if they don't work out, they can be dismissed.
Firing people within the proposed 90-day trial period will be a simple case of the employer saying, "Hasta la vista baby!" On the other hand, employees can throw in the towel without any comeback from the employer.
Wilkinson says: "Small businesses have made it clear that they want to be able to employ staff on a trial period. New Zealand is the only country in the OECD, except for Finland, not to have a trial period."
And if National's policy is adopted it will affect most of the country's companies. In New Zealand, 96.8 per cent of all firms - that's 350,000 - employ 19 or fewer full-time staff and 86 per cent employ five or fewer people. The proportion of small- to medium-sized enterprises (SMEs) in New Zealand is similar to other OECD countries, although SMEs here account for a higher proportion of employment.
"It is these firms that are least likely to have the HR capability to make good human resources decisions. So this policy is very helpful to them because it will give them the confidence to take on people.
"When you look at the statistics you can see there are about 25,000 young people between 17 and 19 that are not in education [or in work] and we want to make it easier for them to get their foot in the employment door - to give them the opportunity to say to an employer, 'Hey, give me a try and I'll prove to you that I am a good employee'." Wilkinson says the trial period proposal includes enough safety mechanisms to protect people from being exploited by bad employers.
"We have worked to eliminate any downside. We have kept in things such as the good faith provision, natural justice rules still apply, the human rights discrimination rules still apply and there's still a right to mediation."
Wilkinson says the proposed change, which would only come in if National were elected to Parliament, would be by agreement.
"So it is up to the employee to knock on an employer's door and say, 'I'm happy to have a trial period, please give me a try'."
She says employers would still be expected to support new staff and help them meet their workplace goals under the ERA's good faith provision.
"There are bad employees and there are bad employers and we think this trial period policy is the right balance for the best interests of everyone."
Chief executive of Business NZ, Phil O'Reilly, says the 90-day trial period is more likely to create employment opportunities in small firms. In a media release, O'Reilly says employers were more likely to take a chance on people without qualifications or experience, or those returning to the workforce from time away.
He says young workers are over-represented in unemployment statistics, with a rate of more than 12 per cent, and were among those who stood to gain the most from the plan.
"The proposal helps SMEs get on with making sensible decisions to hire good staff without being hamstrung by the complexities of the law," says O'Reilly. "It's not about giving people rights to [raise] grievances; it's about giving people a go."
But others are more cautious about the change, fearing it will turn the clock back on workers' rights.
Andrew Little says giving employers the right to sack staff during a trial period and denying those people the right to take a personal grievance is a fire-at-will policy.
"There's no point in talking about natural justice when you can be sacked for no reason. There is no justice at all in that," he says.
Little also says he is confused by what Wilkinson is proposing.
"National is saying that if you are dismissed during the trial period because of performance issues then you can't raise a personal grievance. But then National also say that the principles of good faith will apply; they say the rules of natural justice will apply.
"The confusing thing is that the right to take a personal grievance is effectively the right to insist on natural justice. And that means that if there is an allegation against you - whether it is poor performance or misconduct - then you have a right to know what that is and to be heard about it and give your side of the story.
"So on the one hand National says you won't have a right to take a personal grievance, but on the other they say the rules of natural justice will apply. So what National is proposing is a loss of existing rights."
However, the EPMU does support the idea of a probationary period at work and has developed its own employment contracts for some of its employees. It has employment contracts that provide for a trial period of between six and 12 months "to give staff time to prove themselves".
Little says: "The current law says you can agree on a probationary period - and it is not limited to any period of time. The way it works is that staff get feedback on their performance and if at the end of it - if it has been clearly foreshadowed that a person is not up to the mark - then at the end of the probationary period the employment can be terminated."
However, Little says that staff who have been dismissed retain the right to challenge the decision with a personal grievance should they choose to do so.
"I think this is the correct approach, because managers will have a discipline to stick to and they will be required to give feedback and let employees know whether they are making the grade.
"The current regime actually gives employers more flexibility. But it does require managers to do what they are meant to do - which is manage people and treat them professionally.""
What Little fears most is a return to 1990s New Zealand, when a massive deregulation in the labour market took place.
"Some pretty bad horror stories came about during that time, in the way people were treated. People were arbitrarily and summarily dismissed on insubstantial grounds.
"There is a bit of a culture in New Zealand, that perhaps stems from our pioneering days, that amounts to a 'fire and be damned' or 'fire and let's see what happens' - that sort of mentality.
"I remember stories of small firms sacking youngsters knowing that they would not have enough money to take action against them. It was a pretty unhealthy culture."
A key concern for Little is the management skills of the country's employers. He fears that without rules in place, slipshod managers will be free to toy with people's careers.
"A change in the law that would allow for a level of arbitrariness in employment would be a retrograde step at a time when we need to make sure there are good enforceable rules about what is expected of managers."
Little's view is that the rules don't stop good managers from employing people on probationary periods, but they do mean that bad managers don't get away with abusing people's rights.
Clearly Wilkinson begs to differ.
Contact Steve Hart at www.stevehart.co.nz
