The Government's decision to extend 90-day new-employee trials to all businesses was made after a suggestion from the Act Party, and went against the recommendation of its own Minister of Labour, Kate Wilkinson.

Government papers also show the proposal to enable bosses to demand proof of sickness from workers without first having reasonable grounds for suspicion was made without the advice of the Department of Labour.

The Government's proposed labour law changes, announced in July and now before a select committee, have been strongly opposed by unions, Labour and the Greens.

They include enabling employers to require a medical certificate from a worker on sick leave at any time, and extending the 90-day trial beyond companies with fewer than 20 workers.

The 90-day trial lets employers dismiss workers without giving a reason. Redress is possible only on grounds of discrimination or harassment.

But Cabinet papers - released to the Herald under the Official Information Act - show Ms Wilkinson wanted the trial to be extended only to companies with up to 50 workers.

She did not want larger businesses covered, as they had "robust systems to undertake good recruitment and employment practices".

Act leader Rodney Hide said last night that extending the scheme to all businesses was his party's idea.

"The National Party came to us for support and wanted to extend it to 50, and we said, 'If it's good for businesses with 50, it will be good for business with 51 and 101 and 1001.'

"We persuaded the National Party to go the whole nine yards. It wasn't an arm-wrestle."

The Cabinet agreed, and a bill to extend the scheme got the required support of the Act Party to pass its first reading this month.

Labour MP Trevor Mallard, a former Cabinet minister, said Act had too much power for a party that won only 3.65 per cent of the party vote.

"What is becoming absolutely clear is that on certain issues, like this, [Prime Minister] John Key is being led by Rodney Hide and the Act Party.

"If Key had any balls he would have said, 'It's 50 or we don't introduce the legislation'."

Mr Mallard said it was unusual for the Cabinet to override a minister's recommendation.

"What often happens, if a minister is unsure, is the minister will provide options and Cabinet will pick. But here no options were provided, so it sounds like an ideological decision."

Mr Mallard, Labour's industrial relations spokesman, said it was also unusual that Ms Wilkinson did not seek the Department of Labour's advice on changes to sick-leave law.

"If she got careful advice, they wouldn't have made this decision, and I wouldn't be surprised if they back off because the current system works well."

Ms Wilkinson justified the decision in a Cabinet paper, saying current rules requiring an employer to have reasonable grounds to demand a medical certificate on any sick day, were an "unreasonable burden on employers".

"Anecdotal evidence suggests that the compliance costs and time associated with establishing suspicion can be high and onerous on the employer," the paper said.

But a regulatory impact statement said Ms Wilkinson made her decision, and the Department of Labour "was not asked to provide advice".

The only department advice on the matter was after a meeting with the Meat Industry Association, which wanted the change but also wanted workers - rather than the employer - to pay for the medical certificate.

The department said this would be an "unreasonable financial burden" and would require employees to go to a doctor even for a minor illness.

Cabinet papers also show that the Treasury and the Ministry of Economic Development criticised the speed with which the changes were prepared.

"Agencies have had a limited time to consider the current proposals and a number of proposals that may impose additional costs on businesses were made late in the review process," one Cabinet paper said.

The Government also ignored Labour Department advice to leave rules on union access to the workplace unchanged, as there was no widespread evidence that the system was being abused.

MINISTER ROLLED
Government documents show:

* Labour Minister Kate Wilkinson's proposal to enable employers to demand a medical certificate from workers without first having "reasonable grounds" of suspicion was made without the advice of the Department of Labour.

* The department recommended the status quo for union access to workplaces, but the Government is changing the law so unions need the employer's permission, which will not be allowed to be withheld unreasonably.

* Ms Wilkinson wanted to extend the 90-day job trial to companies with up to 50 workers, as she said large firms already had "robust systems". Act suggested it be extended to all enterprises, and that proposal was accepted.