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Fair Pay Agreements gone, 90-day trials back as Nats, Act stamp mark on new era

Michael Neilson,
Publish Date
Tue, 12 Dec 2023, 8:00am

Fair Pay Agreements gone, 90-day trials back as Nats, Act stamp mark on new era

Michael Neilson,
Publish Date
Tue, 12 Dec 2023, 8:00am

National and Act are stamping their mark on a new era in employment relations with commitments in the next two weeks to reverse two of Labour’s biggest moves in that space during its six years in office. 

It continues a decades-long tussle between right and left-leaning governments in the area of employment relations, and in particular the power of employees versus employers. 

On Monday, Cabinet confirmed it would repeal the Fair Pay Agreements and extend 90-day work trials to include all businesses before Christmas. 

Fair Pay Agreements, which made it easier for workers to band together to negotiate wages and working conditions, were introduced by the Labour-majority Government just over a year ago. 

National and Act opposed it, saying it was “compulsory unionism” that harmed productivity. 

Then-Workplace Relations Minister Michael Wood said it was restoring the collective rights of workers stripped out through the Employment Contracts Act in 1991. 

Six sectors have successfully applied to start negotiations - including cleaning, security and hospitality - but none have yet received an agreement. 

A petition to keep the agreements has seen over 13,000 people sign. 

Meanwhile, 90-day trials for businesses were first introduced under John Key’s National-led Government for businesses with fewer than 20 employees before it was extended to all businesses in 2010, a move then opposed vehemently and described by union leaders as the “biggest labour shake-up in 20 years”. 

Labour in 2018 restored the trials to businesses with under 20 employees, among other measures, but now the new Government has vowed to return it to the original legislation. 

National and Act both strongly opposed the Labour moves during its time in Government and the policies were included in their coalition agreement. The policies are not mentioned in National’s agreement with NZ First. 

Workplace Relations Minister Brooke van Velden said extending the trials allowed greater opportunities for employees as employers could then take a risk on someone who “might not tick all the boxes in terms of skills and experience but who has the right attitude, without the risk of a costly dismissal process”. 

She said including trials in contracts would still be optional and be determined through negotiations with the employee and employer. 

The change would be made through a Member’s Bill from new Act MP Todd Stephenson - carried on from the last Parliament - and passed under urgency before Christmas. 

Prime Minister Christopher Luxon said he wanted to make it easier for people to get off the benefit and find their first job. 

No fair pay agreements had been finalised yet, enabling the repeal process to occur more smoothly, Luxon said. 

“What a load of rubbish,” Luxon said when asked about Green Party co-leader Marama Davidson’s claim his Government was scrapping Fair Pay Agreements because it “hated workers”. 

A Treasury-commissioned report in 2016 found no evidence that 90-day trials had led to firms hiring more people, or more disadvantaged jobseekers. 

The trial period, when introduced for firms with up to 20 employees, had seen an increase in hiring in the construction and wholesale trade industries by 6 to 10 per cent, the report said, but this reverted after the trial was widened to larger firms. 

The announcements came as the 54th Parliament sits for a second week with the coalition Government expected to start some of its 100-day plan, including repealing legislation. 

First on the list would be reversing Labour’s 2018 move to make the Reserve Bank focus on reducing unemployment, leaving the country’s central bank to its sole mandate of controlling inflation. 

In the New Year, advice would be taken on whether the Reserve Bank should have a more specific deadline on when it was required to return inflation to between the 1-3 per cent target band, Luxon said. 

The House would be in urgency as the Government pursued legislative change with respect to the Reserve Bank’s dual mandate. 

Second would be Labour’s Fair Pay Agreements legislation, which made it easier for workers to band together to negotiate wages and working conditions. 

For legislation that involves repealing, the Government has decided to remove the requirement for regulatory impact statements. This move has drawn some criticism around transparency, but Luxon defended it as those assessments had been done when the original legislation was introduced and in many cases had only been in place for a short time. 

Luxon said he would be in Australia tomorrow for his daughter’s graduation. He would return on Wednesday. 

More new MPs would also be making their maiden statements to the House this week, including all newcomers from Te Pāti Māori and New Zealand First. 

On Tuesday late afternoon will be the first of Te Pāti Māori’s four new MPs, with Hana Rawhiti Maipi-Clarke followed by Tākuta Ferris. 

Maipi-Clarke, 21, is one of the country’s youngest ever MPs. She took down Labour stalwart Nanaia Mahuta in Hauraki-Waikato, which Mahuta had held since it was created in 2005. 

Ferris won Te Tai Tonga from Labour’s Rino Tirikatene, which he had held since 2011. 

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