National leader Christopher Luxon has backtracked on claims by his MPs that Fair Pay Agreements would mean mandatory unionisation.
FPAs are a set of terms and conditions - including wages and working hours - that employers in a particular sector must abide by with the overall aim of raising standards.
Labour's FPA plans were foiled by its former Government coalition partner New Zealand First. But with a huge majority in Parliament, Labour is now pushing ahead to improve pay and conditions for workers.
National has staunchly opposed the agreements, calling them mandatory unionisation.
In the House on Tuesday, Workplace Relations Minister Michael Wood accused the party of spreading "misinformation and scaremongering".
Wood took issue with two incorrect claims made by the opposition.
He said there was no compulsory union membership under the agreements and workers and employers weren't able to take industrial action during negotiations, unlike National MPs had claimed.
When asked whether FPAs meant mandatory unionisation on Wednesday, Christopher Luxon told AM it doesn't.
"No, it doesn't but it does mean mandatory union engagement with employers and that's a real challenge.
"It's a big change for New Zealand. One of the reasons we have been relatively successful over the past couple of years is we have massive labour market flexibility. People are free to make arrangements between employers and employees as they see fit. Rather than having someone in Wellington dictate what those terms should be."
Luxon also conceded employees don't have the ability to strike during negotiations under the agreement.
It comes after National's workplace relations spokesman Paul Goldsmith said FPAs would impose "mandatory union deals on Kiwi workplaces" in the house.
National isn't the only party that has opposed FPAs, ACT leader David Seymour has branded them a "relic of the 1970s".
But Labour says FPAs will create better working conditions and improve productivity.
"We can actually become a more productive economy if we shift the focus of our economy from competing on the basis of low wages to competing on the basis of better products and services," Michael Wood said.
