The Government will scrap Fair Pay Agreements (FPAs) and introduce 90-day trials for all businesses by Christmas, the Workplace Relations and Safety Minister says.
Brooke van Velden said in a statement on Monday afternoon that FPAs undermined a flexible labour market and made life harder for businesses, which are then more hesitant to employ people.
FPAs were introduced by the previous Labour Government and allow for sector-wide employment terms to be set. This includes minimum pay rates, terms around training, and how much leave employees get.
Van Velden said National and ACT had opposed legislation introducing the agreements as the parties believe they would "reduce flexibility, choice and agility in workplaces".
"To increase the wages of workers and ensure lower prices for consumers, there needs to be improved productivity and an environment where business can operate competitively," she said.
"To lift productivity and drive economic growth there needs to be agile and flexible workplaces where employers and employees can agree on terms that suit their unique situation."
FPAs can come about when a union shows that 10 percent or 1000 workers in a sector or industry support an application for one.
The minister called this a "blunt tool" that could be "initiated by a union and a small number of employees, yet they applied to every employee and every employer within coverage".
"There will be no impact on the current terms of employment for workers as no fair pay agreements have been finalised to date. We are focused on boosting productivity, becoming more competitive, and creating a healthy economy. That's why we're preventing more bureaucracy from being piled onto businesses and backing them to grow."
A Cabinet paper leaked to Newshub this month showed repealing FPAs would disproportionately impact women, Māori and Pasifika and young people.
"There's hundreds of thousands of workers and the official advice we're talking about is hundreds of millions of dollars would have been lost from them," said Council of Trade Unions president Richard Wagstaff.
Union members protested against the plan to scrap FPAs outside the office of ACT leader David Seymour in Auckland on Monday. Labour's Phil Twyford and the Greens' Ricardo Menéndez March were also there in support.
The Government will also extend 90-day trials to all businesses by Christmas, van Velden said.
Currently, only businesses with 19 or fewer employees can use this trial period."Extending 90-day trial periods to all employers gives businesses the confidence to hire new people and increases workplace flexibility," said the minister.
"Whether a business has two or 200 employees, bringing on any new employee costs time, it costs money and it is in the best interests of any business to find the right fit."
She said these would provide greater opportunities to businesses to "employ 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".
"The extension of 90-day trials will not affect other aspects of employment relations, such as the requirement to act in good faith, or worker protections regarding pay, conditions, leave, and health and safety.
"It is also important to note that extending the availability of 90-day trials does not mean that all new employees will have trial conditions, rather it provides the option to include this provision in employment agreements."
Van Velden said the Government would adopt a Member's Bill from ACT's Todd Stephenson to be able to progress quickly on the issue.
Employment lawyer Steph Dyhrberg told AM last month there's "not really" any benefit to employees from the policy which is focused on benefiting employers.
"I suppose you could say that employees don't like it after a couple of months it gives them the ability [to quit] as well. But it doesn't actually say that. It talks about if the employer terminates the employee's employment during the first 90 days of an agreed trial that's in writing... if notice is given of termination there is no right to bring a personal grievance of the termination. So it's hard to see a real benefit for employees, I think this is really about a benefit for employers."
