Employment Relations (Trial Periods) Amendment Bill

Members, we come now to clause 3, “Principal Act”. The question is that clause 3 stand part.

Thank you, Mr Chair. I am pleased to make a contribution to clause 3 of the Employment Relations (Trial Periods) Amendment Bill, which states that the principal Act—which the Employment Relations (Trial Periods) Amendment Act works under and, in fact, does amend—is the Employment Relations Act 2000; one of my most used and affectionately known pieces of legislation.

The question that I would like the Minister to engage on—and, obviously, I realise that she may have received some advice on this from officials, but I think it is important to note that this bill started off as a member’s bill, and members’ bills are drafted differently to Government bills. So what I would like to know, in relation to the decision to draft this bill in the way that it does amend the Employment Relations Act, is the advice that she has received about the appropriateness of this. Did she look to other alternative methods of drafting this particular bill? Were there suggestions made by officials on how to improve the drafting of this Act? Because, in my experience with members’ bills, often there is a number of changes that officials do suggest.

There are not many consequential amendments that are suggested to this principal Act; so is there any comment she can make around the suitability of adopting a member’s bill that was drawn in the last ballot prior to the election and then adopting that bill—first of all saying that there would be a select committee process on it and then subsequently stating that there wouldn’t be a select committee process on it, and then taking it through urgency? This is such an important piece of legislation that is being amended. It has existed since 2000, and it’s already come up in debates on different bills in the House today, about how the Employment Contracts Act existed and then it was repealed through the Employment Relations Act. Any amendments to this piece of legislation are very important and significant to the fabric of how employment law functions in New Zealand.

There are a number of colleagues who have already made comments on the nature of this bill, which is the subject of this clause, and about how it introduces the concept of good faith into employment relationships. We know the concept of good faith is a principle that imbues all employment relationships, and, very interestingly, it’s very difficult to see how good faith applies to this particular amendment. Usually in good faith, there is an opportunity for an exchange. Usually with good faith, there is an opportunity for explanation. Usually in good faith, there’s an opportunity for representation. Usually with good faith, there is an opportunity for that important relationship that is so fundamental to the Employment Relations Act to be thought through.

I know the Minister may say, “Well, employment trial periods existed prior to this legislation, and this simply extends it.” But I think it’s incumbent on her, as a Minister, to tell this committee—because we don’t have the ability to go through a select committee process—why it is appropriate in 2023, or indeed in 2024 if that is when the bill comes into effect, how good faith and how the case law around good faith has progressed during the intervening period, between when we had trial periods first introduced and had them extensively throughout all employers and now having limited that for the last three or four years. How does good faith apply to trial periods? We know it does apply, because we know that it is an important part of the Employment Relations Act which is amended by this clause.

I have a copy of the Employment Relations Act in front of me, and we can go to section 4 and just see how far the duty of good faith goes. If you look at section 4, “Parties to employment relationship to deal with each other in good faith”. They “must deal with each other in good faith”. And this is a principal part of the Employment Relations Act. If I just skip up to the object part as well, “The object of this Act is … to build productive employment relationships through the promotion of good faith in all aspects of the employment environment and … employment relationship”. I know this trial period was not invented by this Minister—I don’t ask her to take responsibility for that—but what I do ask is, when she says that this trial period extension bill allows trial periods to apply throughout the economy, to every single employer, how does the principal objective part of this Act and the purpose of the Employment Relations Act fit with trial provisions? And is she satisfied that it fits within that piece of legislation?

The practical implication of passing this law is, as I’ve said, to change this Act, and everything in this Act should be, if legislative drafting is correct, consistent with section 4 of the Act and also should be interpreted consistently with the object of this Act, which is set out in section 3 of the Act. It is very different to imagine a good faith employment arrangement as envisaged in section 3 and section 4 in a trial period situation, because, in practice, the duty of good faith is to engage. One of the key things around a trial period is that there is no requirement to engage—a dismissal can be for any reason that isn’t a discriminatory reason. And Mr Chair, if you will allow me, I would like to foreshadow that there are a number of sections in Part 9 that are not amended by the bill in front of us but are relevant to the bill in front of us, and I would like to make a contribution to that particular section at some point. I think it would be beneficial for those following this debate to actually understand the types of personal grievance which continue under a trial period regime and which don’t continue under a trial period regime, because even for someone who used to practise employment law, like myself, it is very difficult to ascertain exactly what could be covered for a particular dismissal or not.

So, when we look at this clause 3 of the bill, I wonder if the Minister is able to go through—and I do realise this is my second call, so I won’t take all of this time. But can I just end this contribution by saying that to the employment law community in New Zealand, who will be the ones who are responsible for interpreting what the Minister does today and providing that advice to their clients, big and small, vulnerable and not vulnerable, rich and poor, throughout New Zealand, they need to know how the intersection of the primary provision of good faith in section 4 and the object of the Employment Relations Act is consistent with the bill that she is putting forward.

I do have other contributions to make in relation to this bill, in relation to the personal grievance section, which is the other substantive section which is relevant to this bill, but I just wondered if I could leave those questions with the Minister to have a response.

Thank you very much for the member’s contribution. Look, I wanted to talk briefly about the principal Act being amended, as the member Camilla Belich raised. That’s because this makes an amendment to the 90-day trial provisions that exist within the Employment Relations Act, which are currently just for small and medium business, and we are changing that to all employers. So it seems pretty straightforward why we need to amend that particular part of that Act.

The overarching question was about whether or not the bill that we have before us is suitable, as it was a member’s bill. My officials have advised me that it does achieve my policy objective and that it is a well-drafted bill. They also advised that we didn’t need any changes to the bill, because we don’t need any transitional provisions, because this is very clear that it is applying only for new employment agreements from the date of Royal assent. I would also like to take the chance to commend by former colleague Dr James McDowall on the very good drafting of this member’s bill, which allowed us to use this at the time.

Talking to the third part of her question—about good faith applying to 90-day trials—I’d like to assure the member that an employer dismissing an employee under a 90-day trial still has a requirement to act in good faith under section 4 of that Act. It still applies. The Employment Relations Authority and the courts have upheld good faith requirements for dismissals under 90-day trials since trial periods began in New Zealand in 2009, such as ensuring that the trial period is agreed to before starting work, to provide an opportunity for the employee to seek advice and to raise any issues. So the bill does not change any of those requirements, which is why it’s not in it.

Just for members’ enlightenment, in terms of the narrow focus of this clause, this provision identifies the principal Act; it doesn’t open up the Act for debate, except to the extent that this bill amends it. However, members, the time has come for dinner, and I need a cup of tea! We will suspend until 7 p.m.

Sitting suspended from 5.58 p.m. to 7 p.m.

Members, the House is in committee on the Employment Relations (Trial Periods) Amendment Bill. Before the dinner break the committee was considering clause 3, “Principal Act.”

Thank you, Madam Chair. I enjoyed the last contribution I was able to make on clause 3 in relation to the amendment of the principal Act, the Employment Relations Act, and I did signal to the Chair at the time that I had another contribution that I wanted to make, specifically around clause 3, which is the amendment to the principal Act.

The main clauses which are amended in the Employment Relations Act are the sections 67A and 67B. So I will speak, and I did note the comment by the presiding officer at the time, and I’m not intending to—just for your assurance, Madam Chair—speak to the entire Employment Relations Act, even though that is included in the clause.

The contributions that I want to make are specific to the particular sections which are affected by this new bill on trial periods. So section 67A—we’ve some amendments to that that will be discussed in the next debate, on clause 4, but the amendments in relation to section 67B do open up a different area, which is another fundamentally important part of the Employment Relations Act, which is the provisions to allow personal grievances to take place or not in section 103. So that’s specifically referred to in the principal Act—the section that 67B amends refers to the personal grievances section.

So one of the main issues with trial periods is the removal of the ability for employees to take personal grievances in respect of their dismissal. So the language used in the bill—and that will be discussed in a subsequent clause—is quite specific around that not being permitted. However, if we actually look at the Act, which we’re now looking at under clause 3, we see that there are a number of personal grievances that can still be pursued by people regardless of the fact that they might be under a 90-day trial period. And that is, I think, one of the issues with this bill, and I wonder if the Minister could comment on this at all—the lack of clarity in what types of action can actually be covered and taken under the Employment Relations Act, despite the bill which the Minister is proposing on trial periods.

The bill says that if you’re in a trial period, you can’t bring a personal grievance for dismissal. However, it does allow a number of personal grievances to continue, and I might go through those for your benefit and just ask if the Minister had considered any other types of personal grievances that she may want to protect by allowing them to continue with this legislation. I think the Minister did refer to this during question time today; it’s clear, then, and it has been an established practice for a number of iterations of this type of legislation, that discrimination claims and other acts relating to racial discrimination, sexual harassment, that type of claim is able to be taken whether you’re in a trial period or not.

In looking at this section in the Employment Relations Act, again it was notable to me how many other exceptions have been added in more recent legislation. So there was the work done around zero-hour contracts, and that was under the previous National Government and that’s actually been included in this section which has been retained by this bill, preventing people who have rights in relation to zero-hour contracts from actually being prevented from taking a personal grievance. So that is obviously interesting. And then there’s the membership or not of a union that can also continue, and then protection of whistleblowers.

So I think the House can be united in being satisfied that these are protections that are so fundamentally important that of course, regardless of whether you’re in a trial period or not, they should not be excluded from being able to take these forms of action. The difficulty that I have and the question I would like to ask the Minister is: what happens and what is her understanding of this legislation in how it would impact a dismissal which is tainted by sexual harassment, family violence, racial harassment. These are all clauses which are relevant to this particular bill and retained by the Employment Relations Act in relation to this particular bill.

So what would occur in that situation, from the Minister’s advice, if there is a dismissal which is tainted by some of these discriminatory reasons? And what would be the course of action under this new piece of legislation that she would recommend someone take in relation to taking a course of action in law? Is her advice that, obviously, the bill she’s proposing says that they can’t take a claim for a personal grievance because of that dismissal? However, is the dismissal able to be part of some other personal grievances which remain under this piece of legislation? And what’s your advice to the public, really, about how they would navigate what is quite a complex situation?

So I want to thank the Minister for making sure that those provisions were retained within this principal Act which we are discussing in clause 3. I think that was the right thing to do. I do think that there is somewhat of a lack of clarity as to what people should be doing in those particular situations, if they are in fact to find themselves in a situation where they have one right which exists but another right which is taken away. Obviously, for lawyers and for unions, they can offer advice to people, but not everyone’s in a situation where they have access to a union or a lawyer, and it might be good to clarify how she sees that intersection of rights occurring.

I thought it was helpful, in relation to my last question, when she confirmed that good faith would apply throughout the process of the trial period. That’s really good to have that reassurance, and that was my understanding of how the Employment Relations Act, which is the principal Act that is being amended by this bill, would work. So bearing that in mind and understanding that we do have this relationship of good faith which imbues all of the clauses, including the bill which the Minister is intending to pass tonight, can she dig into a wee bit more the type of advice that she would give to members of the public on how to navigate what is quite a tricky area. So a few questions here for the Minister and I look forward to her response.

Thank you, Madam Chair. I wanted to ask the Minister about the object section of the principal Act. We’ve talked about good faith but we haven’t talked about the acknowledgment that there is an inherent inequality of bargaining power. That is something that is in the next section; part of section 4. I thought it was interesting, because I see a distinction between small employers where the power imbalance is a little bit different.

A small operation is, effectively, two people who have a greater amount of equality. That really is the nature of a small business and I can see the justification for trial periods in that situation being quite different. But when you have a big employer, one that has 50 employees or more, there is a clear acknowledgment in the Act that there is an inherent inequality of power between the two, and that’s fundamental to the Act. So I wondered how there was a reconciliation between those two things and how you could have that object in the Act, yet have this clause applying to large employers where that is so evident. But also the Act is built trying to make sure that that’s acknowledged in its object section.

So I wanted to know whether there’d been any advice on that and whether the Minister has a view on that inherent inequality that is in a relationship and how she protects against it. Because it goes to the vulnerability of the types of workers I’ve talked about who are way more precarious in this time period than they would be otherwise and are going to be really worried about what happens next. It goes to the capacity for them to even raise issues in that time and the kind of fear that they will bring into the workplace, because they’ll be worried that they’re going to lose their jobs if they do anything that their employer objects to, whether it’s good or bad.

I think the Minister is aware that most sexual abuse situations never get near a court, they’re never challenged in that way, and that makes an area like that, bad behaviour in terms of things like sexual assault or other kinds of bad behaviours which we know are bad, a lot less able to be managed in that situation because there will be fear of retribution because there’s a very big difference between those things happening and being able to prove that they’ve happened. In fact, the employer doesn’t have to give any reason in this situation. So I’d like the Minister’s comments on that.

Thank you, Madam Chair. Look, really quick questions for the Minister—this will be a brief contribution. Just asking about clause 3 in the amendment bill. My question is about whether there is any other legislation, any secondary legislation, any legal instruments, any regulation which is impacted by the passage of this bill. That clause reads “This Act amends the Employment Relations Act 2000”, but it would perhaps better read, “and makes consequential amendments to the immigration instructions”, for example.

So I’d like the Minister to tell me whether there is any other secondary legislation or legal instruments which are impacted by this—and then I can write a really useful amendment.

Thank you, Madam Chair. Acknowledging, again, the lack of select committee, I hope my judgment is right that this may be the best place to raise it, because I feel that in the previous clause it wasn’t addressed—the steps that the Minister was hoping to take to ensure there was a proper communication campaign to ensure workers and employers are made aware of any changes to the Employment Relations Act. I say this because when a fair pay agreement is passed, the reality is that we were handing out letters to people, a lot of people were still not aware that fair agreements were a thing, so I think there is always that need whenever there is a change to the Employment Relations Act; that it’s not just a matter of updating the website.

So my question is: what steps does she envision that she needs to take or what resources may need to come into place to ensure that the changes to the Employment Relations Act 2000 actually create the conditions for employers to be aware of this extension of 90-day trials, as well as those workers who may be entering those workplaces; that they are also aware of these changes?

Thank you, Madam Chair. I’d like to take the chance to respond to a few of the questions today. The member Camilla Belich was talking about what would occur if dismissal might happen and there is another personal grievance that’s part of the process. I’d just like to remind the member that it is possible to bring a personal grievance under this new law in relation to any other matter such as sexual harassment. The bill is only excluding that one part of the law, which is specified, for unjustified dismissal. It does not preclude bringing on another personal grievance ground.

I wanted to take the chance to talk to the question from Helen White about inequality of power, and just remind the member that good faith principles apply no matter the size of a company in New Zealand, under the Employment Relations Act.

I’d also like to take the chance to respond to Arena Williams, who asked about changing the clause as it’s written in the bill to allow for things like the immigration instruction, and just remind her that I’ve already spoken about that in relation to clause 2. I have already outlined that this does not change the immigration instructions, so that is null and void.

And also to Ricardo Menéndez March’s question about further resources—I thank the member for that question, because I believe it is in good faith—and what more resources are needed to let employers know about the new laws and that they’re up to date. As part of the implementation of this policy, we will be updating the guidance on the Employment New Zealand website, but I’ve already mentioned that in a previous clause.

I move, That debate on this question now close.