Employment Relations (Allowing Higher Earners to Contract Out of Personal Grievance Provisions) Amendment Bill

I move, That the Employment Relations (Allowing Higher Earners to Contract Out of Personal Grievance Provisions) Amendment Bill be now read a second time.

Fundamentally, this bill is about providing choice to employees and employers to construct the employment arrangements that best suit each of them, and mutuality is a cornerstone and key component of this bill. But like so many bills, the bill emerges from select committee in better shape than it entered. It might be a bit of a blunt way to put it, but so often select committees have a major role in panel beating the original legislation into something that is more fit for purpose, more relevant, and more applicable to New Zealanders, and such is the case with this bill. The Transport and Industrial Relations Committee was able to spend time scrutinising the provisions of it and making very sound amendments.

Now, it’s important to note, there were a number of submitters that pointed out that certain rights, such as the right to be free of discrimination and sexual or racial harassment in the workplace, would have been contracted out under the bill as it was originally introduced. It is right to point out that the member that introduced this bill to the House and sponsored it at first reading, the Hon Scott Simpson, did point out those very elements in that first reading speech. It was signalled very clearly that the bill would receive changes in select committee to address those matters. In fact, as the member that had taken over the bill by the time it actually received attention at select committee, as the first to submit on the bill, I made those very points very early on—that we needed to look at amendments to make sure that those provisions were brought back into the scope—and, of course, naturally enough, they were made.

But I’d like to point out, before we talk about the changes the committee made, that when the bill was first introduced to the ballot, it received wide support—including from the then Labour spokesperson, one Andrew Little, who noted that he supported the bill in principle and anticipated that Labour would support it. Well, if they’ve got any clue, they would continue to do so. Of course, it’s in even better shape now, and that’s a good thing.

As I said, the bill is fundamentally about allowing employees and employers to together arrive at the best employment agreement for each of them. Essentially, it allows employees to negotiate some form of compensation that is more valued by them than the personal grievance provisions of the Act. Likewise, it permits an employer who can see some relevancy in having such a situation to offer more to the employee, such that they might be prepared to enter into an agreement.

One of the issues that was raised by members opposite in their then Opposition roles in select committee was: what problem does this solve?

💬 Hon Member: Exactly.

Exactly—exactly. What it shows is the members opposite who were in Opposition then but now are in charge of running the country can’t understand that members in this House should be getting ahead of problems and actually proactively introducing things that are going to help New Zealanders get ahead—in this case, help people to have the right sort of workplace relations and opportunities. [Interruption]

💬 Madam DEPUTY SPEAKER: Order! Members—order!

If they can’t get their heads around getting ahead of a problem, we’re going to continue to see more of the Government that we’ve seen over the last few weeks, which is an absolute shambolic mess. One can only hope that they will learn from the experience.

The situation was widely canvassed by submitters and it was acknowledged that these sorts of actions are quite routinely seen today, with the likes of chief executive officers having employment contracts that contract out of these very personal grievance provisions. In fact, the submitters—and, particularly, I think, the Law Commission, which submitted—pointed out that there are questions about enforceability of those provisions of those contracts under the law as it stands today. But no one—no one—questioned about whether they actually work in practice.

So this bill says: why should CEOs be the only employees in companies who should be allowed to negotiate those sorts of terms and provisions in their employment contracts? Why should other employees who feel they have the confidence and are prepared to go into negotiations—why should they be excluded? Why should they not be permitted to likewise care for their own circumstances and their own future?

Clearly—to another point that was raised by members opposite and submitters—they think that these employees who are earning at least $150,000 a year are somehow vulnerable or disadvantaged. The reality is that any employee that is earning that much in a business is, clearly, highly valued by the business, else they wouldn’t be in that sort of role and wouldn’t be compensated to that very high level of earnings. To suggest that they are by and large somehow vulnerable, disadvantaged, or somehow not capable of negotiating their own employment terms and conditions is the noise from members that are still living in the 1970s, and one could only hope they might make it into the 21st century sometime soon. I won’t hold my breath.

But none the less, these people are in roles of responsibility. They are highly valued by the companies who are prepared to compensate them to such a high amount. Should they wish to enter into those negotiations, why—why—should they be prevented from negotiating those terms such as we all permit CEOs to do and have done for many years?

It’s important to note, too, that the bill had and retains provisions to protect employees, to ensure that they are not coerced into such negotiations and that the agreement that is reached is clearly mutual and can be proven to be so through the independent legal advice that is a fundamental requirement in order for the agreement to be valid. The employee must seek and receive independent legal advice. The agreement must be in writing. There are measures to protect employees being coerced by employers into entering into provisions that they truly do not wish to.

Now, there were, as I noted at the beginning, elements of the bill as first introduced that would have meant that employees would not have had redress in matters that had been raised by submitters as issues on basic human rights. These are elements such as not being able to take action in the case of discrimination, sexual or racial harassment, or certain other measures. Officials advised, and it was acknowledged right at the very beginning of the select committee process, that it would be a good idea to ensure—and, in fact, necessary to ensure—that those provisions were still available to employees. Officials came up with a very simple and elegant way of addressing that, such as the bill permitting the contracting out of only a single provision: section 103(1)(a), which is the element about unjustified dismissal. So the employee does and will retain redress through instances where the employer contravenes their other rights. At the same time, though, the committee did make recommendations to this House that clarification be made to ensure that where the employee does contract out of that one provision, they understand, and there is no opportunity for them to take other legal proceedings in the matter of that dismissal.

The committee, as committees often do, looked at provisions or situations in other countries, and committee members did chat, if I might say, about why in Australia they do have the provision for those legal challenges, despite the fact that they have legislation that automatically contracts those higher-earning employees out of the personal grievance provisions. In fact, I think that’s probably the very reason, and members did, I think, reach some level of agreement on that. In Australia, because it’s not optional, if you earn over a certain amount you are automatically out of those provisions. That’s why they retain—

I apologise to the member. Your time has expired.

Madam Assistant Speaker, I rise for the second time in this House. I’d like to first congratulate you on becoming a Speaker. We’ve known each other for a number of years, and I have great respect for your values, understanding of process, and care for people.

Now, before I begin on this bill, I need to correct something about my maiden speech. I mentioned four Labour Party MPs who had stood in the Hamilton seats, and after my speech, the Speaker, the Hon Trevor Mallard, reminded me that there was one more, whom I forgot, and that was him. Hopefully, the Hon Mr Mallard is watching in his office. Thank you for the work you did in Hamilton West.

Now, this bill allows employers to contract out of unjustified dismissal protections when hiring employees who earn over $150,000 per year. At the Transport and Industrial Relations Committee, the bill was supported by various business groups and was opposed by the Human Rights Commission, most lawyers, unions, and workers.

I’d like to begin by focusing on one word, and that’s the word “choice”—not a word from the 1980s, when we said “Choice!” with our thumbs up, but, basically, it’s where somebody can choose between two things. Inspired by Deborah Russell, my colleague, to boldly go where no Labour MP had been before, and possibly no New Zealand First or Green MP—I’m not sure—I went to the National Party website. Now—

💬 Rt Hon Winston Peters: Oh, you didn’t.

I did. I did.

💬 Rt Hon Winston Peters: Did you have a lie-down afterwards?

Ha, ha! It was quite difficult to get on there. The parliamentary server blocked me initially for dangerous or unauthorised material, but after some negotiation, Parliamentary Service let me on the site, which was good. Before I talk about what was on the site, I must say the font could be improved, just so you know that. It is a very small font. But I’ll do my best.

💬 Chris Bishop: I raise a point of order, Madam Speaker. I think the member should know that Mr Peters is the expert on fonts in this House. Maybe he should talk to him—

The ASSISTANT SPEAKER (Poto Williams): Thank you. Thank you.

So let’s have a look at what’s on the National Party website, fonts aside. “The National Party has always valued enterprise, hard work and the rewards that go with success. We will continue to aspire to a New Zealand where all New Zealanders can flourish.”

💬 Hon Member: Is that the comedy section?

Ha, ha! “We believe this will be achieved by building a society based on the following values:” Now let’s have a listen to what these values are. Number one: “Loyalty to our country, its democratic principles, and our Sovereign as Head of State”—OK, all right. Number two: “National and personal security”—OK, sure. Number three: “Equal citizenship and equal opportunity”—equal opportunity.

💬 Rt Hon Winston Peters: You aren’t making this up, are you?

It’s right here. It’s right here, Mr Peters. It’s here. It is difficult to read. And number four, here we go: “Individual freedom and choice”. So—

💬 Rt Hon Winston Peters: That can’t be true.

It is on the website. Whether it’s true or not is up to the members. So let’s have a look here. You see, the key thing is this bill removes the choice of an employee to undertake a personal grievance. National Party: the great bastion of freedom of choice—

💬 Matt King: Yeah!

I’d like to know—ha, ha! I would like to know why the members are discriminating against people earning over $150,000. Why would you discriminate against those people by removing their choice for a personal grievance? Those earning over this salary are not just in senior management; they can be public servants; they could be whistleblowers. Some employees may choose to settle any disagreements through another process, other than personal grievance. However, it’s vital that this option is available to them. It comes back to choice.

The second point is that there is a power imbalance between an employer and an employee. The employee has the weight of control, and I worry about employees signing contracts that remove their right to personal grievance.

I’ll talk about two jobs that I’ve worked in, and neither of them have anything to do with fonts, so we can relax there, Mr Bishop. The first job was in retail. There was no union. It was an individual contract, and I clearly felt the power imbalance. I was on a low wage, and it was very difficult for me to ask for a pay rise, because there was a clear imbalance. My second job was as a schoolteacher, which did involve fonts. Now, we had a strong collective under the NZEI Te Riu Roa union, and I had the right, if I required it, to a personal grievance. Fortunately, I didn’t need to take it up, but the choice was there.

Another point: why do we need this bill? Only 1 percent of the population earns over $150,000. Is it really worth the time of this House to debate it? There is no pressing issue in our society around this. There’s no evidence that employers or employees are asking for it. This bill is a solution looking for a problem, rather than a problem looking for a solution. [Interruption] Thank you, Mr Galloway—Mr Lees-Galloway.

💬 Hon Iain Lees-Galloway: Yeah, thank you. Jeez.

Ha, ha! Now, a couple of other points. This bill undermines and contradicts the basic human rights of workers. A submission from the New Zealand Human Rights Commission said, “the Bill would seem to be inconsistent with a number of International Labour Organisation (ILO) and human rights treaties and instruments, including: ILO Discrimination … Convention … The International Covenant on Civil and Political Rights … The International Covenant on Economic, Social and Cultural Rights”. I agree with them that this bill removes the basic human right of a defence against the behaviour of a person with power over one without.

So, in summary, number one, it removes choice—“individual freedom and choice”, from the website there; small font, very small font actually, I must say. Number two, we don’t actually need this bill. Number three, there is a clear power imbalance between employers and employees. Number four, it undermines human rights. And, to finish, all employees deserve the right to access personal grievance. Whether they want to or not is their choice, but they deserve the right.

This Government is committed to increasing fair outcomes for working people, regardless of their income, mansions, or boats. This Government opposes this bill because it is unnecessary, poorly targeted, and establishes a dangerous concept in New Zealand’s workplace relations framework. The concept of contracting out of employment rights is dangerous. This legislation sets a dangerous precedent that could lead to further contracting out and diluting of our employer accountability. Thank you, Madam Assistant Speaker.

Madam Assistant Speaker, thank you so much. I’m delighted to stand up and take a call on Brett Hudson’s excellent bill, the Employment Relations (Allowing Higher Earners to Contract Out of Personal Grievance Provisions) Amendment Bill. You could have done with a snappier title, but it’s a very good bill.

I just have to start by reflecting on the somewhat surreal experience of hearing the member who’s just resumed his seat, Jamie Strange, concerned that we’re wasting the time of the House with this bill. We’re wasting the time of the House—this from a Government who, on the very same day they finish their first Address in Reply debate, is debating such important, ideological reforms to our country like the Statutes Amendment Bill and the Subordinate Legislation Confirmation Bill. This is a Government who, a third of the way into their 100-day plan, has got nothing in the tin, and is debating statutes amendments and subordinate legislation.

💬 Rt Hon Winston Peters: I raise a point of order, Madam Speaker. The Standing Orders and Speakers’ rulings require this member to actually address the bill before the House—not a montage of her memories, but the bill before the House right now—and she’s had enough time to get to it. So would you please bring her to the point of the business of the House, thank you.

The ASSISTANT SPEAKER (Poto Williams): I thank the honourable member for his intervention. This has been a very wide-ranging debate, but I invite the member to continue.

Thank you, Madam Assistant Speaker—speaking of time-wasting from that member across the House, we have this speech worrying about this; well, actually, this is what members’ days are about. Members’ days are about allowing individual members to find small aspects of the law that actually can be improved, and make a lot of sense. And I support this.

I’ve also got to take issue with the comments of the last speaker that this bill somehow removes choice. I sat there and tried to work out on what planet allowing a senior, high-paid, highly remunerated staff member to agree with the employer removes choice. After taking their own independent legal advice—no one’s been tricked into this; intelligent, clever, highly skilled people who have taken proper advice—why shouldn’t they have the choice to remove this process?

So far from removing choice, Mr Strange, it is the absolute opposite of that. It is saying this to mature, intelligent adults—who we don’t treat like children, on this side of the House; who we don’t assume need the nanny State powers of the Government to protect them from their own basest instincts; who we actually agree can make a sensible, balanced, mature decision on the facts, with good advice. And why wouldn’t we let them? Australia does it. Has it meant the end of civilisation as we know it and the horrible outrage and intimidation and exploitation of those poor, highly paid CEOs? Of course it hasn’t. It is a nonsense, the argument. There is no reason at all that we shouldn’t allow it.

And it is important to note that this doesn’t apply to whistleblowers. There is a clear protection in the bill for whistleblowers. It doesn’t apply to most of the grounds set out in section 103 of the Employment Relations Act at all. It is very clear that the employee can still seek assistance where a term of their employment contract hasn’t been given effect to, where they’ve been discriminated against, where they’ve been sexually harassed, and where they’ve been racially harassed. There is a whole list of grievances in section 103 against which the employee is still absolutely protected, but, to give them the right, the choice, the entitlement to choose a different set of processes for themselves, like an adult, we support.

Debate interrupted.

The House adjourned at 10 p.m.