Employment Relations (Termination of Employment by Agreement) Amendment Bill

I move, That the Employment Relations (Termination of Employment by Agreement) Amendment Bill be now read a second time.

I want to begin by acknowledging the work of the Education and Workforce Committee and the members who considered this bill. I know that there was quite a lot of thought and work that went into this bill, and all members of the House will know that with a member’s bill, you don’t have the same level of advice and work that goes into creating a bill. I just want to acknowledge that there has been quite a few changes, and I want to thank the select committee for this.

While some of the changes I do disagree with, I do think overall the select committee process has improved the bill, and it’s landed in a really good place. It’s something that I think we can all be proud of. The committee recommended a clearer, more formal process for requesting negotiations so both employers and employees know where they stand. It also recommended that repeat requests be limited for six months unless there are genuine and reasonable grounds for another request. Having a clear regime is important, so that employers are not afraid to use this mechanism. The committee also made it clear that simply requesting negotiation is not by itself grounds for a personal grievance, and I think that this is really important, because for it to be effective in practice, we need to know that this protection is there in itself. In the end, the committee has recommended that by majority, this bill will be passed.

This bill is really about allowing employers and employees to actually have an honest conversation. Sometimes an employment relationship is no longer working. Most of the time, an employer and an employee actually know it, but the law makes it difficult for either of them to say so openly. Instead, the parties can end up going through months of performance management, needing formal meetings and legal advice, which often strains the relationship well beyond what was needed. This may eventually lead to the same outcomes, but only after a great deal of stress for everybody involved, particularly the employee.

This bill creates another, fairer option. It allows an employer or an employee to ask the other if the party is willing to discuss an agreed exit. This is all it actually does. It is what actually happens now when we go down the track of without prejudice, after there has been a lot of hurt and a lot of time wasted. The other person doesn’t have to agree to even have this conversation. They don’t have to even accept an offer if they have a conversation. This allows for an employee to seek advice if they need it. They can negotiate an exit package that suits them, whether that’s financial, or other terms that may matter to them. They also have the ability to walk away at any point. No agreement exists unless both sides agree to it. I think this is a really important point to make, because this is simply just a negotiation process.

Let me give a practical example of where this could actually help. Imagine a business owner can see that in six months’ time, the business may need to restructure because they may be missing out on some contracts, for example, or a contract is going to end, and one position is likely to disappear. Under the current system, an employer may feel unable to say anything. In fact, they probably won’t say anything to the team and the employees. They will need to start the formal restructuring process. The employee carries on for another six months without knowing what is coming, or maybe they know what’s coming, only to lose their job at the end of it. A lot of contracts now don’t include redundancy payouts like they once did, so they end up with nothing at the end.

This bill would allow an employer to be up front about what is happening in the business, about missing out on a contract, about what is coming, and how they could negotiate some kind of exit straight up. I think the thing that is really important to note here is that the employee could go along, get some advice—legal advice, union representation—and they might actually not want to agree to this. They could then carry on for the next six months, knowing that they’re being managed out of their position or that the restructure’s happening. That is absolutely OK to do so as well.

Alternatively, the employee could have a chance to start looking for a new position; they could start financially thinking about what is going to be happening to them in the next six months; they may relocate to another part of the country—maybe that is actually part of their package. There is lots of opportunity here for an employee to set themselves up really well. The key point here is about choice. It’s about creating the choice for an employer and an employee to end an employment relationship on a good note.

Right now, we have a system that is functionally broken. We have employment relationships that are breaking down, and we have the mechanisms in order to move somebody on, essentially, being used that are just not what they were created or intended to do. We all know that the system isn’t working, and part of the way we can fix that is to line ourselves up with what they do in the UK. In fact, I was really surprised that the Opposition didn’t support this. Actually I wasn’t, because it’s an ACT Party employment legislation bill, but in the UK, the unions like this legislation. It’s actually a popular mechanism for coming to an agreement, particularly in the workplace when there are two parties where the relationship has either broken down or there are personality issues, and you’re never ever going to resolve those. You can’t move them to another department; you can’t put them on anywhere else. It’s about having that opportunity to be able to come together and talk about what it would take to move someone on and what kind of financial incentives there need to be in order to do that. That is really important.

Another example could be two employees enter into a relationship at the workplace, and when the relationship later ends badly, they find that they can no longer work together. The tension may begin affecting the rest of the workplace. The employees know the situation’s not working, and the employer knows it too. One of those employees may decide that they’d be better off actually leaving, but resigning would mean walking away with nothing. It also means standing down from getting things like Work and Income assistance. Instead, they remain in the workplace, things become uncomfortable for everybody, and things escalate to points that they just don’t need to be. Under this bill, that employee could approach the employer, or the employer could approach them, and they could ask to negotiate and agree departure, including compensation, agreed references perhaps, and perhaps other things, like relocation, for example. The idea is that they could come to some kind of conclusion mutually, and that is what I think we desperately need. Instead of months of awkwardness, conflict, and disruption, they could sit down, reach an agreement, and move on. Again, nobody is forced to do anything.

Those are the kinds of situations this bill intends to deal with. It gives people practical ways to resolve a difficult situation, instead of forcing them to pretend like it doesn’t exist. I’ve heard that a number of parties actually intend to oppose this bill. Once again, it’s ACT that is left standing up for business, and I want to say, National as well—thank you very much for indicating that you will support this bill. We understand on this side what it is like to be an employee, and to be an employer, and we know that most of our businesses are small businesses in this country—90 percent of them are small businesses. We want to help them with their employment law, and we want to make sure that employees and employers have the best outcomes.

Reading the Labour Party and Green Party’s differing view in the select committee report was disappointing, because much of it doesn’t actually reflect what the bill does. They claim the bill would allow employers to dismiss people without a cause, or without fair process, however the process is really clear. The whole entire thing needs to be mutually agreed on, with that legal advice, or potentially union advice, so it’s simply wrong. An employer cannot dismiss someone by asking to have a conversation, they cannot force an employee to negotiate, and they cannot force an employee to accept an agreement. It is just not going to happen. If the employee says no, the employment relationship continues and the employer remains bound by existing laws. All of the usual protections against unjustified dismissal and unjustified disadvantage do remain. If the employee does choose to negotiate, they may be able to secure a substantial payment, a good reference, and certainty about what happens next, which I know we’ve talked about.

I struggle to understand how giving an employee that choice is supposed to be unfair. Labour and the Greens also claim that once an employer raises the possibility of an agreed exit, it could be impossible for the employee to remain in the role. An employee can simply decline the request and stay in their job. The argument seems to be that employees are so fragile, that merely being asked whether they want to discuss leaving might make it impossible for them to continue. I genuinely don’t accept that. I think people can be adults in the room. Employees are adults, and they are capable of having difficult conversations. I have to say it’s slightly ironic to hear this argument from the Labour Party, because almost three years ago, New Zealanders had a fairly clear conversation with Labour and decided in significant numbers they did not want Chris Hipkins to remain Prime Minister. I think that was a very wise, adult conversation.

I’m running out of time, so we’re not going to get through all these points, because this bill is in fact a really good bill. If we’re going to unlock the potential of the next generation—of our businesses, of our employees, of this country—we need to be putting businesses first. We need a flexible labour market. I commend this bill to the House.

ASSISTANT SPEAKER (Maureen Pugh): The question is that the motion be agreed to, but the time has come for me to leave the Chair. This debate is interrupted and is set down for resumption next sitting day. The House is suspended, and I will resume the Chair at 9 a.m. tomorrow for the extended sitting to consider Government orders of the day. Sleep well.

Debate interrupted.

Sitting suspended from 10 p.m. to 9 a.m. (Thursday)