Employment law battle reaches Parliament

Hospitality and retail have warned businesses could close under proposed employment law changes, but unions believe its an overreaction. Photo: Lynn Grieveson

The battle over employment law changes has made its way to Parliament, with two opposing sides telling politicians they will either be a boon or a bust for the country. Shane Cowlishaw reports.

Industry groups are warning that businesses will close if employment tweaks are pushed through, while unions claim the changes will increase both productivity and worker protection.

Both sides got to speak on Wednesday in front of the Education and Workforce Select Committee, which is considering the Government’s Employment Relations Amendment Bill.

The legislation makes a number of changes including restricting 90-day trials to employers with less than 20 staff, the restoration of statutory rest and meal breaks and the strengthening of collective bargaining and union rights.

Depending on who you listen to, the shake-up will either restore power to workers or disrupt business and damage important industries such as tourism.

‘They will probably close their doors’

The retail and hospitality sectors would be affected by the proposed changes and their advocacy arms were clear their members believed it would be a negative effect.

Both Hospitality NZ’s chief executive Vicki Lee and Retail NZ’s public affairs general manager Greg Harford focused on the restriction to the 90-day trial.

Lee told the committee that while 92 percent of their members had less than 20 staff the remaining eight percent employed a large number of people and removing it alongside other proposed changes would likely lead to job losses and closures.

“ … they will probably close their doors. Hospitality runs at a low margin and we have a number of them will simply not be able to operate. Now that’s not what we want for the hospitality sector.

“I do have deep concerns about the sustainability of the hospitality sector and our tourism sector, particularly our small operators who are not only looking down the barrel of a number of employment relations changes that will impact on the way they do business but they are also really concerned about proposed increases to the minimum wage.”

She said it was unclear how the change would apply to seasonal businesses who had less than 20 staff but scaled up during peak seasons.

Lee recommended increasing the cut-off to 50 staff, which would cover most of Hospitality NZ’s members.

Speaking later, Harford echoed many of Lee’s concerns and said the changes would deprive people of opportunities and drive them into unions whether they wanted to join or not.

The 90-day trial had been great for marginalised employees who were unlikely to be hired without a safety, he said.

“All the 90-day trial has done is allow employers to take that risk when employing someone who has a chequered history.

“If someone interviews well that’s perhaps performed poorly in a previous job, perhaps has a bit of a criminal history, in the absence of a 90-day trial they’re not likely to be offered a job or a chance to prove themselves.”

Harford also singled out the restoration of set times for rest and meal breaks, pointing out that it could be disastrous in a retail environment.

“It’s particularly impractical if you take a small business that may only have one shift. This could potentially force retail stores and other businesses to close for morning tea breaks, for lunch breaks, for afternoon tea breaks.”

‘The sky didn’t fall in’

Unsurprisingly, unions held a contrary view and were supportive of the bill.

Both the Council of Trade Unions (CTU) and the PPTA appeared before the select committee, and described the bill as a strong first step towards restoring power and a greater share of wealth to workers.

Richard Wagstaff, president of the CTU, said if the changes were passed good employers would barely notice as they didn’t rely on minimum standards, got along well with their staff and enjoyed a good relationship with unions.

What the bill would do was protect workers from exploitative employers who were “by nature authoritarian”.

The CTU’s economist Dr Bill Rosenberg told the committee that New Zealand was an outlier in its low rate of collective bargaining with only Turkey, South Korea, Mexico, Poland and the USA below it.

Productivity had worsened under National’s changes to employment law and reversing them would likely lead to a productivity boost, he said.

Wagstaff agreed and said many of the changes were not new, but simply a restoration of union rights.

“We are no stranger to many of these proposals and we know how they play out … we have noticed some of the alarmist reactions to the bill and they remind me of when the ERA was first introduced and some of the talk that was going on then almost 20 years ago. But the sky didn’t fall in.”

The Minister says...

Asked about Hospitality New Zealand’s suggestion that the 90-day trial period should be extended up to companies with less than 50 staff, Workplace Relations Minister Iain Lees-Galloway said there was no need.

“Whatever you set the threshold at there will be some businesses that move above and below the threshold. The solution is pretty simple. At the point where you employ someone if you have 20 employees or more you won’t be able to use the 90-day trial period.”

Smaller businesses did not have the resources to manage a full hiring process but a company that was employing 50 staff should have a properly equipped human resources department to manage without a trial period, he said.

Regarding fears the employment changes could lead to businesses closing Lees-Galloway, who recently signalled a desire for a less combative approach to industrial relations, dismissed them as unfounded.

“We’re returning to settings that were in place during a period when we had strong economic growth and better productivity than we do today so I think they’re a bit more worried than they need to be.”