Rt Hon John Key
Prime Minister &
Leader of the National Party
28 October 2011Media Statement
Workplace policies to build flexibility, create jobs
Prime Minister and National Party leader John Key today announced the National Party’s employment relations policy,
which includes a starting-out wage for young, first-time workers.
“A flexible and fair labour market is critical for building a stronger and more competitive economy, and creating more
real jobs,” says Mr Key.
“National’s employment relations policy brings better balance to labour market rules. It encourages growth, creates jobs
and protects workers’ rights.
“The starting-out wage will give some of our youngest and most inexperienced workers a much-needed foot in the door. It
will provide them with valuable work experience that may not have otherwise been available to them.”
The starting-out wage will be set at 80 per cent of the adult minimum wage and three groups of people will be eligible:
• 16- and 17-year-olds in their first six months of work with a new employer.
• 18- and 19-year-olds entering the workforce after more than six months on a designated benefit.
• 16- to 19-year-old workers training in a recognised industry course involving at least 40 credits a year.
Mr Key also announced an extension to flexible working arrangements, improvements to collective bargaining and a review
of constructive dismissal.
“National wants to see more people benefiting from flexible working arrangements. We’ll extend the right to request such
arrangements to all employees, and allow employers to reach agreements without having to go through a formal process –
saving time and money,” says Mr Key.
“We’ll also make changes to reduce bureaucracy and costs associated with collective bargaining, including removing the
requirement to conclude a collective agreement.”
Mr Key says National will also take a close look at how allegations of constructive dismissal can be better managed.
“Altogether, these initiatives are part of National’s plan to give businesses the confidence they need to invest, grow
and create higher-paying jobs.
“This comes on top of the good progress we’ve made in our first term of government, including establishing the
successful 90-day trial for new employees, raising the minimum wage, improving the Holidays Act, reforming the personal
grievance system and keeping the Hobbit movies in New Zealand.”
View National’s employment relations policy at: http://www.national.org.nz/PDF_General/Employment_Relations_Policy.pdf
[Scoop copy: Employment_Relations_Policy.pdf]
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National Party Employment Relations Policy: Q
THE ‘STARTING-OUT WAGE’
Background
Until 2008, 16- and 17-year-olds were eligible to be hired on a youth minimum wage that was set at 80 per cent of the
adult minimum wage. This encouraged employers to take a risk and hire young workers with little or no experience.
In 2008, Labour abolished the youth minimum wage, in a move that research commissioned by the Department of Labour
suggests has destroyed up to 9000 jobs for 16- and 17-year-olds.
Why introduce a starting-out wage?
We’re conscious the global recession significantly affected job opportunities for young people – especially in the 16-19
year age group. This is at a time when the removal of youth wages priced many young workers further out of the market.
Our starting-out wage will provide young people with the opportunity to earn money, gain skills and get the work
experience they need.
How much will the starting-out wage be worth?
The starting-out wage will be set at a minimum of 80 per cent of the adult minimum wage.
Who will be eligible for the starting-out wage?
Three groups will be eligible for the starting-out wage:
•New entrants’ component: 16- and 17-years old will be eligible to be hired on the starting-out wage until they have completed six months of work
for the same employer, or are responsible for training or supervising other workers.
•Young beneficiaries: 18- and 19-year-olds will be eligible for the starting-out wage if they have been on a benefit for more than six
months. Again, they remain eligible until they have completed six months work for the same employer.
•Young persons’ training wage: 16- to 19-year-olds will be eligible if they are training for 40 credits a year or more. After turning 20, the number of
credits required will increase to 60 credits per year – which is the current level for the training wage.
What if the employee leaves and transfers to a different employer?
Those who are 16 and 17 years old, and who leave their employer after working for more than six months, will remain
eligible to go back on the starting wage until they complete six months with their new employer.
Eligible 18- and 19-years-old who had been on a benefit and then completed six months work must be paid the full adult
wage even if they transfer between employers.
IMPROVING FLEXIBLE WORKING ARRANGEMENTS
Background
Many workplaces already have flexible working arrangements, either formally or informally. A recent survey of employers
with flexible work arrangements in place showed 87 per cent said those arrangements have had a positive impact.
However, formal agreements can be reached only after going through a formal process, and the formal request mechanism
applies only to those with caring responsibilities.
How will National improve flexible working hours?
National will extend the right to request flexible working hours to all workers, and will allow flexible working
agreements without invoking the formal request process. These changes will open up flexible working arrangements to all
workers, and save employers time and money.
We will remove the existing tenure requirement (six months of continuous service) before an employee can make a formal
request to their employer.
National will also increase awareness of these formal provisions, the benefits to business of flexible working
arrangements, and encourage employers and workers to come to agreements that suit their circumstances.
Are flexible working arrangements costly to employers?
According to a recent Department of Labour survey, 76 per cent of employers who had flexible working arrangements in
place said they incurred no costs. Of those who said they did incur some costs associated with flexible work
arrangements, the majority said these costs were reasonable.
By allowing formal agreements to be reached without invoking the formal request process, our changes will reduce any
costs to employers even further.
Will employers be forced to agree to flexible working arrangements?
No. There are various grounds on which an employer can turn down a formal request for flexible work, such as additional
costs; detrimental effect to meet customer demands; detrimental impact on quality or performance; and the inability to
reorganise work among existing staff; among others.
COLLECTIVE BARGAINING
What will removing the ‘requirement to conclude’ mean for collective bargaining negotiations?
The Employment Relations Act originally required collective bargaining to simply be done in good faith. This was later
changed so that once negotiations begin, a collective agreement must be reached unless there are genuine reasons not to.
This requirement can lead to protracted negotiations, even when agreement is unlikely to be reached.
The change has led to protracted negotiations in instances where agreement clearly isn't going to be reached and in many
cases has resulted in workplace disruption and the deterioration of relationships between employers and unions.
National will return the Act to its original form, retaining the requirement to bargain in good faith, while removing
the requirement to conclude a collective agreement. It is in the best interests of both unions and employers to settle
negotiations quickly and fairly, and avoid workplace disruption and strike action.
How will removing the 30-day requirement assist employees?
Currently, employees have no choice but to accept the terms of the Collective Employment Agreement (CEA) in place for
the union members of that particular workplace for their first 30 days of employment. Being unable to agree to lesser
terms in some areas, in return for a higher base salary for example, means this can have the effect of lowering base
salaries.
In the majority of instances, particularly in the private sector, employees immediately shift to Individual Employment
Agreements (IEA) once 30 days are up. However, having already started work, their negotiating position is weakened.
Removing the 30 days requirement will enable employees to agree to the exact terms and conditions they want from the
outset, through either negotiating individually or joining the collective and becoming a union member. The choice is the
employee's.
How will this benefit employers?
The most obvious benefit to employers is that it will reduce administration and compliance costs. Employers will only
need to settle on the details of the employment agreement once, at the outset of the employment relationship.
There will be no follow-up required after 30 days and no need to work through the details of a second employment
agreement when an employee chooses to go on an IEA. This will save time and paperwork.
Why should employers be able to opt out of multi-employer collective agreement (MECA) negotiations?
MECAs require employers to enter negotiations with their own employees, their competitors, and their competitors’
employees.
Employers should be able to decide whether or not a MECA is the right option in their circumstances. Enabling them to
opt out of the negotiations before they begin will allow them to save their resources at the outset, should they already
consider they are not best served by this form of agreement.
What will partial pay reductions for partial strikes mean in practice?
Where employees are refusing to do parts of their job, such as answering phone calls, responding to emails or completing
paperwork, their employer can seek to reduce their pay to a level that reflects the work being done. This would involve
making an application to a Department of Labour inspector, who would assess the circumstances and make a decision on
what reduction in remuneration would be appropriate.
Why is this change needed?
Currently, employees can be present at work but do very little under the guise of a partial strike during bargaining
negotiations. This can go on for months at a time and cause major disruptions. The only real means of response available
to an employer is to suspend or lock out the employees. This is a big step and isn't preferred as it can damage the
employment relationship and the relationship with the union. Allowing for partial pay reductions provides for a more
measured response and will even up the negotiating positions.
CONSTRUCTIVE DISMISSAL
What is wrong with the law governing constructive dismissal?
Constructive dismissal is a real issue and it is important that people who have been hounded from their jobs have access
to justice. However, evidence is emerging that the allegation of constructive dismissal is being used as a last resort
in employment disputes, and frivolous cases are taking up the valuable time and resources of the Employment Relations
Authority (ERA).
This ultimately harms the cases of those whose complaints are genuine, can damage the reputation of defendants, and
reduces the efficacy of the ERA.
Constructive dismissal can be a difficult charge to defend even when the allegation is unfounded, as often the evidence
involved is subjective.
What will National do to address this issue?
National will seek input from the Department of Labour and the employment law community on the best way to prevent
constructive dismissal being used inappropriately in employment disputes, while maintaining access to justice for those
who bring legitimate cases.
ENDS