1. Introduction

2. Finsec is the union representing workers in the New Zealand finance sector.   Finsec represents nearly 7,000 workers in banks, insurance and finance companies. Members have a broad interest in the rights of workers across New Zealand.
3. Finsec is an affiliate of the New Zealand Council of Trade Unions, and supports the more detailed submission that the NZCTU has made on this Bill.
4. Finsec opposes the Employment Relations (Probationary Employment) Amendment Bill because it would allow employers to sack workers without reason.   We believe this undermines the good faith provisions in the current Employment Relations Act. It also threatens internationally acknowledged worker rights such as the right to association by, for instance, giving employers the right to dismiss employees during their probationary period if they join or talk to a union, ask for a wage rise, or raise health and safety issues in their workplace.
5. The Bill applies not only to new young workers whom it purports to target, but every single employee who starts a new job throughout their working life.   Most workers change jobs 6 times on average in their working life.   Under this Bill all these workers will have no assurance that they will be treated in a procedurally fair way for the first 90 days of employment.

6. This Bill removes choice

7. Employers and employees can already agree to an initial probationary or trial period under the existing legislation. The difference is however, that if the employer thinks the employee is unlikely to be appropriate at the end of the probationary period, the employer still needs to follow a fair disciplinary or dismissal procedure.
8. Section 103A of the Employment Relations Act, provides an objectivity test of what a fair and reasonable employer would do in the circumstances at the time a dismissal or action occurs. This Bill removes that requirement for an employer to operate in an objectively fair and reasonable manner, instead allowing unfair and unreasonable employers to unreasonably sack any new employee without justification. The Bill removes the requirement to provide feedback about a worker's quality of performance or to give a warning that the worker is not meeting the expected standards.
9. So, though the Bill actually purports to help new young worker into a first job it actually hinders those workers.   It removes the likelihood that they would receive feedback and assessment from their employer, as is expected, instead allowing them to be sacked without even being told clearly why beforehand.   This is the opposite of what new employees who are trying to break into employment for the first time actually need.  
10. Another aspect of this Bill is that it links Work and Income New Zealand's 13-week stand-down from receiving a benefit for anyone fired.   So workers are forced to accept whatever terms and demands their employer puts to them during their first 90 days, with no employment rights to protect them and the threat of 3 months without any income if they refuse.

11. This affects not just vulnerable workers, but all workers

12. The Bill claims that it is aimed at enabling people who have not previously had work experience to find their first job.   However, the vast majority of the 300,000 people that it will actually affect are workers who are either already in the workforce, or have already proven that they have the skills or abilities to work through training, past experience and/or tertiary education.   This Bill increases the risk these skilled, able workers face when they change jobs.   They must give up job security and employment rights to move into a new environment with no rights.   This disincentive for workers to change jobs makes the labour market more, rather than less, rigid - presumably the opposite of what employers are looking for in employment legislation?
13. This is a particular concern for our members in the finance industry, many of whom swap between banks, insurance firms and other finance companies to develop their skills and advance their career.   They are much less likely to take risks like this if every time they do so they spend three months without any employment rights.

14. Low wage low skill labour force rather than developing high skill economy.

15. The emphasis in the bill appears not to lie in introducing probation periods (as this already exists), but making probation periods more punitive to the worker.   This gives weight to the argument that these probation periods are only supposed to apply to workers who are vulnerable or weak, because highly paid executives or well unionised workforces would not agree to such a term in their employment agreement.   It seems to imply that, as the focus is on the punitive measures rather than the breadth of probation periods entered into, there is a strong expectation that those punitive measures will be used.
16. This focus on limiting employment rights for low skill low wage jobs and enabling a high turnover seems to be the opposite employment direction to the one that we believed was widely accepted that New Zealand should take; That is a highly skilled economy with a focus on encouraging workers to develop within their jobs and advance both their experience and knowledge.

17. This Bill undermines the positive relationship focus of the ERA

18. The introduction of the no rights period during the first three months of employment changes the focus of an employment agreement being an ongoing relationship between employer and employee that requires work on both sides.   It is replaced with a view that this relationship is combative and that employers need less hindrances to them winning that battle quickly.   In particular it takes the focus on access to mediation (with its subsequent focus on mending or strengthening an ongoing relationship) and replaces it with instant dismissal.
19. This seems unnecessary given that employers can already employ people on a casual agreement or for a fixed term.   Indeed, this bill effectively turns every new employee into a causal worker for three months by ensuring they can be fired at will.   This bill is aimed at undermining the job security and rights of permanent employees (those with which the employer is presumably aiming to enter a long-term relationship).   It seems unfair that, at the start of this relationship, when boundaries are being established, one party should have no rights whatsoever.
20. Furthermore, the existing probation law already tends to allow dismissals with a lower threshold of proof and reasonableness.   So, employers can already dismiss new workers more easily if they choose.   The fact that they are not choosing to suggests there is not a lot of value to them in extending this power.  
21. There is no evidence to suggest this Bill is good for employment.
22. The Bill's proponents have suggested it will reduce court costs. However, as we have noted, the existing Mediation Service, which is free of charge, provides for grievances to be resolved without court cases.   Indeed disputes during the first 90 days of employment are relatively rare, so there is not much room for reducing costs.
23. The Bill's proponent's have also pointed to the fact that New Zealand is one of only two OECD countries without an initial period during which workers rights are limited.    However, under our current law, New Zealand has the lowest unemployment in the OECD, so copying other OECD labour law approaches to unemployment would seem counter-intuitive.  
24. The third argument that supporters of the bill have posited is that businesses will be more likely to employ people if they face less financial risk (from treating their new employee procedurally fairly).   This implies that businesses will suddenly come up with new jobs to do that they are willing to pay people for.   It seems more likely that businesses already choose to create jobs on the basis of whether there is work that needs doing and if it will earn money.   If a the end of three months of a new job an employer decides to instigate her/his rights under this Bill to summarily dismiss he/she will still require a new worker to do the work that exists.   That's not a new job; it's just a new person without rights for the next three months.

Recommendation

That the Bill be opposed.

This work is licensed under a Creative Commons Attribution-NonCommercial 2.5 License.