Evaluating employment changes
A new report by the Ministry of Business, Innovation and Employment looks at outcomes of key changes to employment law made in 2011 to see if they are working as intended.
What the changes were meant to do
The broad aims of the changes were to:
- reduce compliance costs for businesses
- reduce employment relationship problems
- improve the balance of fairness
- provide more clarity and guidance to employers and employees
The changes and how they’re measuring up
Trial periods were opened up so that all employers have the option to use trial periods of up to 90 days. To stimulate business confidence to hire new staff and encourage more job opportunities for disadvantaged job seekers.
Trial periods are now being used by both small and large firms across a range of industries, positions, and skill levels. Employers reported trial periods have reduced the potential cost of dismissals without adding additional costs. Of employers who used trial periods with new hires, 27% had dismissed at least one employee during or at the end of the trial period. It seems while trial periods have not changed the nature of employer/employee relationships, employers see them as a way to help manage risk when trialling new staff. Interviews with employers who had dismissed staff indicated they followed correct procedures and were more comfortable there would be no comebacks. Changes to the Holidays Act meant employees can apply to cash in up to one week’s annual holidays and also to transfer public holidays to another working day. Employers were provided with an additional method to calculate payments for types of leave and holidays – Average Daily Pay. It’s also easier for employers to ask for proof of sickness or injury. To make it easier for businesses and employees to understand and apply the Act in a wider range of employment arrangements, increasing choice and flexibility.
While the Holidays Act changes have increased flexibility and choices for some employers and employees, it seems overall the changes have neither increased ease of use nor decreased costs. There is still a lack of understanding of how the law works. Some employers find the Holidays Act provisions difficult to apply in some arrangements, such as for people with variable work hours or shifts. Compliance costs for businesses in calculating entitlements and payments haven’t really changed.
Union access to workplaces is now conditional on employer consent and employers are able to communicate directly with employees during collective bargaining. To enable businesses and employees to understand and apply their obligations more easily and help resolve employment relationship problems faster. While there was no increase in the number of problems reported, changes to union access and communications during collective bargaining seem to have had comparatively little impact overall among employers and unions though they seem likely to have worsened matters in sites where employer-union relations are already poor.
Changes to mediation processes provided additional options for parties, specifically early assistance from mediators. The so-called test of justification was changed to give greater recognition to the fact that there may be a range of possible responses that a fair and reasonable employer may make in the circumstances before it. Conduct must be viewed against what a fair and reasonable employer ‘could’ have done rather than ‘would’ have done. To help resolve workplace disputes faster and improve the balance of fairness.
Parties in disputes have more choices as mediators are now able to make formal recommendations. The use of informal recommendations by mediators has increased. There has been little change in the time taken to resolve cases.
Key commentators said that fairness was already relatively well balanced between employers and employees and this balance has not shifted much. The amendment preventing mediation settlements from being agreed for less than minimum entitlements was sometimes seen as not helping the balance of fairness where the employer did not have funds to pay the employee’s full entitlement and agreement could not always be achieved. The amended test of justification hasn’t yet produced practical outcomes, although codifying the considerations in applying the test may have increased the transparency to the disputants.
Although it’s still too early to assess the changes’ full impact, the findings were seen by the Ministry as generally positive, though it did acknowledge little change or mixed results in some areas.