WHAT DID THE ELECTION RESULT MEAN FOR EMPLOYERS?

The election results last week were fascinating and are worthwhile considering a little more closely.

As everyone knows there was a clear winner on the night (National) with over 951,145 votes and 59 seats. However, what is lesser known is the other great winner on the night was the number of disallowed votes (180,000) and the Bill and Ben Party who polled a remarkable 10,000 votes in the South Island only 8,629 and 9,536 votes respectively behind Peter Dunne and Bill Anderton!

When the disallowed votes are taken into account the gap between the major parties seems remarkably slender. Nevertheless, the result has been undeniable and prompts many questions such as what will the election result actually mean for employers?

The first obvious implication of coalition building is that Prime Minister Key can turn now to both left (Maori Party) and right (ACT) depending on the issue to get legislation passed. Whilst Key has created his own four headed monster this new union reaches out to as broad a base as possible and this can not be all bad when you consider the tough times that may lie ahead.

The specific changes themselves can be divided into the following categories:

1.        90 day trial period.

Much has already been spoken about this by both supporters and antagonists. The opponents of this change believe that this will empower business owners to sack at will at 90 days and avoid their obligations to statutory entitlements which begin to accrue from 180 days of employment. Supporters believe this is essential legislation to assist with managing the “have a go” employment minefield bequeathed to us by the last government.

Our view is that not much will actually change as the trial period will only apply to those businesses with 20 or less staff and to be really effective the thresholds should have been raised substantially, say to 180 days and 100 staff. Mandatory protections will still exist e.g. such as the right to refer matters to a Labour Inspector and you can expect that employers who are cavalier in their management of this new environment will get severely punished. 

2.         Unions.

Some Union power is about to be clipped with Unions no longer being required in negotiations for collective agreements. This may have the effect of dissuading employees from membership when they take a direct hand in their own negotiations for better terms and conditions. In some environments this will undoubtedly be helpful moving discussion driven by ideology to a position whereby pragmatism dominates.

3.         Employment Relations Act.

This legislation will also be subject to close scrutiny and it has been suggested that paid union education leave and vulnerable worker legislation may come under pressure.

Some restraints on Union access may also result with this being by agreement with the employer only. It has also been stated that Key wants to see the Mediation Service “staffed with qualified people”, whatever that means…suggesting that the current crop of mediators just don’t really cut it – and the experience of many of my clients is that this is certainly true. The other prediction is that the Employment Relations Authority is destined to become more judicial once more with the right to cross examination being allowed and this will be a bonanza for the lawyers! 

4.         Annual leave.

It is likely that the fourth week of annual leave will be allowed to be cashed up by mutual agreement. The Holiday’s Act will also come in for some attention, especially around the definition of “relevant daily pay” which will be dropped.

5.         ACC. This will become a competitive marketplace once again.

6.         Kiwisaver.

More changes are coming again I am afraid. The minimum employer and employee contributions will drop from 4% to 2% in an effort to make the scheme more affordable for every participant and the employer tax credit of $1040.00 will also be abolished.

 7.        Redundancy relief.

This will be targeted and made available to those who have been in employment for at least 6 months and who have been made redundant. The assistance will be designed to last for 16  weeks and is designed to top up the “In work” tax credit and to increase the accommodation supplement by up to $100.00 per week.

The bottom line is that employment law reform will not be a significant priority and Kate Wilkinson who has been charged with responsibility for Health and Safety and Labour law is 20^th on the list and that is some distance from the front bench.

The Nats have never said that they intend to change personal grievance legislation and there has been nothing about skills and productivity and the central pieces of reform may well be change in the ACC area and Kiwisaver Reforms and this is also indicated by the prominence of Peter Dunne and Nick Smith in the new line-up.

Whatever is the ultimate shape of legislative reform you can be certain that their will be further changes required to employment agreements along with the need to take positive, strong advice on employment relations matters in the months ahead.