Undoubtedly, having to justify sacking workers could be hard on small employers who hire a non-performer or someone who really doesn’t fit in. But sack them they can. If the job is a relatively simple one, then should performance problems arise, the period given for improvement is relatively short — weeks rather than months.
And it’s not difficult to sack someone fairly. The rules of “natural justice” are not complicated. There are handy little books (wrote one myself) available, and local polytechnics, employers associations, etc, run short courses explaining these matters.
Actually, anybody hiring other people really ought to do such a course and learn about the pitfalls of being an employer, and the ways to get the most for all parties out of the empoyment relationship. Note that National’s policy doesn’t do that. Quite the reverse — it seeks to make employers less accountable.
So, what’s the problem?
Ironically, the problems were caused by the ECA. In the old days (before 1991), only union members had the right to take personal grievances, but the unions took the cases and filtered out those lacking merit. The ECA widened coverage to all employees, including senior managers. This had two bad effects.
Because payments for lost wages and entitlements, and for loss of dignity, injury to feeling, etc, were related to pay rates, there were some spectacular decisions involving senior managers, which were widely reported. This led to perceptions that personal grievance actions are a goldmine for employees.
Worse still, lawyers got involved. Do lawyers care whether a case has merit? Maybe, but they get paid anyway (unless they’re one of the few on commission) so there’s less incentive to filter out poor cases. So, the number of PGs going to the Employment Tribunal, now Employment Relations Authority, exploded.
Note that one of the stated aims of the Employment Relations Act 2000 (by Margaret Wilson, then Minister of Labour) was to rid employment relations of lawyers. Generally speaking, they make things worse for everyone. Sadly, the genie was out of the bottle, and shows no inclination to get back in.
In fact, the average payments made to successful grievants — and not all are successful — are small. Less than $10,000 all up. And remember, these are usually cases where the employer’s done things which they shouldn’t have.
However, the process has become very legalistic, and employers small and large think that they must hire expensive lawyers.
“But why not let small employers sack?”, chorus the Right. “Good staff have nothing to fear.”
Well, actually, they do. Many small employers do not know what they’re doing when they employ people. The ones who think that it’s all “common sense”, or who go to their accountants for advice (true!) are amongst the worst. This faith in the competence of untrained and often inexperienced small business people is touching. It’s also totally at odds with the reality that mediators and Employment Authority members deal with every day. Not to mention the numbers of small businesses that fold.
The CTU makes a good point when it complains that the proposal allows small employers to “opt out of fairness in employment”. Is fairness in employment a good thing? Absolutely. But note that National’s policy does nothing to promote fairness in the employment relationship.
And who are the people at risk? Why, overwhelmingly it’s the lower paid and lower skilled. They’re the same workers who got hammered by the ECA. Lost their union membership and suffered pay cuts, forced to work longer hours, etc. National’s proposals just open these most vulnerable workers to further abuse.
For all of National’s protestations that the proposals will help employment rates for these people — without producing any hard evidence to back up this claim in the face of 3.6% unemployment — it looks like they have the bosses’ interests closest to heart.
If there are problems, lets deal with the causes of the problems. Once, employment legislation was developed jointly by the state, employers and unions together. Perhaps we could do with some of that, rather than one side and then the other enacting its backers’ favourite wish-list. This latest attempt underlines this point, if nothing else.
Update: A very thoughtful post expanding on some of these points by Jordan Carter. And Roger Nome.
And a Steve Pierson post at The Standard which refers to research at the DoL showing that, in fact, there isn’t really a problem anyway.