Monday, April 22, 2024

Workplace relations Minister addresses business chamber

Workplace Relations and Safety Minister, Brooke Van Velden has this evening addressed members of the Auckland Business Chamber at an event in the city.

Her speech is as follows:

Good evening everyone and thank you for that lovely introduction.  

Thank you also to the Honourable Simon Bridges for the invitation to address your members.

Since being sworn in, this coalition Government has hit the ground running with our 100-day plan, delivering the changes that New Zealanders expect of us.

I am proud to have delivered two important priorities under this plan: abolishing the poorly thought out so-called Fair Pay Agreements and expanding the availability of 90-day trials.

Now that the 100 days is up, it is time for me to turn my mind to what I want to achieve in this portfolio for the rest of this term. 

Today, I am excited to share with you my priorities in the Workplace Relations and Safety portfolio for the rest of the term. 

You are the first audience to hear what my priorities are, and I hope this is only the beginning of an ongoing conversation. This Government is committed to cutting the red tape and regulations that are stopping both businesses and employees from realising their full potential.

I hope – and expect – you will hold us accountable for achieving that. I am aware that the laws we make in Parliament have real consequences and impact on every person, so they need to be proportionate and necessary. I see real opportunities within my role to contribute to positive change that enables New Zealanders to prosper.  

Before I move on to my priorities, I would like to make a few observations.

The first thing I want to acknowledge is that I know many businesses have had it rough recently. Businesses have had to deal with a lot of extra costs that have made it more expensive to hire people and harder to ease the cost of living.

Policies that were meant to benefit workers have only added to business uncertainty and the costs of doing business. Under the previous government:

  • The minimum wage increased at nearly twice the rate of inflation. 
  • A new public holiday was introduced, further adding to the strain
  • And sick leave entitlements doubled, making it harder for businesses to have certainty over staffing.

I want to restore business confidence and certainty. That is the way businesses are able to create more and better jobs.

The second observation I want to share with you is that I believe workers and employers can agree on solutions that enable both to thrive. This might not sound like a radical statement. But over the last six years, employers would be forgiven for feeling like they have been pitted against workers. 

Meanwhile, there are workers who have struggled to get a job in the labour market. They might not have the right skills or experience, or have other life demands that require a more flexible working environment. These are the workers who are disadvantaged by regulations that make it more expensive or riskier to hire someone new.

The frustrations both employers and workers are facing are connected. Labour market regulations are becoming increasingly complex, making it harder for employers and workers to reach solutions that work for both of them.

Flexible labour markets are the best environment for businesses to grow. When businesses thrive, our economy thrives. It’s only with a strong economy that we can lift wages, create opportunities, and help Kiwis get ahead.

With these objectives in mind, I have set a number of priorities to guide the work ahead for my Workplace Relations and Safety portfolio.

Firstly, I want to confirm that delivering improvements to the Holidays Act is one of my top priorities.

The problems with the Holidays Act have been experienced so widely, most employers would have found themselves non-compliant at some point in time.

  • Workers suffer because it is difficult to be sure they are actually receiving their statutory entitlements, and many have suffered years of underpayment.
  • Businesses suffer because the processes and calculations of the Holidays Act are so complex many employers struggle to understand their legal obligations and even with the best intentions, have found themselves non-compliant. 
  • And the taxpayer suffers, because it’s not only the private sector that has struggled to get things right. Even MBIE is part of the long list of employers who have been tripped up by the Act. The irony is not lost on me.  

The costs of inaction are eye-watering. Health New Zealand’s remediation payments affect an estimated 270,000 employees, who were owed a combined total of around $2.235 billion.

One issue that is clear is that the Act has struggled to keep up with working arrangements that differ from a standard five-day, 40-hour week. It is important that any improvements to the Holidays Act provide enduring solutions that will be responsive to constantly evolving work arrangements and business needs.  

I understand that change has been a long time coming, and there will be many in this room who are sick of undelivered promises. The previous government’s Holidays Act taskforce began work in 2018, but were not able to deliver on changes by the end of their term in government.

There will be people in this room who might rightly wonder what I intend to do differently to ensure this gets over the line.

The first action I am going to take is to make sure that any changes to the Act are workable and are a material improvement on the status quo. One of the reasons it has taken so long to deliver change is that the previous government’s proposed changes were so complex, it has taken years to move from policy decisions to getting draft legislation. If the policy is difficult to draft, chances are businesses would have a tough time implementing it too.

I am also committed to getting feedback from the stakeholders who will eventually have to work with the Act. We need the Act to be workable for everyone, from the multi-national corporates to the small-town family run restaurants.

You can expect to hear back from me in the coming months on the policy issues under consideration and how you can provide your feedback.

Secondly, you will be aware that one of the priorities of the ACT-National coalition agreement is to reform health and safety law and regulations.

Personally, this is one of the policy areas I am most excited about. On the campaign trail, I heard from businesses and workers alike who are currently either struggling to understand the reason for some costly health and safety regulations, or are struggling to comply with the rules as they stand.

I recently heard from a school principal who said that the laws they are asked to comply with are impractical and don’t relate to the reality of juggling many children in a classroom. Some businesses I’ve talked to are so uncertain of whether or not they’re doing enough, they’re whacking up posters left, right and centre to show they are attempting to comply.

Businesses and workers need to know what their obligations are. 

Businesses want to keep people safe and healthy at work, but one of the things I hear consistently is that businesses just don’t know what to do in order to comply.

Small businesses in particular, are pulled in so many directions, and urgently need this clarity as far as possible.

Workers too, need to know what their employers, and they themselves, are required to do to keep them safe.

This is an area where business and worker interests should align. All workers and their families deserve to have confidence that they will return home safe. And businesses know the costs – both personal and financial – of workplace accidents and the difficulties of attracting and keeping workers in risky sectors.

The Health and Safety at Work Act is now almost ten years old, and I think it is an appropriate time we take a step back and assess whether the health and safety system is fit for purpose.

I want us to get back to basics and ask New Zealanders what is the purpose of health and safety regulation, how should risk and costs be allocated, what’s working and what needs to change? 

We need our health and safety system to be clear, to be understandable, and to be effective. I want our system to make sure businesses are focused on addressing the things that are causing workers harm, and not on compliance that serves no purpose. I want to give businesses confidence in the actions they are taking to ensure health and safety.

Before we embark on reform, I want to hear from workers, from businesses, from people who know how to ensure workers get home healthy and safe. With this in mind I will start with public consultation. I want New Zealand businesses and workers to have their voices heard and for their feedback to shape this work and ensure that we are focusing on the areas that will have the most impactful change. 

More details about this public consultation will be released in the coming months, and I hope you will all get involved.

My next priority is related to the Employment Relations Act, which is the main piece of legislation underpinning New Zealand’s labour market. 

There are parts of the Employment Relations Act that could do better at lifting New Zealand’s productivity and economic growth. 

It is essential that the Employment Relations Act strikes the right balance between labour market and regulatory flexibility, certainty of obligations and outcomes, and protection for workers.

An important part of changes to the Act comes from the ACT-National coalition agreement commitment to better protect choice and freedom to contract for workers and businesses.

Many New Zealand businesses use contractors in situations where engaging an employee to do the work would be inappropriate or not as effective.

The gig economy, for example, has created jobs that offer autonomy and flexibility that workers would not be able to enjoy in conventional work.

Contracting arrangements can be particularly useful for people who can’t commit to standard hours like students, or parents with young children. Contracting can be a stopgap between roles, or a way to re-enter the job market, or to allow time to establish their own personal business on the side of ongoing contracts. 

From an economic perspective, enabling flexibility in working arrangements increases productivity and incomes by allocating resources more effectively and increasing output per hour worked. It can also improve income security by expanding opportunities for short-term employment.

Most contractors are happy being in a contracting relationship. According to Stats NZ, about 1 in 20 New Zealanders are contractors.

  • Almost 80 per cent said they had a lot of control over how their work was organised and how their tasks were done; and
  • 90 per cent said they were satisfied or very satisfied with their jobs and that they would prefer to continue being self-employed rather than have a paid job working for someone else.

This Government wishes to ensure businesses and workers who explicitly agree to a contracting arrangement, have certainty about the nature of that relationship.

The legal status quo has created uncertainty for contractors and businesses because of contractors’ ability to challenge their employment status if they believe they should be classified as employees. 

This uncertainty might also discourage businesses from offering contractors added benefits that are normally reserved for employees such as sick leave and parental leave. 

Not only can this be costly for businesses, who genuinely believe they have a contractor business model, but it also increases business uncertainty in general; including for contractors in the same business who don’t want to be employees.

So, I have asked my officials for advice on policy options to increase certainty in contracting relationships. 

I want to achieve certainty for contracting parties, so that their intent when entering into a contract for services is upheld.

The ACT-National coalition agreement also requires the Government to consider changes to simplify personal grievances. 

Personal grievances are intended to protect employees from unfair employer behaviour, something we know happens, but I don’t consider we currently have the balance right. 

I have heard that the process for pursuing a personal grievance claim can be slow, costly, and can incentivise employees to pursue grievances even where their behaviour has contributed to the employment relationship problem.

Employers can be dragged through personal grievance processes by vexatious employees. It can impose significant legal costs on businesses and impact their reputation, for which there is no redress.

Lengthy personal grievance processes can have a negative effect on other workers in the workplace as well. Vexatious employees can hurt culture and morale, or can force other workers to compensate for unproductive colleagues.

I have asked my officials for advice on simplifying personal grievances. Specifically, this includes considering setting a high-income threshold above which a personal grievance could not be pursued, and to remove the eligibility for remedies if the employee is at fault.

I want to ensure that personal grievance settings provide fair rules that work for everybody, that are clear, understandable, and simple, so that employers can get on with their role in growing the economy.

My final priority to share with you today is my intention to improve the effectiveness, efficiency and responsiveness of the frontline services in the systems I am responsible for. 

It is essential that the frontline services in the workplace relations system are performing well for New Zealanders and are providing value-for-money services. 

It is also essential that we know how well our regulatory systems are performing. 

I am going to set performance targets for the Employment Relations and Employment Standards system and the Health and Safety system, as well as performance measures for the frontline services within them. 

I want to ensure that these frontline services are focusing their energy and resources on areas where they can have the most significant impact, and that both taxpayer funds and the Health and Safety at Work Levy are being spent responsibly. 

I’m looking forward to working with MBIE and with WorkSafe over the coming months to set baselines and strategic performance measures so that we can measure the impact of the funding provided, track performance and drive change for the betterment of all New Zealanders.  

To lift productivity and drive economic growth we need flexible workplaces and regulation, where businesses have the certainty and confidence to innovate and grow, and employees have the freedom to agree on terms that work for them and their unique contexts. 

We need fair rules that work for everybody, that are clear, practical and simple, so that businesses and workers alike can thrive and get on with their critical role in the economy.

That is my focus. The work that I have outlined today will deliver this vision, and I look forward to hearing from you as we get it underway. 

I am confident that this Government will deliver positive change that provides certainty and confidence for a thriving economy.

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