Wednesday, August 25, 2010

Trial Periods: Guest Post by John Hughes

There’s no doubt that managing people can be a tricky business. In just one workplace, recently, manager A had to deal with a team member who had been found to have misrepresented the nature of some personal spending on a credit card dedicated for business use, while manager B discovered that a member of his team had directed inappropriate sexual comments at women who also worked there. Disciplinary action would obviously have been on the cards under conventional employment law principles.
But each of these managers showed themselves to be acutely responsive to the needs of the team members in question. Manager A described the credit card offence as a technical matter and argued strongly that no action should be taken until a high level investigation had taken place and natural justice observed. Although the offender took it on himself to resign, he was soon reinstated. Manager B, meanwhile, explained his team member’s lewd behaviour by saying that he was unused to the work environment he now found himself in and as demonstrating that he needed to grow into a job that was new to him. He was given a “talking to”.
Manager A, we might remind ourselves, was Prime Minister John Key faced with the issues arising from Housing Minister Phil Heatley’s misuse of his ministerial credit card. Manager B, again, was ACT leader Rodney Hide, dealing with the fallout from the misbehaviour of ACT MP David Garrett.
So why are both men now so keen to introduce trial periods which will potentially deprive all employees in New Zealand of the consideration that they extended to their own colleagues? Since it might seem churlish to suggest anything as simple as a double standard at work, let us consider the arguments that have surfaced since the decision to extend the current trial period scheme was announced.
First, there is the freedom of choice argument. In the view of the Prime Minister, no-one needs to sign up to a trial period. They can “opt out”. Despite attempts to distance the current government from the thinking underpinning the Employment Contracts Act 1991, this is neo-liberal ideology at its purest. Employers and employees, in this theoretical world, are seen to possess equal bargaining power. Whilst some job applicants (a successful foreign exchange trader, for example) may indeed possess a degree of bargaining power, in the real world others plainly will not (for instance a pizza deliverer, even if the government had not already voted down legislation to improve his or her existing working conditions as a contractor).
The Government has pinned much of its propaganda on findings in a Department of Labour report that surveyed 771 employers in detail but interviewed only 13 workers (this purportedly due to “resource constraints”). Ironically, perhaps, that research makes this very point about bargaining power. The report showed that the employers surveyed generally made a take it or leave it offer which included non-negotiable trial periods and that the employees surveyed generally were unaware of their ability even to attempt to negotiate on the issue.
Even if such awareness existed, how realistic is it to expect job applicants to expect to bargain over such issues when hundreds of people queue for a few vacant positions at a fast food outlet and there remains the very real prospect of a social security stand-down if a job offer including a trial period is refused?
Second, the Prime Minister and the Minister of Labour have argued that the current limited trial period law has increased job opportunities. Once again, however, the Department of Labour research on which this claim is based shows nothing of the sort. Rather, in the words of that report “it cannot be stated categorically that trial periods had created extra job opportunities”. The much-trumpeted 40% of employers surveyed who claimed that they were unlikely to have hired a particular recruit without a trial period tells us nothing about how that conclusion was reached and certainly does not tell us that the job would not have been there in the absence of trial periods.
Third, the Prime Minister and Minister of Labour have both asserted that the extension of trial periods will assist marginalised groups such as lone parents and migrants who would otherwise not get job offers. It’s remarkable, isn’t it, how the purported concern of the Government for the poorest in society always manifests itself in practical measures that further worsen their lives, working or otherwise? That concern was not apparent when officials repeatedly warned the Government that axing ACC entitlements would hit the most vulnerable groups the hardest; it wasn’t there when the decision to raise GST was taken, again disadvantaging the poor infinitely more than the rest of society; and it certainly wasn’t there when the Government passed legislation allowing the Work and Income Service to halve the benefits of parents who fail new work tests, at a time when the Public Health Advisory Committee reported that there is already massive, and we would say utterly shameful, inequality in the health status of New Zealand children (beneficiaries’ children were identified as the most likely group to face continuing serious hardship in this respect).
Then, of course, if employers were indeed behaving as the Government claims, they had ample opportunity to demonstrate this in the skewed Labour Department Report on which the Government has relied so heavily. Unsurprisingly, that Report found instead that “very few” employers had used trial periods to employ marginalised workers. By telling these same employers that marginalised groups are a risky prospect without trial periods, moreover, the Government has effectively legitimised prejudices which would amount to unlawful discrimination if acted upon.
Fourth, if this new-found compassion for the poor seems a remarkably convenient camouflage for a right-wing policy that suits the Government’s natural constituency, it isn’t alone in this respect. So also is the much-vaunted comparison with other countries that use trial periods, especially the UK. Three years ago, when the parties forming the Government were in opposition and UK standards were used to promote legislation for flexible working arrangements, the present Minister of Labour Kate Wilkinson decried the comparison. “The current set of labour market and economic and social conditions in New Zealand”, she said, “does not present a close enough match to any [other] countries for that country’s solutions to be the obvious choice”. Indeed, she stated then that “it is dangerous simply to compare our situation with the United Kingdom situation and say this is the law for us”. Three years on, it appears that this danger only arises when the comparison with the UK favours employees rather than employers.
Then, finally, there are the simple misrepresentations. The Prime Minister has claimed that unions are “hyping up” the 90 day trial period and that workers currently on trial periods cannot be dismissed without reasons being given: “you can say it didn’t work out, but you have to say why it didn’t work out”. This is completely false. The trial period provisions introduced by the Government expressly remove the usual obligation to provide reasons for dismissal and the relevant official background papers state that the trial period proposals were “explicitly developed on the basis that there would be no requirement for employers to give reasons”. As misrepresentation goes, the Prime Minister’s claim ranks with Labour Minister Wilkinson’s original assurance that trial periods were covered by good faith provisions requiring notification of proposed dismissal. Once again, to the contrary, this aspect of good faith is expressly excluded from trial periods.
BAS, of course, is primarily concerned with the interaction of trial periods and the social security system. Here, the Work and Income Service requires that clients who are receiving the unemployment benefit and are referred to trial period of employment either take up the trial or face loss of benefit. Further, if a worker’s trial period is terminated after moving to trial employment from other work, he or she faces a social security stand-down. Despite original promises by the National Party in opposition, when trial periods were introduced under urgency in December 2008 no change was made to the provisions for waiver of the one or two-week stand-down before receiving a benefit. (This stand-down can be waived only if the applicant has been in full-time employment for less than 26 weeks; was receiving a benefit immediately before they were employed; and if their benefit was stopped because they moved into work.) Even worse, if a Work and Income case manager believes that a trial period employee has been dismissed for misconduct, or left work voluntarily, that employee ultimately faces a 13 week disqualification period without the option of first testing the validity of the dismissal (and the consequent stand down) through an unjustifiable dismissal claim, a right which exists for all other dismissed employees.
So, once again, we are back to the brutal politics of the 1990s in which the marginalised are squeezed between precarious working conditions and an increasingly mean-spirited and punitive social security system. Freedom of choice, anyone?

This piece was first published in the Spring Newsletter of the Beneficiary Advisory Service, (“BAS”). The BAS specialises in information and advice on low-income issues and social security advocacy and can be contacted at Suite 18, 107 Armagh Street, Christchurch, PO Box 130090, Christchurch. Phone, 379 8787, Fax, 377 3561. Email

Thursday, August 19, 2010

Personal Grievances: the proposed new s103A

The Minister’s Explanatory Note to the ER Bill states that it will “help restore the confidence of all parties in the personal grievance system”. This seems unlikely as the reforms do little to improve things that need reform, such as issues arising from triangular employment, and a lot to change things that don’t. However it has been clear since the Department of Labour issued its execrable Discussion Paper that these reforms have little to do with improving the personal grievance process and more to do with providing a response to the campaign of disinformation and misinformation run by various employer lobby groups who claim that the system is unfairly weighted against them and that wholly justifiable dismissals are overturned on the basis of some minor procedural mistake – examples of which are rarely if ever produced or substantiated (see my post of 24 February).

So what are the reforms?

The most important is of course the exclusion of new employees from personal grievance protection if they “agree” to a trial period. I will not comment on this as the inevitable iniquities that will result have been well covered in the CTU’s campaign on this issue. However one point that might be noted is that these employees have not only been stripped of their statutory protections but also of the limited common law protection from wrongful dismissal as section 113 bars such actions. The government has therefore enacted employment-at-will for up to 400,000 employees who change jobs each year – a period that might easily be extended in a third round of reforms.

The most important change to the personal grievance procedure itself is to be found in the proposed new s103A. The first is the change in the test of justification from “what a fair and reasonable employer would have done in all the circumstances” to what that that employer “could” have done. This change may look linguistically insignificant but its import is clear from the Explanatory Note. This states that “the current test of justification, which inappropriately obliges the Judge to substitute himself or herself for the employer and determine what the fair and reasonable employer would have done” should be amended. The Note goes on to state that “By substituting the word “could” for the word “would” in the test of justification, the Bill recognises that there is a range of fair and reasonable responses (actions and courses of action) that could be made by an employer in any situation.”

Two points need to be made here. The first is that the Note suggests that the Authority and the Court take a rigid approach to what is reasonable and insist there is only one answer to the question: it refers to “the “false assumption that there is only 1 fair and reasonable course of action.” – this is garbage. Both the Authority and the Court are careful to look at the full range of circumstances in deciding whether a particular approach was reasonable and in fact recognise that there may be a proper range of responses. As Judge Shaw said in Air New Zealand v Hudson [2006] 1 ERNZ 415 “While the range of responses open to an employer is obviously one of the matters to be considered, it is not the only matter”, a statement that clearly gives the lie to the statement on p 4 of the Note (my emphasis).

What this amendment is intended to do was made clear by employer submissions Air New Zealand v V (2009) 6 NZELR 582. It was argued that
once the Authority or the Court has determined that there was serious misconduct, and that this was a decision that a fair and reasonable employer would have made in all the circumstances at the time the dismissal occurred, the Authority and the Court should have no further role."
In other words it is nothing to do with the Authority of Court that the employer may have made a decision that was totally disproportionate in the circumstances or even totally irrational. Any person familiar with employment law could identify situations that might constitute “serious” misconduct but where dismissal would be totally unjust. Indeed the term “serious” should be regarded with considerable suspicion as it contains very strong pro-employer values, has become increasingly subjective and encompasses a range of conduct that many might regard as falling well short of conduct that justifies dismissal.

The second point that deserves comment is the idea that it is “inappropriate” for a neutral third party to decide if an employer’s substantive decision was reasonable in the circumstances. The point of independent evaluation is just that. Natural justice does not consist only of a right to be heard and it is not achieved when the decision maker is the judge of their own actions. Given the seriousness of the consequences of dismissal for an employee that employee is entitled to an unbiased and independent evaluation of a decision they challenge. It is also important to recognise what role the courts perform in such cases. The simplistic language in the Note suggests that judges act in an arbitrary and capricious fashion in imposing their own values. Perhaps the Minister might gain some value by a careful reading of the thorough and thoughtful analysis of Judge Shaw in Air New Zealand v Hudson in which she said:
the s103A requirement for the Authority and the Court to stand back and determine the matter on an objective basis by evaluating the employer’s actions does not give an unbridled licence to substitute their views for that of an employer. Their role is instead to ask if the action of the employer amounted to what a fair and reasonable employer would have done and evaluate the employer’s actions by that objective standard. It may mean that the Court reaches a different conclusion from that of the employer but, provided this is done appropriately, that is objectively and with regard to all the circumstances at the time the dismissal occurred, a conclusion different from that of the employer may be a proper outcome.
It is of course not yet clear how the courts will interpret this change of wording, and one should remember that the need for an objective standard of evaluation remains as does the general good faith requirement, but the objective of its advocates is clearly to reinforce the subordination of the employee and the vulnerability of their employment – on which see my blog of July 26.

The Bill, in sub clause (3), proposes to add a number of new considerations to be taken into account by the Authority or Court. These would seem to largely restate the existing law but do have the advantage of making explicit at least the basics of procedural fairness. Similarly sub clause (5) appears to add little. Perhaps the one concern relates to the need to consider the “resources available to the employer”, although this may be prove to be a cleft stick. All employers have access to professional advice and might be expected to seek it. It might also be recalled that in In Association of University Staff Inc. v The Vice-Chancellor of the University of Auckland [2005] 1 ERNZ 224 at [41] the Court suggests that professional HRM managers might be expected to be aware of appropriate standards and practice in their field.

Friday, August 13, 2010

Death of Jimmy Reid

All the national papers in Britain this week have carried extensive obituaries following the death of Jimmy Reid, one of the foremost Scottish trade unionists in the post-war era. Among other things he apparently said that if kamikaze pilots formed a union Arthur Scargill would have been its natural leader. A speech he delivered on his inauguration as rector of Glasgow University in 1972, compared at the time to the Gettysburg Address, is reproduced in full in The Independent and is still well worth reading.

For an obituary see

Wednesday, August 11, 2010

Guest Post from Amanda Reilly

One More Straw

Most parents would agree that simultaneously managing family responsibilities and paid work can be hard. Research in this area frequently focuses on the difficulties faced by middle class professional women (which is unsurprising since much of this research is carried out by middle class women who have a very personal stake in the issue). However, a recent joint report by the UC Hastings College of Law Work Life Law Center and the Center for American progress shines a light on how work family conflict affects poor and working class families. It makes for harrowing and heartbreaking reading. Click here to read the whole report

Here is one extract I found particularly upsetting: Kim Braithwaite was making progress. She was working two jobs to support her two children, 9-year old Justina and 1-year-old Justin. But on October 12, 2003, she faced a dilemma: her babysitter was late. Kim would be tardy for her shift at McDonald’s if she delayed and she worried that she would be fired. The sitter would arrive in a few minutes, Kim reasoned, and she left for work. The next she heard was from the police. Her children were found dead in her front room; her apartment had caught fire before the babysitter arrived. Kim was arrested for child neglect. Said a neighbor, “It’s hard when a single mother has two or three kids and has to work a lot. But I never hear her kids crying, never see her yelling at them. She is a good mom. ”'

Could such a tragedy occur in New Zealand? One would hope not but I suspect we would not have to look too hard to find families in New Zealand who, like those identified in the report ‘get few benefits from their employers to help manage work-life conflict and often hold jobs with inconsistent or unpredictable schedules that exacerbate these conflicts. Government policies to help these families are too often inadequate and underfunded, yet conservatives point to the problems these families have in balancing work and family as proof of their “irresponsibility.”’

There are no quick fixes or easy answers to the problem of helping families to manage work and family. However, the consequences of the recent proposal to amend the Holidays Act, to give employers the right to request a medical certificate if an employee is absent from work for a single day, strike me as likely to be particularly harsh on poor working families. For a well paid single person with reliable transportation having to go to a doctor for a medical certificate because your employer suspects you took the day off to go shopping is a minor inconvenience. But the same requirement to obtain a medical certificate could be a significant imposition on a struggling solo parent on a low wage with no car and a complex web of childcare arrangements to juggle. Keep in mind also that under s65 of the Holidays Act an employee may take sick leave if a person who depends on the employee for care is sick or injured. Anecdotally, many working parents of young children use up their statutory sick leave entitlements on caring for their children and soldier on at work if they themselves are ill. Any parent who has experienced what it is like to be up all night with a vomiting child and then had to drag themselves to work the next day ought to be able to empathize with the burdens that illness must impose on poor working families. These families deserve our respect and support. I have no doubt that many good employers are supportive and understanding of their employees with family responsibilities and that the proposed law change will make no difference to their treatment of their workforce. However, not all employers are good or sensitive and I fear that conferring the ability to compel employees to obtain medical certificates after one day of sick leave on employers could be one more straw for the backs of already struggling workers and families.