Why does National want to remove the right of workers to appeal against unjustifiable dismissal in the first 90 days of employment?
The reason National gives us is that workers having the right to sue for unjustified dismissal has a chilling effect on small businesses. Supposedly, they are afraid to hire workers because if they find they want to get rid of the worker they will have to go through a proper process and have a justifiable reason for dismissal. Employers avoid this risk by not hiring people. And that, we’re told, leads to less employment than would otherwise be the case.
First, employment is at record levels and the cry from employers is always ‘we want more workers’ not ‘I’m scared to hire people’. There is no evidence that the right to fair process and justified dismissal dissuades employers from hiring. The policy would not increase employment.
Secondly, a study shows there are 1.5 employment related problems per 100 workers a year in the private sector (2.9 for small businesses). The median cost was $5000 ($3,900 for small businesses). Of these ERPs, most were handled quickly and cheaply by agreements between the employer and the employee; only 5% went on to become personal grievance cases. Only 10% of disputes involved employees who had been employed for less than 3 months.
Personal disputes are rare, in most cases the employee is found to have a good claim and gets a settlement, the payouts are small, and very few involve employees employed for less than 3 months. Workers’ rights are not overly burdensome on employers and when they are used employers are usually in the wrong. Removing these rights would only give free rein to the few bad employers to threaten any workers who don’t ‘behave’ (eg work unpaid overtime, work in unsafe conditions, not join the union) with instant dismissal. Do we really want to reform the law to advantage bad employers?
National might believe its policy is good for employment and reduces a heavy burden on employers but it doesn’t. All it does is give power to coerce workers with the threat of dismissal, which some bad employers will exploit. The law ain’t broke, and that’s no reason to fix it.