Monday, March 23, 2009

Worker pressure

The National-led government has announced plans to allow workers to ask to be paid for their fourth week of annual leave instead of taking the leave. When the previous Labour-led Government added a fourth week of annual leave for all full-time employees, they also made it illegal to accept payment in lieu of leave.

National promised that they would change to the law to allow workers to “sell” leave. Prime Minister John Key denied that any employers would pressure workers to “sell” a week of leave, pointing out that businesses would still need to pay for the week of leave and the week worked. However, the head of business lobbying organisation Business New Zealand told the media that paying for that week would amount to a 2% pay rise for workers and businesses could afford to pay for it due to the productivity gains they think they’ll get.

The news angle changed this afternoon, however. The media started reporting that Key said that "only an employee can ask to cash up the fourth week and the employer can't ask for that." Talking about who can and can’t “ask” for this is beside the point: We all know that there will be employers who will pressure employees to do it, or take advantage of workers who need cash. I’d have a lot more faith in what John Key says if the law also makes it specifically illegal for employers to ask to buy a week’s leave and, more importantly, illegal to pressure workers.

It’s also probable that businesses that think they’ll come out ahead will be surprised. Some workers will sell that time, then take sick leave, unpaid even. So, companies won’t necessarily end up with workers working more hours. The law must also allow companies to deny the request to sell leave, and smart companies would refuse as a matter of policy.

I wonder, though, if this isn’t a backdoor way of removing that fourth week of annual leave altogether. Perhaps they hope the cash incentive will encourage works away from taking the fourth week giving National justification for removing the obligation. Maybe not. But given some of the government’s recent actions, I’m getting pretty suspicious of their motives.


Reed said...

This is absolutely a backdoor, really a side door, to dropping a week of annual leave. Consider, it's already an option for companies to provide more than four weeks if they wish. So, the four week count is now meaningless.

Companies will roll the dollar difference out of annualized costs and get an extra week of labour--from vulnerable workers first, then the rest.

I'm a little surprised that nobody seems to care. If the TV person on the street interviews are representative, many people really think it means they'll make more money.

Arthur Schenck said...

I'm glad to see I'm not the only one who's suspicious of this. To me, it looks like a bad idea for everyone, while the current law provides certainty, with clear and understandable rules.

After I wrote this, I thought I should've added that under the current employment relations law (which is itself to undergo tinkering by the government), an employer couldn't just drop a week of annual leave without the consent of the worker (if the 4-week requirement was dropped). But if it was dropped, employers might offer a "pay rise" in exchange for an employee giving up a week of annual leave as a way to change the contract. Also, most people only stay in a job for a few years before moving on to a new job—and a new contract.

This mostly affects workers in non-management roles, since management contracts are usually more generous in the amount of time off they give. Still, they too would be affected as lower contract drop back to three weeks.

As you pointed out, ordinary people seem to think it would mean more money and don't realise that it means they're losing something. Up to a point, I'd support their right to make a stupid decision (and National seems determined to go that route), but it's got to be with strong legal protection from intimidation and without removing the four-week requirement.

Otherwise, this will be just a way to give business what it wants (less annual leave requirement) by hoodwinking workers into thinking that they're actually getting something by giving up something else.