New Zealand firms have given the thumbs up to a new employment law aimed at creating a more flexible work force by letting employers negotiate the terms of meal breaks and overhauling collective bargaining rules, reports the National Business Review (NBR). 

The Parliament last month passed the so-called “Tea Break Employment Bill”, which aims to increase labour market flexibility and cut the regulatory burden and compliance costs for small- and medium-sized businesses. Chief among the changes are new working arrangements where employees can request work hours that suit them, the ability to negotiate rest breaks to meet work flows, provisions to protect vulnerable workers, a faster turnaround for Employment Relations Authority decisions, and a series of changes to collective bargaining to reduce ineffective negotiations.

The moves have been widely welcomed by public companies, with 35 of the 42 local listed firms who responded to a survey from NBR saying that the legislative overhaul leaves New Zealand's labour market flexible enough to meet their needs.

Workplace Relations Minister Michael Woodhouse described the changes as "creating a fair and more flexible system for both employers and employees".

New Zealand's labour market is continuing its recovering from the 2008 recession, which coincided with the global financial crisis, which forced firms to slash jobs as they clamped down on costs in a shrinking environment. Since then, the local employment environment has improved, with the unemployment rate falling to a five-and-a-half year low 5.4% in the September quarter.

However, strong inbound migration flows have limited gains in wages, with the labour cost index, a measure of wage inflation, rising at a +1.6% annual pace in the September quarter.

The government's changes to the employment legislation were stalled in the previous Parliament after former Act Party leader John Banks resigned after he was found guilty of filing false donation declarations in his failed bid for the Auckland mayoralty in 2010, and was quickly passed after this year's general election returned the National-led administration to the Treasury benches.

The legislation was staunchly opposed by opposition political parties, which leaped on the amendment to make rest and meal break provisions negotiable, which the government defended as trying to find a balance for sole-charge positions, and accused it of watering down collective bargaining provisions.

Firms that found the labour market too inflexible cited unions' intractability in linking wage growth to productivity, which made local companies less competitive to their international rivals.

The government's amendments removed the requirement that all non-union members are employed under a collective agreement in their first 30 days, allowed firms to opt out of multi-employer agreements, removed the duty for good faith to require a concluded agreement, and allow partial pay reductions for partial strike action.

In terms of the collective bargaining changes, the Department of Labour advised that removing the requirement to conclude an agreement and introducing partial pay cuts for partial strikes was "likely to have the biggest impact on the bargaining environment" and would reduce bargaining where there were strained relationships between employers and unions or low unionisation, stoking litigation in the short-term to test the legal boundaries. Workplaces with productive bargaining relationships would likely see little impact.