"The Australian government has (almost) had the good sense to recognise that mandatory unfair dismissal laws are bad for firms and workers alike", Roger Kerr, executive director of the New Zealand Business Roundtable said today.

He was commenting on the announcement that businesses with up to 100 workers will be exempt from unfair dismissal laws, while probation periods for new employees in businesses with more than 100 workers will increase from three to six months.

Mr Kerr said that a 1996 study published by the Business Roundtable documented the harmful effects of mandatory unjustifiable dismissal laws and showed that they were equivalent to a tax on wages (leaving workers with lower pay on average) and on employment (costing New Zealand a significant number of jobs)1.

"The main thing wrong with the Australian proposal is the irrelevant distinction between 'small' and 'large' businesses, which is also offensive to the rule of law", Mr Kerr said. "It makes no sense for mandatory dismissal rules to be applied to larger businesses either, and some will no doubt reorganise their operating units to get around them.

"Overall, the Australian government's proposed industrial relations reforms still fail to recognise that there is little need for special regulation of labour markets, but at least they are a step in the right direction, especially with respect to unfair dismissals. If they are adopted by the Australian parliament, Australia will steal a march on New Zealand, which has been going in the opposite direction with more restrictive labour law", Mr Kerr concluded.

1. Charles Baird, The Employment Contracts Act and Unjustifiable Dismissal: The economics of an unjust employment tax, New Zealand Business Roundtable and New Zealand Employers Federation.

For more information, contact:

Roger Kerr
Executive Director
Ph: 04 499 0790
Email: rkerr@nzbr.org.nz

Web: www.nzbr.org.nz