Prime Minister John Key says the Cabinet decided to extend the 90-day trial period for new workers to cover all businesses following negotiations with the ACT party.
Documents released under the Official Information Act reveal that the Minister of Labour Kate Wilkinson had recommended the probation period should only be available to companies with fewer than 50 employees.
In the July paper to the Cabinet, Ms Wilkinson argued that companies with more than 50 employees tend to have robust systems in place to undertake good recruitment and employment practices.
ACT leader Rodney Hide says despite her recommendation, his party pushed to have the 90-day trial applied to all companies.
Mr Hide says it did not make sense to prevent someone who employed 51 workers from taking advantage of the trial period, or prevent someone from getting a job with such a company.
The Prime Minister says ultimately, he believes the trial period would have been made available to all companies, regardless of size, and Ms Wilkinson did not resist the move.
The Labour Party says ACT's role in extending the trial period shows it is calling the shots and National is meekly following on behind.
Labour leader Phil Goff says most New Zealanders do not believe it is fair to allow workers to be sacked without any reason being given, or any right of appeal.
Legislation extending the 90-day trial period is before Parliament's industrial relations committee for public submissions.