National has to strike a balance

John Key.
John Key.
Employement law is an area fraught with traps for any political administration. New Zealand employers and employees have seen major swings in the way employment legislation has been thrust upon them since 1990 when a newly-elected National Government dramatically changed the way bosses and workers interacted.

The Helen Clark-led Labour administration moved some way back to more union-friendly legislation from 1999. The Government led by Prime Minister John Key has been relatively timid when it comes to changing employment law. There have been moves to again sideline trade unions but it is the recent changes announced by former labour minister Kate Wilkinson that have caused some warnings to be issued.

Those warnings, from the left of the political spectrum, involved the so-called vulnerable workers who work in our cleaning, catering, orderly and laundry industries. Ms Wilkinson tinkered with legislation that relates to some of New Zealand's lowest-paid, often part-time workers who are in a second job or work the unsociable hours to help with the family finances. Many of those workers are paid the minimum wage.

Labour introduced Part 6A into employment law to protect what its union backers called the low-income workers who rely on statutory protections for a semblance of fairness. Part 6A gave thousands of workers the right to retain their jobs and to be transferred to a new contractor on the same terms of employment when a business is sold or a contract re-tendered.

Labour and the unions remain concerned that every commercial cleaner and every kitchen worker employed in schools, commercial buildings, rest-homes and other businesses whose work is exposed to repetitive competitive tendering will be left to the whim of employers.

So it was into that particular cauldron that Ms Wilkinson stepped. She claimed that a review of Part 6A found there were significant operational issues around transferring the entitlements and information of workers to their new employer.

Now a new labour minister will need to drive the changes through Parliament. Ms Wilkinson was seen as employer friendly, at the expense of some workers.

National is unlikely to move away from the changes but a softening might be expected in the face of strident opposition. For some employers, the changes do not go far enough. For worker representatives, the changes are too harsh.

The review had also found that while larger businesses had been able to adapt better to the requirements of Part 6A, small and medium-sized businesses faced greater proportional costs.

The conundrum appeared to be that a contract was either won or lost on a tender price. If the tender was won by a new company, the successful tenderer was obliged to take on the existing workers from the failed tenderer on the same terms of employment.

The same obligation applied when an existing business was sold.

An exemption from those particular obligations was allowed for businesses with fewer than 20 employees, where the small to medium-sized business was the incoming employer. Employees in small and medium enterprises account for about a quarter of those in affected industries. The difficulty with Part 6A was the absolute requirement for incoming contractors and employers to provide continuity of employment for the workers in the specific industries where a business was restructured or sold.

Businesses owners throughout the commercial world tender on a known quantity of what they can achieve from their own existing operations. Those contracts are won, or lost, on the ability of an organisation to be at its most cost effective and efficient. Some of that efficiency relates to the skills of the business owner but also, the skill and efficiency of the workers contribute greatly to a successful operation.

Undoubtedly, successful tenderers will need extra staff to complete their contractual obligations. Taking on some of the existing workers should be a choice, not a requirement, as there are already other ways of protecting the wages and conditions of workers in those industries.


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