Government announces controversial labour law changes

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The government’s announcement yesterday of controversial changes to the Employment Relations Act, which will be introduced into parliament later this year, came as no surprise to anyone.

However, it was the changes to Part 6A of the act which is intended to provide continuity of employment to workers in the cleaning, catering, orderly and laundry industries when a business is restructured or sold – that attracted the most feedback.

A review of Part 6A found that there were significant operational issues around transferring employees’ entitlements and information to a new employer, Labour Minister Kate Wilkinson said. “The proposed amendments will fix these issues and provide more certainty and clarity for employers while protecting key benefits for affected employees.”

The review also found that, while larger businesses were able to deal with the requirements of Part 6A, small and medium sized businesses (SMEs) faced greater proportional costs, the minister said. “That’s why cabinet has also agreed to exempt SMEs, with under 20 employees, from the provisions of Part 6A where the SME is the incoming employer.”

The proposed changes to Part 6A include:

 

  • A requirement for the outgoing employer to forward employees’ information – such as employment agreements, PAYE, wage and time or leave records – to the incoming employer.
  • A process to help the employers agree how to apportion liabilities for accrued service-related entitlements of employees who are transferring.
  • A requirement that employees must decide to transfer to a new employer within five working days (or a longer timeframe if agreed between the outgoing and incoming employer).
  • Additional penalties and compliance orders for non-compliance with Part 6A, and provision for litigation in the District Court.

The proposed changes to Part 6A are part of a package of measures that will extend workers’ rights to request flexible working hours and ensure a fair and flexible collective bargaining environment, Wilkinson added.

The other proposed changes to the act include:

 

  • A return to the law’s original position that the duty of good faith does not require the parties to conclude a collective agreement.
  • Empowering the Employment Relations Authority to declare in certain circumstances that collective bargaining has ended.
  • Allowing employers to opt out of multi-employer bargaining.
  • Allowing for partial pay reductions in cases of partial strike action.
  • Removing the 30-day rule that forces non-union members to take union terms and conditions.

The changes will help to keep businesses nimble in the current environment, as well as to secure more jobs in New Zealand, Kim Campbell from the Employers & Manufacturers Association said. “But employers were hoping for even more flexibility than has been announced.”

Where unions and employers work constructively together for the mutual benefit of all involved there will be little change, he said. “But businesses will now be able to assure their viability by being able to conclude bargaining over work place conditions even if after the robust process they fail to agree.”

The changes to Part 6A, while welcome, fell well short of what is required, Campbell continued. “Any law that guarantees employment to members of a union is flawed and should have been repealed in its entirety.”

However, Phil O’Reilly from BusinessNZ said the proposed “moderate” changes will improve, but not significantly alter, employment processes. “The ‘good faith’ framework of the legislation will remain, with improvements to some of the details on bargaining and contract processes.”

Other changes around bargaining, as well as to Part 6A, will also go some way towards facilitating more successful workplace relations and better workplace communication, he added.

Meanwhile, opposition politicians and union representatives condemned the proposed changes, and said they would benefit negatively on employees – particularly vulnerable ones.

 

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