30 April 2002

State Owned Enterprises Minister Mark Burton said he is satisfied that New Zealand Post has taken appropriate steps to ensure that current redundancy provisions are reasonable and in line with standard practice.

"Yesterday I asked officials to obtain a briefing from New Zealand Post on cases raised in the media at the weekend," Mark Burton said.

"Two of the cases involved redundancy payments made since the election of the Labour/Alliance government. Questions about payments made during the time of the previous government should be directed to previous ministers. This government has made it quite clear that substantial state sector redundancy payments should be avoided if possible - and that includes SOEs.

"However, New Zealand Post has advised that the two employees who departed in 2000 and 2001 had redundancy provisions in their contracts that dated back to 1992 and which could not be changed without the employees agreement.

"The provisions were inherited from the New Zealand Post Office and were standard across the company: ie a postie first employed prior to 1992 would have had their redundancy payment calculated under exactly the same formula.

"In recent years standard redundancy provisions across the state sector have changed and New Zealand Post has modified their contracts for new employees, to reflect standard practice.

"Historical provisions in state sector contracts may seem excessive by today's standards, but they are legal and must be honoured. However, the government's expectations are quite clear and substantial payments are becoming a rarity," Mark Burton said.

Attached: Key points briefing to SOE Minister from NZ Post.

29 April 2002

Briefing To Minister For Soes On New Zealand Post Termination Arrangements.

Key Points:

- Robert Lake (terminated Sept 2001), Phil Abraham (terminated Sept 2000) and Paul Forno (terminated Oct 1997) received redundancy payments that were completely in line with New Zealand Post’s terms and conditions which apply to all employees employed before 1992 - they were not “golden handshakes”.

- These three redundancies were the result of legitimate business restructuring - there was nothing “secret’ about them.

- As employees employed prior to 1992, the terms and condition under which payments to Robert Lake, Phil Abraham and Paul Forno were calculated were the same for all staff employed prior to 1992.

- This means that a mail sorter, a postie, or a Post Shop staff member employed prior to 1992 would have their redundancy payment calculated under the exact same formula.

- The restructuring of the Letters and Enterprises businesses that led to the disestablishment of Mr Lake’s position was approved by New Zealand Post Chief Executive Elmar Toime within his delegated authority of management and advised to the Board.

- As Mr Lake’s redundancy payment was an automatic calculation under the standard terms and conditions, there was no requirement for the Board to be given details of the redundancy payment itself.

- The payment to Stuart Keith (terminated August 1999) was not a redundancy payment. It was a settlement, the terms of which are confidential to both parties. The amount was less than $80,000 gross (the sum cited by the Sunday Star-Times). Mr Keith was not a senior executive. The settlement was approved by John Allen, Group Leader Letters at the time, and was within the delegated authority of management.

- New Zealand Post’s redundancy terms and conditions were inherited from the New Zealand Post Office, which in turn were developed under the broader State Services negotiating forum.

- Since 1998, New Zealand Post has reduced redundancy provisions for employees hired since that date.

- Current terms and conditions for redundancy are in line with the Department of Labour report in April 2001 that the most common formula was 6 weeks pay for the first year of service plus 2 weeks pay for each year thereafter.

- The terms and conditions for employees employed before 1992 have been “grandparented’ as these have legal standing and cannot be changed without employee agreement.

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