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KiwiSaver rules could bring more industrial action

Media release
21 May 2007

KiwiSaver rules could bring more industrial action, litigation

Budget changes to KiwiSaver could bring more industrial action and litigation, says Business NZ.

Business NZ Chief Executive Phil O’Reilly says that’s because of the voluntary opt-in and uncertainty about how you bargain around that.

“In a situation where John and Fred each earn $40,000 and John opts in to KiwiSaver and Fred doesn’t, it creates a relativity problem for the future.

“They have each negotiated a salary package - John’s $40,000 includes the employer contribution and Fred’s doesn’t. If, later on, Fred decides to opt in to KiwiSaver, will the employer’s contribution be part of, or on top of, the $40,000 package?

“The Government is saying - don’t worry, KiwiSaver will just be part of total wages negotiated. But comments by some union officials imply they will in fact seek wage increases on top of KiwiSaver.

“They will be bargaining on the basis that some will opt in and others won’t – making bargaining very complex.

“Moreover, if Fred agrees to a clause in his contract saying that the wages received will reduce by the amount of the employer contribution if he later opts in to KiwiSaver, will some union then attack that rectrospectivity (agreeing in advance of something happening that could be to the employee’s detriment)? This could be an illegal ‘contracting out’ under the Act.

“It looks like we have another example of a new law that will have to be tested in Court to get certainty about what it means – another unnecessary, complicated and expensive outcome from employment law.

“This has arisen because the Government did not consult business on this plan prior to the Budget,” Mr O’Reilly said.


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