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State Sector stealth misses the point

Media Release

11 February 2004

State Sector stealth misses the point

Proposed State Services Act changes are a short-sighted attempt to exact revenge on secondary teachers for the discomfort they caused the Government in 2002 and their timing suggests the Labour Government is manipulating the democratic process.

PPTA president Phil Smith said it was no accident the Bill was introduced in the last week of term last year with a closing date of 30 January, effectively preventing teachers from responding, and subverting democracy in the process.

He said PPTA was to have tabled its submission before the Education and Science Select Committee today, however, the Committee was under such time pressure (it must report back to Parliament by 28 February) that it had to delay the presentation.

“The Government has not allowed sufficient time for a reasonable debate about this issue and seems hell bent on exacting revenge from secondary teachers and school boards for the embarrassment they caused in 2001-02,” he said.

In its submission, the Association argues that proposals to remove from Boards of Trustees and pass to the Secretary for Education powers to dock pay, suspend and lock out employees will not solve the fundamental problem that the Bill purports to address.

“Education Minister Trevor Mallard’s claims that the amendments will reduce the incentive of teachers to take industrial action completely miss the point,” Mr Smith said.

“Teachers already expect to lose pay and risk lock out and suspension if they take strike action. Their incentive to do so is not related to pay but rather the issue at stake.

“Industrial action is usually entered into most reluctantly because of an intense belief that a government’s position in bargaining will ultimately disadvantage students and their learning.”

“The real problem in 2001-2002 was that the Minister and Ministry failed to get to grips with the extent of the crisis in secondary schools; boards supported teachers because they could see the workload pressures they faced.

“Rather than attempting to punish teachers and school boards, the Minister and Ministry need to think about where they got it wrong in 2001-2002.”

Mr Smith said other proposed changes – to enable the Minister to extend the school year if a school takes strike action, and deduct from a board’s operations grant if it fails to provide the names of striking teachers – were extraordinarily punitive and the latter would ultimately disadvantage students.

“We would rather be engaging with the Government constructively – these amendments do nothing to advance that.”

Ends. The submission is attached and will be available at
1. Introduction

1.1 The NZPPTA representing some 15,000 members in State (including integrated) secondary area and composite schools and manual training establishments welcomes the opportunity to make submissions on this Bill.

1.2 There are two main aspects to this Bill – the conferring of powers to the State Services Commissioner to suspend or lock out Board employees who are bargaining for a collective agreement, and amendments to provide certainty to teachers in the event of a school merger or closure.

1.3 As the weight of the Bill (and this submission) is devoted to the first of these aspects, the Association will make some preliminary remarks regarding the policy objectives purported to inform the proposed legislative change.

2. Preliminary remarks: Powers to suspend, lock out or discontinue pay of employees

2.1 In the Explanatory Note to the Bill, the Government suggests that the “ill” to be remedied by the Bill is the alleged advantage in bargaining power Board employees have over other employees as “their incentive to take industrial action is greater”. The remedy proposed is to confer on the Commissioner (effectively the Secretary for Education by delegation under the Act) “all the rights, duties and powers of an employer under the Employment Relations Act 2000”.

2.2 In respect of this perceived “ill”, the Association makes these points:

2.2.1 First, in terms of relative bargaining power, the Association argues that the balance of advantage rests squarely with the Commissioner/Secretary for Education. The Commissioner/Secretary acts directly for and is subject to the dictates and policies of the Government of the day. Furthermore, the Government, as the ultimate employer, has considerable powers at its disposal including the power to regulate and legislate. In the past, the Association has experienced the intervention of government, via legislation, to either change the rules for bargaining or to abrogate a bargained outcome. No other employer has the full powers of the State at its disposal.

2.2.2 Second, whether teachers may or may not lose pay or whether or not they may be suspended or locked out is not an incentive for them to take industrial action. The “incentive”, if that is the word, is invariably the principle of the matter; the issue at stake. Industrial action is very much a last resort and is entered into most reluctantly – teachers’ uppermost concern is in respect of their students and their education. More often than not, a decision to take industrial action is driven by an intense belief that the position adopted by Government in bargaining will, ultimately, disadvantage students and their learning. When making decisions about strike action, teachers are aware that pay is at risk and that suspension or lock out could also result.

2.2.3 Third, the industrial action which occurred throughout the 2001-2002 bargaining round reflected a failure on the part of the Commissioner/Secretary for Education to address longstanding problems with secondary teacher supply and the excessive workload generated by the rushed implementation of the NCEA. Many Boards of Trustees chose to support the position of teachers rather than the Ministry position because, as good employers, they were concerned about the stress their employees were being subject to.

2.3 With those points in mind, we will now address the specific aspects of the Bill in detail.

3. Part 1: Preliminary provisions

3.1 Clauses 2 and 3 of this part set out the commencement and purposes of the proposed legislation and, given the construct of the Bill, are appropriate as written. However, the clauses may need to be re-examined should the Select Committee determine to recommend material changes to subsequent provisions in the Bill.

4. Part 2: Amendments concerning employees of Boards of Trustees

4.1 Clause 4 seeks to insert new sections to confer new powers to the Commissioner (Secretary for Education by delegation). Purportedly, these include “all the rights, duties and powers of an employer under the Employment Relations Act 2000”. However, for the reasons and explanations which follow, the Association believes the proposed amendments go much further by effectively conferring all of the powers and rights on the one hand, but then obviating the Commissioner (Secretary) from attending to certain of the duties required of an ordinary employer in parallel circumstances on the other.

4.2 The Association submits that this is unfair and will further exacerbate the imbalance that already exists in the bargaining relationships as highlighted in paragraph 2.2.1 of this submission.

4.3 This unfairness and the difference in treatment as between the Commissioner (Secretary) and an ordinary employer arises as follows:

4.3.1 Proposed section 74AA(1) confers to the Commissioner (Secretary) “all the rights, duties and powers of an employer under the Employment Relations Act 2000” in respect of Board employees during the course of negotiations for a collective agreement that will bind those employees. This, the Association submits, is sufficient to achieve the purported purpose of the Bill assuming the Select Committee and Parliament agrees the purpose has merit.

4.3.2 This is particularly so when this proposed section is read along with section 74(3) of the current Act. Existing section 74(3) provides “Unless otherwise directed in writing by the Commissioner, an employer in the Education service must not lockout or suspend striking employees…” In other words, the current Act already reserves to the Commissioner (Secretary) the power to direct lock out and suspension in the course of bargaining for a collective agreement.

4.3.3 New section 74AA(2), which clarifies that the powers referred to in subsection (1) “include the power to lock out or suspend employees” not only states the obvious but also smacks of vindictiveness. The rights, duties and powers of employers under the Employment Relations Act are abundantly clear, including the power to lock out or suspend employees. These latter powers don’t need to be singled out and particularised in the State Sector Act. Subsection 74AA(2) is superfluous and should be struck out.

4.3.4 It is new section 74AA(3) which severely diminishes the duties of the Commissioner (Secretary) in these matters relative to the duties required of an ordinary employer under the Employment Relations Act. Subsection 74AA(3), if passed, will allow the Commissioner (Secretary) to effect a suspension (and also a lock out presumably) by simply advising the union of the class or classes of employees who are, or are to be suspended without the need to:

(a) separately advise any employee of that fact

or without the need to:

(b) comply with section 89 of the Employment Relations Act.

This ease of process to be afforded to the Commissioner (Secretary) including obviating the need to comply with section 89 of the ERA is markedly different from, and of a significantly lesser nature to, the duties of an ordinary employer in identical circumstances under the Employment Relations Act. For that employer, the relevant provisions are sections 87, 88 and 89 (ERA).

Section 87 provides that an employer may suspend the employment of an employee who is party to a strike, and further provides that an employee who is so suspended is not entitled to be paid for the period of the suspension.

Section 88 provides that an employer may suspend a non-striking worker where, as a result of a strike, the employer is unable to provide the work that is normally performed by that employee. Again, a worker so suspended is not entitled to be paid for the period of the suspension.

Section 89, requires an employer suspending an employee under section 87 or section 88 to “indicate to the employee, at the time of the employee’s suspension, the section under which the suspension is being effected”.

The underlined words from section 89 and the language used in the three sections 87 to 89 are important for the Select Committee to note. The singular word “employee” is used consistently throughout, and in section 89, “the employer must indicate to the employee” concerned the particular section (87 or 88) under which the notice or advice of suspension is being effected. In other words, Parliament envisaged that ordinary employers would deal with employees individually in these matters. No particular convenience or ease of process as that now proposed for the Commissioner (Secretary) was intended.

It might be argued that the employment relations context in the Education service is complex, thus justifying different and lesser requirements in the case of the Commissioner (Secretary). If so, the Association does not accept complexity as a valid reason for such significant differences. Employment arrangements, and human resource and payroll processes among ordinary New Zealand employers are amazingly diverse and complex. For example, a moderately sized New Zealand employer may have a number of entities employing people in a number of different locations. In some cases, these entities may be “self-governing” to various degrees but may have key functions, such as human resource, personnel or payroll processing differently or separately managed. Further, it is possible that some of these functions may be contracted out to specialist providers; payroll processing being not uncommon for example.

Irrespective of the complexity and diversity of arrangements, all employers are subject to the same requirements of the Employment Relations Act. The State and its agencies should remain subject to the same requirements. Subsection 74AA(3) should also be struck out.

4.3.5 Proposed subsection 74AA(4) provides that where the Commissioner (Secretary) has suspended or locked out an employee, she or he may direct:

(a) that the employee not be paid for the period of the suspension or the lock out; and/or

(b) that any amount already paid be deducted from any remuneration otherwise payable to the employee.

This subsection begins with the words “Despite any other enactment . . . ”.

The purpose of this subsection, along with subsection, 74AA(5) would appear to be to allow the Commissioner (Secretary) to direct persons responsible for payroll management (which could include persons in independent companies contracted to provide such services) to effect the pay deductions/pay recoveries as the case may be.

Without prejudice to the merits of the Bill, one would have thought such a provision to be unnecessary. For teachers, the paymaster is the Secretary for Education. For other Board employees and above-entitlement teachers, the paymaster is the individual Board of Trustees. Even if the actual payroll functions are contracted out to some third party, the paymaster remains the responsible party in terms of the law. Thus, where actual processing may be contracted to a third party, the actual employer remains responsible.

Further, the words “Despite any other enactment” at the beginning of the subsection are also concerning. This means that the Commissioner (Secretary) will be exempt from the processes regarding the recovery of overpayments as required by the Wages Protection Act 1983, particularly section 6. That section enables an employer to recover overpayments in certain circumstances, but subject to the employer giving appropriate notice to affected employees and also effecting that recovery within a prescribed time period of the giving of such notice.

If this is to be the case, not only would this advantage the Commissioner (Secretary) relative to other employers, but it would also be inappropriate for a significant employer in the State to be exempt from such basic requirements of the law as to certainty to employees regarding wage and salary payments.

4.3.6 Subsection 74AA(5) allows any direction under subsection (4) to be given to any person responsible for effecting wage and salary payments to employees and requires that person to follow any such direction.

Again, this implies a short-cut and over-riding of process. As just submitted, the actual employer in negotiations is also the ultimate and responsible paymaster, not some third party or other external agency (such as a bank) which may form part of the chain of transfer from the employer’s to the employee’s account. Should any such third party or external agency fail in its part of the transfer process, simple contractual remedies are available. The responsibility for initiating as the case may be, rests with the employer. The Secretary (acting under delegation) does not need to direct her or himself in this regard.

4.3.7 Subsection 74AA(6) simply clarifies the effects of subsection (1) and the further sections of the Bill to which subsection (1) is subject. Importantly, subsection 74AA(6)(a) removes from Boards of Trustees, the actual day-to-day employers, any discretion at all in the matter. This is unacceptable in the Association’s submission. Boards of Trustees have full knowledge of the fact situation as it applies in their respective situations. They have the capacity and the wisdom to act independently and appropriately and it is inappropriate to deny that capacity which Boards are required to exercise in every other circumstance.

The subsection should be struck out.

4.3.8 Subsection 74AA(7) defines a Board of Trustees for the purposes of sections 74AA and 74AB to 74AD following, and achieves it purpose in that regard.

4.4 Proposed new section 74AB sets out to indemnify Boards of Trustees from any liability arising from the exercise of the Commissioner’s (Secretary’s) powers except where the liability arises out of conduct of the board that is not in good faith or is engaged in without reasonable care. In the context of the Bill, this is a sensible enough provision.

4.5 Proposed section 74AC will deem a strike unlawful unless the Commissioner/Secretary is given written notice of a proposed strike before it commences. The provisions in this section are remarkable in that they effectively negate the provisions of section 83 of the Labour Relations Act as they currently apply to the staffs of schools. In particular:

4.5.1 Generally employees are not required to provide notice of an intended strike under the Employment Relations Act. The only exceptions relate to strikes in what are described as “essential services” and to which sections 90 and 91 of that Act apply. The Education service is not described as an essential service.

4.5.2 Proposed sub-section 74AC(2) will require a notice to state the nature of the action, the school or schools to be affected and the start and end dates of the proposed strike. Again, this is remarkably different from and at odds with the Employment Relations Act provisions applying to comparable employees in other industries. Further, such new requirements surpass and are considerably more onerous than those required in essential services under that Act.

4.5.3 Proposed sub-section 74AC(4) goes on with a unique provision whereby every employee will be deemed to have participated in the strike throughout the period stated in the notice unless an employer advises otherwise. Again this is hugely different from the situation as it applies now and will continue to apply to the generality of working people. The law as it stands recognises that decisions regarding proposed action may be collectively made but that decisions to actually participate in the action are individually made. What is being proposed will change the status of school staffs fundamentally vis-à-vis ordinary employees and will further serve to undermine the protective principles of the Wages Protection Act already commented on. The scope for litigation and bureaucratic endeavour in the event of mistakes would be enormous as well. Such a change should not be contemplated. Section 74(AC) in its entirety should be struck out.

4.6 Section 74AD which follows requires employers to notify the Commissioner/Secretary of the names of employees not participating in a strike. This too, will effect the reverse of the situation pertaining to all other employers who will continue to identify and provide notice to those employees who do strike. The section continues with provisions which are punitive in nature if not draconian, in particular, the provisions in subsections 74AD(5) and (6) which allow for deductions from grants to boards as the Minister thinks fit where non-compliance is alleged. Such a provision also interferes grossly with the ability of schools to govern their schools in a responsible and deliberative way. Further, the bulk of such grants are to meet students, not staffs’ needs. Section 74AD should also be struck out.

4.7 The final provision relating to this aspect of the Bill is in clause 6 which proposes an amendment to section 65A of the Education Act. The proposed new section (2A) which would deem a school to be open for instruction notwithstanding a strike or lockout is sensible and acceptable. However, new section (2B) is not. A provision which will allow the Minister to extend staffs’ obligations to attend their work sites because of a strike or lockout smacks of a deliberate undermining of the effectiveness of workers undertaking industrial action. No other employer has this power. Proposed new section (2B) should not be proceeded with.

5. Amendments Surrounding School Closures/Mergers

5.1 The Bill contains two amendments purportedly designed “to facilitate the retention of teachers and to provide them with employment certainty.” It is the Association’s submission that the amendments proposed achieve that purpose in part only for the following reasons:

5.1.1 Clause 77HB — to the extent that the amendments in this section address complexities around staff transition in mergers, PPTA is in support of the general direction. Regardless of the initial intent, sections 77G (Appointments on merit) and 77H (Obligation to notify vacancies) of the State Sector Act have constantly confounded attempts to develop a smooth staffing transition process to be used in network reviews.

5.1.2 As it stands, the law in respect of mergers can be read three ways:

(a) First, it is possible to view all positions in a merged school as new positions which must be advertised nationally and appointed on merit. This effectively disestablishes all jobs with a resulting high redundancy cost. It is also destabilising for staff and puts curriculum delivery prior to the merger at risk as staff seek jobs elsewhere leaving the schools with vacancies and little prospect of filling them.

(b) A second interpretation argues that staff employed by the continuing board have absolute protection of employment because there has been no change in their employer. This view privileges some teachers’ jobs over others, a situation which is not conducive to a smooth process. It also creates wider community tensions from the outset because there is greater perceived value in being the continuing school/board than being one of the merging boards/schools.

(c) The third possible interpretation is one the parties have fashioned to try to overcome the practical difficulties of the first and second interpretations. It argues that all employees are technically employees of the continuing board once it has been established. This approach treats all staff equally, provides a little more certainty about their employment and minimises conflict by requiring all boards in the merger to work together in the interests of the students.

5.1.3 It is important therefore that the situation be clarified. The proposed 77HB makes it clear that in a merger the employer effectively remains the same and therefore there are no actual vacancies. It will remove possible sources of confusion and dispute and will ensure that the legal framework supports the transition process which exists in the collective agreement document.

5.1.4 Clause 77HA — In contrast, the proposed new clause 77HA is unnecessary and will add nothing to the merger/closure process except confusion and litigation.

5.1.5 It has been justified on the grounds that it brings schools into line with the practice prevailing in the public service which allows departmental heads to place surplus staff in other departments and as reflected in amendments to the Act made in 2003. This view takes no account of the existence, since 1989, of 2,300 individual employer boards all with their own distinctive cultures. While the factors defining “equivalent employment” under 77HA (same position, general locality, terms and conditions of employment) may work in relatively homogenous public service departments, they will be problematic in schools where many intangibles affect the employment relationship. A teacher seeking employment will consider a range of factors such as decile, coeducation, single-sex and even factors like the nature of the board of trustees, the principal’s style of management and professional leadership and even the capacity and ability of a particular Head of Department. Similarly boards will have their own distinct preferences about which applicant best fits the school’s culture. Empowering the Ministry of Education to ride roughshod over local appointment decisions, a possible consequence of the amendment, is a recipe for disaster.

5.1.6 It is most likely that, in practice, effective managers in the public service give consideration to factors beyond mere “equivalence” when dealing with transfers. In other words, the power to transfer employees is moderated by their understandings about suitability. The problem for schools is that they will not have the flexibility to make those decisions based on local knowledge because the Ministry will simply micro-manage the budget process to minimise redundancy costs. Schools and teachers will be left to manage the consequences. And there will be consequences; teachers compelled to apply for jobs they do not want can simply set out to convince boards they would be an unattractive employment prospect - a subterfuge that simply wastes everyone’s time; alternatively along with their union they can endlessly challenge the legal definition of equivalence. Boards unhappy at the prospect of having an applicant they regard as unsuitable imposed on them will similarly resist.

5.1.7 For the record, it is not possible for an employee under either the Secondary Teachers’ Collective Agreement or the Secondary Principals’ Collective Agreement to accept the surplus staffing option and retain a permanent job. However, it is possible in limited circumstances for teachers to volunteer to leave when a school is found to be over-staffed. In this event, some teachers (with the approval of the board) may take up an option of 30 weeks paid retraining, or 30 weeks as a supernumerary teacher in that school or another school, (providing the new board agrees) or a long service payment option providing they have sufficient service. Let us be clear that we are not talking here about the enormous “golden handshakes” provided in the public sector; a teacher with thirty years’ service gets around $20,000 after tax; most get considerably less than that.

5.1.8 To conclude on this point, the proposal in 77HA totally ignores the fact that the employment agreements already contain extensive sections on the management of the surplus staffing processes developed over some thirty years by the Ministry of Education acting for the Government, the New Zealand School Trustees’ Association representing boards and PPTA representing secondary teachers. It is not clear why of all the clauses that set out the process for managing surplus staffing, this particular element has been deemed to require legislative force. What is clear is that there can be no merit in using the heavy hand of legislation to reinforce clauses that have already been agreed by the parties directly affected. Moreover, the capacity for making change, should it become necessary, is constrained once a position is reified in legislation. It would be ironic to amend two sections of the State Sector Act that were found to be unhelpful only to add another rigidity.

5.1.9 In short, we believe this section to be unhelpful at best and positively harmful at worst. It should be struck out. The issues have been and can continue to be successfully dealt with via the collective bargaining process.

6. Conclusion and Recommendation

6.1 The Association has no issue with the no work, no pay principle in the event of strike or lockout. However, it does take serious issue with those provisions in the Bill that fundamentally disturb the status quo for working people in education relative to workers in every other industry. We also see proposed section 77HA as unhelpful and unnecessary.

6.2 It is the essence of the Association’s submission, and its recommendation, that the stated purposes of the Bill can be achieved by the insertion into the State Sector Act of proposed sections 74AA(i), 74AA(7) and 74AB possibly, but with consequential amendments and proposed section 77HB; and by the insertion of proposed section (2A) to section 65A of the Education Act. The remaining provisions are unnecessary.

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