Media Release 22 May 2000

Employment Relations Bill will cost jobs

The Employers & Manufactures Association (Northern) told Parliament's Employment Legislation Committee in Auckland today that the Employment Relations Bill will cost jobs.

Peter Tritt, EMA employment relations manager, told the committee that "The Bill will add new costs to business, heighten business uncertainty and undermine business confidence. All of which will lead to a contraction in the employment market."

"The Bill contains serious flaws, which will undermine Government’s hopes of creating a strong and dynamic economy."

"The Bill has received a largely negative reception from employers throughout the northern region, the submission said. The recent fall in business confidence has been attributed substantially to this. Large numbers of employers, both members and non-members, are turning up to EMA meetings on the Bill, over 3000 to date."

Major points made in the submission:

Extra compliance costs - clock runs at $4.25 million per year

Assuming a modest extra cost in time alone of one hour per employee per year, the total cost of the new compliance measures for EMA Northern members is $4.25 million per annum. The figure was calculated across EMA’s 243,000 employees @ $17.50 per hour, (the average hourly wage). Each extra hour involved in meeting the new compliance costs adds a further $4.25 million per year. Many extra hours will be needed for each employer to comply with requirements to:

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 Provide the new Schedule 2 to all employees.
 Provide notice requirements for all employees on individual agreements.
 Provide notice requirements for new employees covered by collective agreements.
 Allow unlimited access rights to perhaps several competing unions.
 Demarcation problems arising from competing unions.
 Good faith collective bargaining processes.
 New grounds for personal grievances.
 Increased use of mediation services.

Even a modest extra 10 hours per employee, per year, in compliance would cost EMA members $42.5 million. The actual cost is likely to be much higher.

Additional Employment Relations Education Leave - $4.65 million annually

Employment relations education leave will cost EMA Northern members in excess of $4.65 million annually. Our 3307 members whose total payroll is under $1 million (with an average staff of 9) employ 30,000 staff and stand to lose a total of 16,535 days on this requirement. At $17.50 per hour this represents a total annual cost to these smaller members of $2.3 million. In addition, our 167 members with payrolls over $5 million employing over 94,000 people, will incur total annual costs over $1.6 million.

Perversely, the burden will fall disproportionately on smaller businesses less able to pay. Added to these totals are those to non-member employers, and to thousands of independent contractors who could assume the status of employees under the Bill.

Additional union meetings - $17 million annually

Employers will be obliged to allow union members to attend two 2-hour paid union meetings each year at a potential cost to EMA Northern members of over $17 million per annum in lost time. This sum is calculated across 243,000 employees x 4 hours @ $17.50 per hour. Administration costs are extra.
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Total annual compliance costs will exceed $60 million
On a conservative basis, cost estimates exceed 60 million a year. These additional cost must inevitably result in fewer jobs.

Additional uncertainty

The Bill heightens uncertainty because it over-rides established legal precedents and principles. Four major Court of Appeal rulings are undermined, relating to:

 Independent contractors.
 Communications with employees during bargaining.
 Continuity of employment.
 Fixed term contracts.

The Bill also undermines legal principles protecting:

 Corporate entity and limited liability.
 Confidentiality of commercially sensitive information.
 Freedom of speech.
 Freedom of association.
 Freedom of religion.
 Freedom from unfair discrimination and unequal treatment.

For further information, contact:

Peter Tritt
DDI (09) 367 0921
Home (09) 379 8977
Mobile (025) 796 807

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