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Employment Law Changes will Reduce Pay and Conditions

30 October 2012

Employment Law Changes will Reduce Pay and Conditions

The CTU strongly condemns further proposed changes to the Employment Relations Act 2000 announced today.

Peter Conway, CTU Secretary, says that “These changes are designed to reduce the wages and conditions of workers in New Zealand.”

The ability to negotiate collective agreements is reduced by making it easier for employers to walk away from negotiations and harder for workers to take industrial action. The Government also wants to remove protections for new employees (who can now be offered worse terms and conditions than the collective agreement) and some catering and cleaning staff who will be offered a choice between worse terms and conditions and losing their jobs where their employment is contracted out.”

Peter Conway says “The Government has not yet produced a Bill but has been making a series of announcements. We have previously seen details of plans to allow employers to opt out of Multi-Employer Collective Agreement (‘MECA’) bargaining and to restrict legitimate industrial action.”

The Minister of Labour has outlined a number of changes today including changes to what is known as Part 6a of the Act which deals with protection of vulnerable workers in a transfer situation. Today’s announcement also confirms the Government intention to introduce a Bill with other significant alterations to employment law.

Peter Conway says: “The dilution or removal of the duty to conclude a collective agreement undermines the purpose of the Employment Relations Act 2000 “to build productive employment relationships [among other things] by promoting collective bargaining” (section 3(a)(ii)). The Department of Labour has criticised this proposal in strong terms in their Regulatory Impact Statement (at paras 53 and 54) where they stated ‘this proposal may encourage poor bargaining behaviour (such as surface bargaining)… when one party has no intention of concluding an agreement and does no more than going through the motions to avoid a breach of good faith complaint. Parties may abandon attempts to reach an agreement, where it may have been possible to do so under the current framework. This change will have a signalling effect that employers can walk away easily… This may cause disputes around when bargaining has ended. This may cause deterioration of the employment relationship and see an increase in staff turnover, particularly where there is a strong union presence and commitment to collective bargaining. There is also a risk that fewer collective agreements will be concluded.’

Peter Conway said that currently employers are required to offer new employees the same terms as the collective agreement that covers their work for the first 30 days of their employment. The Government proposes to remove this requirement. In her first cabinet paper, Minister Wilkinson notes that removing this requirement “will enable employers to offer individual terms and conditions [to the new employee] that are less than those in the collective agreement.”

In contracting out situations, the current law providers strong protection for workers that are particularly vulnerable to exploitation those in cleaning and food services plus some caretaking, orderly and laundry services. Under Part 6A of the Employment Relations Act, if these services are contracted out the workers can choose to transfer to the new employer with the same terms and conditions of employment. The protections in part 6A were introduced in 2004 following a review in 2001 that found certain employers were forcing vulnerable workers to either accept worse terms and conditions when they took over a business or lose their jobs. 65% of these vulnerable workers are women and Maori and Pasifika are over-represented. Many earn close to the minimum wage.

It is proposed that incoming employers with less than 20 employees (Small to Medium Enterprises or SMEs) should be exempt from all of the Part 6A requirements. According to the Ministry of Economic Development, 31% of all employees are currently employed by SMEs. SMEs will have a significant incentive to undercut other tenderers by cutting employees terms and conditions. The CTU believes that this is a ‘race to the bottom’ that mistreats some of our most vulnerable workers.


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