Court Case should send shockwaves through Employment Law

22 June 2012

Court Case should send shockwaves through Employment Law

Crest Clean is deeply concerned by ruling by the Christchurch Employment Court in the matter of Doran v Crest Commercial Clean Limited saying it is a direct result of the poorly drafted Part 6A of the Employment Relations Act 2000.

Crest Clean is currently considering an appeal.

“The decision is not only disappointing for both employers and employees but continues the uncertainty when businesses undertake an employee transfer under Part 6A of the Act,” says Grant McLauchlan, Managing Director of Crest Commercial Cleaning.

“We are of the view that this decision actually supports the call for a repeal of Part 6A. Rather than "vunerable workers it should read vulnerable businesses," said Mr McLauchlan.

“Part 6A is not working for either employees or employers. The legislation fails in one of its main objectives, to provide meaningful protection to the most vulnerable employees. It now adds urgency to the need for Parliament to address the problems this part of the legislation has created,” said Mr McLauchlan.

“Part 6A is creating vulnerable business by removing their ability to control their own destiny and places unfair limits on their ability to increase productivity and innovation.

“The legislation is anti-competitive in that it obliges businesses to employ workers who elect to transfer from a previous employer to a new employer on the same terms and conditions.

“This legislation results in significant lost productivity gains for our clients as it prevents them from fully implementing best practice cleaning and hygiene techniques that improves productivity and reduces absenteeism,” said Mr McLauchlan.

The Government is the largest customer to the $1 billion NZ commercial cleaning industry so ironically by default they are denying themselves productivity gains by preventing innovation.

“This Employment Court decision should send shockwaves through Parliament with the only way to remedy this is by repealing of Part 6A of the Employment Relations Act 2000.

“It is also completely unacceptable for both parties to have had to wait for over 50 weeks for a decision on this matter”.

“If the Government really wants to help struggling business then it would repeal this part of the legislation,” says Grant McLauchlan.

www.crestclean.co.nz

Background

• This is a case [2012] NZEmpC97 CRC49/10 involving an alleged transfer of employment under Part 6A of the Employment Relations Act 2000.

• Schedule 1A of the Act (Employees to whom Subpart 1 of Part 6A applies) outlines the categories of employees who provide services in specified sectors, facilities or places of work who are deemed ‘vulnerable’. These specified categories of employees are afforded protection by being given a right to elect to transfer their employment to the new employer, if their work is to be performed by another person as a result of a proposed restructuring.

• In this case Crest Clean won the tender to provide commercial cleaning services to Tonkin & Taylor Limited from their previous supplier, Hills Cleaning Service Limited.

• Crest Clean maintains that did not receive any notice until three days before it was due to take over the cleaning contract of an employee’s notice of their election to transfer, the notice of transfer was made by the out-going contractor rather than the affected employee Mr Doran.

• We believe early notice of transfer is required by the incoming contractor for basic planning around resourcing the new contract.

• Adding further complication was the fact the outgoing contractor could only provide an unsigned employment agreement for Mr Doran, and an unsigned election to transfer notice.

• It was not until the afternoon before Crest Clean was to take over the contract that Mr Doran emailed Crest Clean to give written notice of his election to transfer his employment to Crest Clean.

• Crest Clean having believed that the reasonable notice period for a transfer had not been met concluded that an employment relationship between Mr Doran and Crest did not exist.

• Sometime after Mr Doran contact Crest Clean to notify that he had commenced meditation against Crest Clean.

ENDS

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