Hon Trevor Mallard
Minister of Labour

2 September 2008 Media Statement

Government legislates to make KiwiSaver fairer

The government has today introduced legislation to Parliament to ensure employers meet their obligations to pay contributions to their employees’ KiwiSaver accounts, Labour Minister Trevor Mallard said.

The legislation will amend the Employment Relations Act to address a situation where some employers are paying employees in KiwiSaver less than employees who are not in KiwiSaver.

"In effect, the employees are taking a pay cut, which the employers are using to pay their KiwiSaver contribution," Trevor Mallard said.

"Employers have been able to get away with this in total remuneration packages, in particular, when they have insisted that the packages include employee's paying the employers’ compulsory KiwiSaver contribution.

"This is despite the fact the government reimburses employers with a $20 per week tax credit, which covers their contribution to employees earning up to $104,000 a year in the first year (2008/09). In the worst cases, the employees end up paying their employer’s contribution, while the employer pockets the tax credit from the government. This is patently unfair and unethical.

"The government initially decided to leave the issue of contributions to normal good faith bargaining between employers, employees and unions. However, some employers have taken advantage of this situation, so we have decided to amend the Act."

"The changes introduced today will make it unlawful for employers to offer employees different salary packages on the basis of their KiwiSaver membership. Employees would be able to take a personal grievance against their employer in this situation.

"The law changes will not affect employers’ eligibility for the employer tax credit, and employers and employees would still have to operate within the good faith bargaining framework in the Employment Relations Act. The law changes, when passed, will be backdated to take effect from today, so employment agreement negotiated from today should take account of the changes. However, the amendments will not affect employment agreements entered into before today," Trevor Mallard said.

ENDS

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