Adams Paul: Status of Redundancy Payments Bill — First Reading 
Adams Paul: Status of Redundancy Payments Bill — First Reading 
[Volume:606;Page:4037] 
PAUL ADAMS (United Future) 
: 
 As Mark Peck has said this bill was inspired by the collapse of the Weddel meatworks in 1994. Those employees found they had no greater protection than other unsecured creditors in respect of their redundancy compensation. Under the Companies Acts of 1955 and 1993 when companies are wound up the order of payment for creditors is as follows: first is the receiver second are debenture holders which are usually a bank that has first call on the sale of the fixed assets third are the employees who are treated as preferential creditors for up to $6000 in unpaid wages salaries and holiday pay and fourth are customers with deposits for layby purchases and the Inland Revenue Department for unpaid PAYE and GST. Therefore after the receiver the preferential creditors—including staff layby depositors and the Inland Revenue Department—have first call on the proceeds from selling company stock collecting unpaid debts and selling assets with a floating charge over them. Almost everyone else who is owed money by a failed company—suppliers contractors landlords staff redundancy payments and the portion of wages and salaries above $6000—are unsecured creditors and are paid if there is any money left. There is a risk there. Company shareholders get their money back only when outstanding creditors have been paid so again there is a risk there. 
Let us evaluate that risk correctly. When companies go broke it normally involves a lot of human suffering for a number of people such as the owners the staff and also various contractors and suppliers. There are normally no winners. The banks may be the odd exception to that because they seldom lose as I have discovered. But life does involve risk. It is a part of life for us and we all have to learn to handle it correctly if we want to get ahead in life. It is a risk to start a company. It may go broke and the owner will lose everything. It is a risk to work for a company. It may go broke and employees will lose their jobs. Likewise it is a risk to do work for a company. Again as we have seen it may go broke and people will not get paid. All companies involve people and people will get hurt if a company fails. But worse would be the situation if people were ever to stop taking risks because we would achieve nothing. I have discovered that most people at the end of their life wish they had taken more risks not fewer. 
This bill amends the Act to make redundancy payments a preferential claim. In other words it gives redundancy payments the same status as wages and holiday pay. When a company goes into liquidation or receivership the bill also removes the $6000 limit on all amounts due to employees. When looking at this bill to determine whether United Future could support it we had to stand back and look at the bigger picture. In itself protecting people’s entitlement to their agreed redundancy pay makes sense. However when we look at it in the light that a company collapse is a disaster for many people we have to ask ourselves whether compensation that is designed to remove some immediate financial worry associated with the loss of a job should take precedence over payment for work already done by contractors and suppliers who also as we have heard have staff and families to look after. We feel we have to say no. Therefore United Future will not be supporting this bill. We believe that work already done and due for payment must be ranked alongside if not ahead of redundancy payments.