Dalziel Lianne: Employment Relations Amendment Bill — Second Reading 
Dalziel Lianne: Employment Relations Amendment Bill — Second Reading 
[Volume:633;Page:5013] 
Hon LIANNE DALZIEL (Acting Minister of Labour) 
: I move  
That the Employment Relations Amendment Bill be now read a second time 
. This bill ensures that our most vulnerable employees will receive the additional protection they deserve in restructuring situations. It is when a business restructures that these employees are at risk of their employment conditions being undermined. The Employment Relations Amendment Bill will stop that from occurring. Specific groups of employees such as cleaners and food service workers across a wide range of commercial arrangements will now have additional protection and as a former secretary of the Canterbury Hotel and Hospital Workers Union I am delighted to be able to contribute to the second reading debate this afternoon. 
It is pleasing to see the bill return to the House with a small number of technical amendments that ensure the bill clearly sets out how protection will apply in every circumstance. I have great gratitude to the members of the Transport and Industrial Relations Committee who worked tirelessly over this legislation and have returned it in such good form. These amendments make sure that the bill will finally deliver on the original policy intent of the 2004 amendment to the Employment Relations Act and I do thank the Transport and Industrial Relations Committee for its fine-tuning of the bill. 
This bill ensures that if a vulnerable employee is to be affected when his or her employer loses a contract for services the employee will have the right to choose to transfer to the business that takes over that work. The bill rectifies the loophole identified by the Employment Court in 2005 when the court found that the protection provided to vulnerable employees did not extend to subsequent contracting situations. This bill does not represent a change in the Government’s policies with regard to vulnerable employees. It is about ensuring that Part 6A of the Employment Relations Act delivers on the original policy intent and that the intended protection cannot be circumvented in certain types of commercial arrangements. 
The amendments recommended by the committee will provide more certainty about the way Part 6A will apply in practice. Amendments recommended by the committee clarify for example that the Employment Relations Authority has the jurisdiction to impose a penalty if a vulnerable employee is not notified of when and how he or she can choose to transfer to a new employer. The bill as introduced provided that in certain situations employees had a right to bargain for redundancy entitlements if their new employer proposed making employees redundant as a result of the transfer of employees. In response to concerns about consistency with the common law and the risk of the drafting being too narrow the committee recommended amending the bill to reflect that this right to bargain for redundancy entitlements arises if the new employer proposes making employees redundant because of circumstances or reasons arising from the transfer of employees. I agree with the committee’s recommended amendment and I will also be recommending a further amendment to clarify that where employment agreements have dealt with redundancy entitlements in those specific situations those agreements will prevail. 
This bill provides that annual holidays and other employment-related entitlements are carried over and cannot be paid out by the previous employer. The committee identified that it may not be clear where the responsibilities of the new employer begin and the responsibilities of the former employer end with regard to these entitlements. The committee has recommended amending the bill so that different employers’ responsibilities in this regard are clear. 
Concerns were expressed by submitters that this bill will mean that when businesses take over a contract for services they may be required to take on underperforming employees. That is not the intent of the bill. The additional rights are provided at the time of transfer and do not provide vulnerable employees with a job for life. If an employer has concerns about an employee’s performance the employer should deal with the performance issues in a constructive manner by acting in good faith informing the employee of any weaknesses and providing the employee with the support and training necessary to improve his or her performance. Following those principles will assist businesses to perform efficiently and effectively. In the long term implementing this kind of practice will lead to New Zealand having more high-performing and productive workplaces. 
I have heard suggestions that small and medium-sized businesses should be exempt from the provisions to protect vulnerable employees. I wholeheartedly reject that suggestion. As Minister for Small Business I say that letting employers off the hook in terms of treating people well and in good faith is not good enough. It is not good enough for employers because their businesses will not grow if they do not learn how to treat people properly. New Zealand’s employment framework is based on the key concept of one law for all employers regardless of size. It is important that we do not change this policy and exempt some employers from good behaviour. The employees affected have been singled out for additional protection because they are particularly at risk during restructurings. Those employees are vulnerable regardless of the size of their employer. Exempting small and medium-sized businesses would result in some vulnerable employees losing their additional protection. This bill is about ensuring that protection is extended to all vulnerable employees as was intended in 2004; it is not about reducing protection. 
Two Supplementary Order Papers are being released alongside the revised bill. The first will provide for a review of how the revised Part 6A of the Employment Relations Act is operating 3 years after its commencement. The Government supports this Supplementary Order Paper because it is consistent with our commitment to regulate fairly and effectively. Regulation works best when it is monitored and measured to establish what impact the new and revised regulation is having in practice and to confirm that it is both fair and effective or to make changes accordingly. Nobody in the Opposition could disagree with having a review to see how the revised regulation is working in practice. 
The second Supplementary Order Paper concerns the disclosure of information on the labour costs of the employees who would be affected by restructuring. I have heard the concerns businesses have expressed that they will be required to take on extra costs they may be unaware of when they take over work in the sectors to which the additional protection applies. For example a business may tender for a food catering contract at a price that will not allow it to sustain the payment of the transferred employees’ terms and conditions. In the long term this could result in the vulnerable employees being adversely affected because they are more at risk of being made redundant following the transfer. Job losses could be more likely if the new employer was not aware of the total cost of the obligations it would be required to take on if its tender offer was accepted. 
To reduce the risk of such an outcome and thereby increasing the protection provided to vulnerable employees the second Supplementary Order Paper provides that in a proposed restructuring situation the current employer must disclose the total labour costs of the affected employees when that information is requested by potential new employers. The information will be provided in an aggregated format. Providing for the disclosure of aggregated information strikes a balance between issues such as commercial sensitivity of labour costs privacy of individuals and providing businesses with the information necessary to make an informed decision about whether to restructure or enter into a restructuring. 
The second benefit of this new requirement is to business. A transparent process for tendering or any other change of contract situation will ease pressures on business. Without this requirement businesses were concerned that they would have to tender blind. Now businesses will be aware of any additional costs and can work those costs into any proposals to take on new work that are subject to the additional protection provided to vulnerable employees. 
I am confident this bill closes the loophole on protection to be provided to vulnerable employees that was exposed last year. The revised bill is about clarifying the application of Part 6A of the Employment Relations Act and delivering on the original policy intent. This bill balances the need to allow businesses to grow and contribute to New Zealand’s economic transformation with the need to provide protection to specified employees who are particularly disadvantaged when businesses restructure. Once again I thank both the Transport and Industrial Relations Committee for its report and those who made submissions. The additional clarifications will ensure that Part 6A of the Employment Relations Act finally provides the protection we intended it to give. I commend the Employment Relations Amendment Bill 2006 to the House.