Issues with so-called 'vulnerable workers' clause

Small- to medium-sized businesses will be removed from the vulnerable workers’ clause after "significant operational issues" were uncovered.

Part 6A of the Employment Relations Act 2000 was created by the Labour government in 2004 ostensibly to "provide protection to specified categories of employees if, as a result of a proposed restructuring, their work is to be performed by another person".

It gave employees a right to elect to transfer to the other person as employees on the same terms and conditions of employment.

Contract workers in cleaning, transport, catering and other service sectors are all covered by the legislation.

Crest Clean managing director Grant McLauchlan has been an avid critic of the clause, labelling it a joke.

“It was cut and paste, wholesale legislation, with problems from day one,” he told NBR ONLINE.

Now labour minister Kate Wilkinson says cabinet has agreed to a number of changes to Part 6A.

She says the objective of Part 6A is to provide continuity of employment for employees in specific industries when a business is restructured or sold.

“A review of Part 6A found that there were significant operational issues around transferring employees’ entitlements and information to the new employer,” Ms Wilkinson says in a media statement.

“The review found that while larger businesses had been able to adapt better to the requirements of Part 6A, small- and medium-sized businesses faced greater proportional costs.

“That’s why cabinet has also agreed to exempt small and medium businesses – those with fewer than 20 employees – from the provisions of Part 6A where the SME is the incoming employer.”

Employees in small and medium enterprises account for approximately a quarter of those in affected industries.

Other changes include:

  • Empowering the Employment Relations Authority to declare in certain circumstances that collective bargaining has ended.
  • A requirement for the outgoing employer to forward employees’ information to the incoming employer, such as employment agreements, PAYE, wage and time or leave records.
  • A process to help the employers agree how to apportion liabilities for accrued service-related entitlements of employees who are transferring.
  • A requirement that employees must decide to transfer to a new employer within five working days (or a longer timeframe if agreed between the outgoing and incoming employer).

Ms Wilkinson expects the amendment to be introduced to parliament later this year, as part of changes the Employment Relations Act.

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4 Comments & Questions

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According to Crest Clean's website, it has "over 1,071" workers. So, the changes will not impact Grant McLauchlan's company, and - according to this article - nor has his company been adversely affected by the legislation.

The website also indicates that Crest Clean has been feted in Deloitte's Fast 50 awards. Good on Grant and all 1,071 of his team.

Great that the rest of the act increases his rights and diminishes those of his staff!

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I think you will find Crest Clean is a franchise type operation, so the legislation may affect a franchise as an idividual operation.

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Crest Cleans success is down to its unqiue franchise model and industry leadership in training and maintaining and lobbying for higher industry standards. As cleaning is one of the more labour intense occupations it is no wonder Crest Clean continue to thrive and prosper; as your pointed out rewarded with another award in the Deloitte Fast 50. Crest Clean franchisees are not classified as vulnerable therefore except from any of the historic or future ramifications of Part 6A. Where Crest fall out of favour is winning contracts where the existing cleaners elect to transfer. The franchise system doesn't cater for employees.

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Rubbish. Crest has been adversely affected and is still waiting for a court decision after a year.

This is a gutless effort from yet another poor female Minister. Other than Collins they all seem hopeless.

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