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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