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Worker protection turns into protection racket


You win the contract to clean the local hospital. You succeed because you are good at your job and have a good crew.

The previous contractor was slack and expensive. The hospital gives him one month’s notice. It’s a good result for you. And a good result for the hospital.

But then Part 6A of the Employment Relations Act kicks in. Part 6A enables the existing cleaners to transfer your business. The purpose of this provision is to protect “vulnerable workers”.

Part 6A defines the vulnerable workers by the work they do and where they do it. Essentially, it covers industries such as cleaning and food and laundry services. The real protection is to existing contractors.

Indeed, the previous contractor told the hospital it was no use dropping him in your favour because Part 6A means nothing much would change. It would be the same crew on the same wages and conditions doing the same job. 

Part 6A locks in existing workers and sloppy work practice. It doesn’t protect “vulnerable workers”.

It protects slack businesses and poorly trained and managed workers. It’s anti-competitive. It drives up the cost of cleaning and laundry services including for government, which is the major country’s buyer. 

Despite the best efforts of the previous contractor to use the law against you, you have won the contract. You have your own crew to do the work.

But you don’t know how many of the previous contractor’s cleaners are going to opt to join your business.

It’s a big contract and Part 6A makes it impossible for you to plan your own workforce. You don’t find out until the day before you take over the contract!

Up until that day you didn’t know whether you would have to supply your own cleaners to clean the hospital or whether you would inherit the entire existing crew or some proportion in between.

Most of the existing cleaners choose to join your shop. You have no time to induct them into your systems, let alone bring them up to Health and Safety compliance. You don’t know them.

You are now hopelessly overstaffed. Worse, the outgoing contractor has no obligation to provide you with any assistance and doesn’t. He doesn’t supply you with the employment contracts you have just legally inherited.

You don’t know what to pay the new crew and what their entitlements to holidays and so on are.  

As a director you are now in breach of the Companies Act. You have a fiduciary duty not to trade recklessly.

Employing people wholesale without knowing their employment agreements is clearly reckless. But you can’t win the contract without placing yourself and your business at this risk.

Such is the employment law in this country. It’s mad and infuriating. One company inherited 120 cleaners and did not receive full disclosure of their employment agreements for a full six months.

As expected, Part 6A has dramatically dropped the level of industry training. One industry training organisation looks set to collapse.

Who wants to invest a dollar in training staff who could be taken over by the opposition tomorrow?

National rightly slammed the Labour government for introducing Part 6A in 2006. But National in government has done nothing.

There has been a required statutory review of Part 6A in 2009. But then nothing. The minister is still sitting on the result.

The evidence is clear. Part 6A can’t be amended. It should be repealed.

More by Rodney Hide

Comments and questions

You raise some interesting points. The existing legislation has some holes such as 6a. Efficiency and competitiveness are the buzzwords of the short sighted and generally ignorant.

The question that begs to be asked is what does real efficiency and competition look like?

Sadly it appears to be a place that is not very people friendly. Having ultra efficient businesses that can produce goods cheaply with minimal labour and other overheads sounds fantastic. That is until you examine the other side of the economic coin.

That is large numbers of unemployed workers who cannot afford to buy the cheaply produced products manufactured in an ultra efficient market.

Look at the economies that are run on this ideology, they are all basket cases that exact a terrible cost on their populations. Do we really want NZ to become something like this?

The flip-side is countries like Greece, Spain,Portugal, Ireland... and just look how great those places are now.

Sure - they were great places to live once - but once their respective governments ran out of other people's money to spend - they then needed to live within their means - and this is the result...

Neither situation is ideal - but it's better to really live standing on your own two feet, taking personal repsonsibility for your own actions and situaiton and doing somehting positive about it, than to live on your knees, blaming other's ,with your hands out wanting someone else to fund your lifestyle?

Clearly, the current system does not work regardless of which ideological position you take. Time for change.

yes standing on our own two feet with NZ$10b debt and more asset sales looming large. Awesome

Does the fact that we have people begging in the streets and a near hopeless position for school leavers also not matter? The human cost of of this ideological claptrap is horrific.

"Real efficiency" is doing more with less. "Real competition" is choice of where you buy. Consumers love it.

Mr Hide, you've become very perceptive these days. Many of us (the public) agree with your Herald & NBR opinions on the critical issues that seemed to have trouble our country recently. Your articles on the Treaty gravy train and the ridiculous taniwha were spot on!

What happened to you when you were in Act? Were you distracted by your woman? Were you misled by the Parliament? You seem to have come to your senses lately and enjoys much popularity once again.

Can you consider getting back to a decent public role and champion the voice of the educated masses?

Yours very sincerely

Hi Marion,

I haven't changed a bit. The only difference is I get to write up what I think in the paper rather than have others write up what they think I think. Makes a world of difference. Political reporting in NZ is truly shocking and big part of the country's problem.

Yours sincerely


Perhaps if you didnt do so many truly idiotic things when you were in Parliament you would have got better media outcomes. Instead you became a parody of yourself.

Lets see what the consumers say about how much they love it in the next election. People are begging on the streets of our cities. This is woeful

Too many kiwis get caught up with efficiency and more often than not it equates to shifting the deck chairs on a sinking ship.

Perhaps if we took a more strategic long term view and investing in playing to our strengths we might move ahead.

If real efficiency is throwing increasing numbers of the elderly, the young and vulnerable on NZ's rapidly growing poverty scrapheap then I'll excuse myself from buying into your rhetoric thanks

Sometimes I wonder if going by the woeful expose so well explained whether National politicians are any better than those of Labour we were best shot of. Mr Hide, now you are on the outside looking back in, what is that everyone is so full of promises yet hands on do nought? My own issue is with Maurice Williamson who for years banged on about the inequities of land taking under the public works act, history and the present is littered with examples whereby the public purse fails to pay fair compensation yet in power there were a few mutterings then he fell asleep. Nationals failure to address part 6a I suggest might be that the employee victims always vote labour so who cares, and the corporates well its just a big money game so let them fight it out as its all too hard for a public servant to resolve as your "Real efficiency" is something they have never experienced....or maybe I live in hope.

Perhaps the 'employee vistims' should think a litle more deeply, and independently of the Union Newsletter, about whom they will vote for next time. So called FREE election bribes are not FREE, that is why so many of the essential labour intensive employments appear to be so poorly paid. The employer is paying exorbitant TAXES to provide the FREE, this is a cost of business that must be recovered, and is factored into wages.
Employees can't have the bread buttered on both sides.

I think we're arguing over beads on an abbacus - what really needs to happen is for more emphasis on adding value and differentiation so our goods earn more and are more sought after internationally.

Anything else is simply an argument over wasted time

Well, I think the National-led govt is delivering exactly what they promised. They didn't promise much!!

Not so.
John Key promised 2 things.
Not to increase tax. Then he increased GST.
And to reduce the number of New Zealanders moving to Australia. There are now many more.
He was clearly not serious about that when he rejected outright all of the Brash Committee recommendation.

I think they're going to get bounced out of power but trouble is the alternatives are equally incompetant

This is spin, a one-eyed view point. You have no empathy.
Why would a business person be so irresponsible tp enter into a contract without out doing due diligence. If that business person is so stupid not to do due diligence then that is their own stupid fault.

You miss the point./ They can't do due diligence, because they don't know and can't find out the employee contract details from the encumbent. It's private information. And then, the encumbents' staff get to choose (right up till the last day of the contract, whether or not they wish to work for the new contractor. So assuming yoiu're right, that means no company should ever tender for any contract in this area!

Oh rubbish - any business involved in that industry will have a pretty good idea of the going rates of pay for those existing employees, probably just above minimum wage.

Line one of article: "You win the contract to clean the local hospital."
Therefore he/she would be fully aware of the implications of part 6a of the act.

Anyone stupid enough to be in business without bothering to learn their market deserves what they get. This is such utter rubbish I am surprised a credible publication like the national bigots rag publishes it

Once upon a time hospitals employed people to clean. And they worked conscientiously to achieve a clean healthy environment. Then comes along Mr Economy. Contract it out, save $$$. Well from what I have seen in the hospital, it is deteriorating standards of cleaniliness. The hospital cleanliness is abysmal no wonder we have outbreaks of norovirus and the like.

@#17 we have outbreaks of norovirus and others because we've been indiscriminantly using anti biotics to treat anything that cannot be clearly identified. Anti-biotic resistant "super bugs" are the direct result and sick people tend to congregate in Hospitals.

These sort of sweeping uninformed generalisations are not helping anyone. Perhapos next time you should think before you post

Not so. Novovirus is food related. It comes about by bringing into our hospital system food that is produced in country's with bacteria flora that is different to our own, e.g. Asia.
We introduce that food to the most vulnerable people in our society i.e. the sick and the elderly and then wonder why the hell we have this expensive problem. Better to feed them Maca's than do this. At least most of Maca's food is NZ based and will contain mostly NZ bacteria flora.
I'm staggered at the money that has been spent dealing with this problem, which is really a fundamental and no one is prepared to stand up to the DHB's and their bullsh*t and say it how it is.

Just in case you think I am wrong, try travelling to China, India, Vietnam and see if you don't get sick along the way. Tell me where in Asia you can find good clean water.
By the way, have you tried hospital food of late? Inedible slush which no one should be proud of supplying.

this story is like most others written by hyde. Rabble rousing rubbish designed to get people indigant at legislation put in place be labour.
Has anyone re red the stories through the lens of Hydes political bias and craving for gain???

Clearly marrying hyde up with the NBR is a good match but political bias in any media is a very dangerous thing indeed

The media in this country are generally of the LEFT bias, that is why there are so many deluded 'dumbed down' citizens.

Oh yes and the average IQ in the national party is stratospheric (NOT). I think stupidity cuts across both the left and the right. The lack of evaluative critical thinking is probably due to the near complete lack of priority given to education in this country.

Clearly the legislation is broken, what other single piece of legislation has been to every legal jusisdiction and back in the last 12 months. Expert legal opinion has called for Part 6A to be repealed in its entirety, the major player in the industry has called for its repeal, but NO, the minister concerned has been caught having done nothing towards the statutory review set down for 2009. Its time the Prime Minister stopped worrying about getting elected again and ordered is underlings to start making decisions, in laymans terms "poo or get off the potty" minister!

If you are so intersted in efficiency Mr Hyde why are you supporting employers who are too busy to train and induct their staff in their business practices? Their and your attitude towards people who are generally on or near to the minimum wage is what is wrong with this country (or should I say economy). Investing in people can be lot more productive than spending all your time undercutting competitors and treating people like disposable assets- with a bit more respect for ordinary working people some employers might even become better people themselves. Mind you you could start by changing the silly contracting system which often tackles problems by replacing them with other problems, instead of addressing real issues like poor wages and bad working conditions.

What you don't realise this legislation was designed by the previous Labour governmen to line their own pockets. These so called vulnerable workers are Service and Food union members who pay union fees that a good % goes stringht to labour party election funds. This does not protect any workers, it just makes the process slower and less essence it is anti business, promotes poor practise and we pay for that as tax payers.

Part 6A is a dog with flea’s and is terminally ill, all that is required is for the government to acknowledge and accept the expert advice they have received and euthanase the legislation in its entirety! Only then will organisations of NZ have their freedoms of association restored so they can have service providers they want on their premises rather than protected SFWU members. If the legislation is so good then lets extend it to all industries rather than the few that the SFWU represent, that way when the next election is held it wont matter what the people of NZ vote or want the same incompetent existing ministers will simply elect to transfer to the new government on the same terms and conditions! Gosh why bother with an election at all, this could save us taxpayers millions. hmm maybe that’s why the minister likes Part 6A so much, say no more “the Vulnerable Minister”

6A applies to all workers in the specified categories in the schedules in the ER Act, not just SFWU.