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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.