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Kate Wilkinson

30 October, 2012

Changes to Part 6A approved by Cabinet

Cabinet has agreed to further improvements to the Employment Relations Act 2000, including changes to Part 6A that deals with the cleaning, catering, orderly and laundry industries, Labour Minister Kate Wilkinson said today.

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.

“Proposed amendments will fix these issues and provide more certainty and clarity for employers while at the same time protecting key benefits for affected employees.

In addition, 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.

“For example, a husband and wife cleaning team who tender and win a small contract may be currently required to take on any staff doing the work under the previous contract owner.

“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 agreed by Cabinet include empowering the Employment Relations Authority to declare in certain circumstances that collective bargaining has ended.

The proposed changes – including those announced in May this year – will be reflected in a new Bill to amend the Employment Relations Act 2000 that is planned for introduction to Parliament later this year.

Changes to Part 6A include:

  • 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).
  • Small and medium businesses – those with fewer than 20 employees – will be exempt from the provisions of Part 6A if they are the incoming employer.
  • Additional penalties and compliance orders for non-compliance with Part 6A, and provision for litigation in the District Court.

The proposed changes to Part 6A are part of a package of measures that will extend workers’ rights to request flexible working hours and ensure a fair and flexible collective bargaining environment.

Other changes include:

  • A return to the original position in the Employment Relations Act where the duty of good faith does not require the parties to conclude a collective agreement.
  • Empowering the Employment Relations Authority to declare in certain circumstances that collective bargaining has ended.
  • Allowing employers to opt out of multi-employer bargaining.
  • Allowing for partial pay reductions in cases of partial strike action.
  • Removing the 30-day rule that forces non-union members to take union terms and conditions.
  • Changes around the disclosure of personal information following Employment Court judgments involving Massey University.

The Review of Part 6A: Continuity of Employment can be found at this web link: http://dol.govt.nz/er/amendments/

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