With more than 1000 workers a week joining the dole queue I’m worried about the large number who are being laid off without notice or redundancy compensation. New Zealand laws have no entitlements to workers for notice or compensation in the event of redundancy, unless there is specific provision in an employment agreement.
Some employers go so far as to specifically prohibit redundancy payments in employment agreements. The thousands of commercial cleaners throughout the country earning just $12.55 an hour are a case in point.
Last week I asked the Minister of Labour, Kate Wilkinson, what she planned to do about the Public Advisory Report on Redundancy and Restructuring which was reported back under the last government, and recommends minimum notice and redundancy compensation. After months of saying it was “on her desk for consideration”, the Minister finally admitted that she has no intention of pursuing the recommendations, saying that, “It is not my priority to impose costs on businesses…”
We all know there’s a recession, but it can’t always be an excuse for doing nothing. It’s not good enough that all the cost of lay offs should be borne by workers and their families.
I have drafted a members’ bill on this topic based on the advisory group’s report and Labour’s manifesto promise. This is a conversation New Zealand needs to have.
Most OECD countries have at least minimum notice and many have redundancy compensation. Australia has minimum redundancy payments as one of the core provisions in awards that can’t be contracted out of. National is fond of quoting OECD countries when they want to compare growth, productivity and wages. I can live with that as long as the balance sheet on both sides – workers and employers – is equitably compared.
I’m completely open to considering how redundancy payments should be made and who by, taking into account small business pressures. Labour is having a look at Australia’s General Employee Entitlements and Redundancy Scheme (GEERS), which provides a basic payment scheme for employees’ unpaid entitlements, such as redundancy pay, in situations of insolvency, where there are insufficient funds or assets available, and no other source of funds are available to pay these entitlements.
You might have some other ideas.
Fantastic stuff Darien. This is bread and butter Labour stuff and there’s no better time to promote it than now, when thousands of Kiwis are finding themselves unemployed without compensation and even more are staring down the barrel of it. Let’s expose the Tories for what they are. Go hard.
Even Business New Zealand was interested in discussing how this might work, not that it won’t but actually how you may go about implementing it in a way that the business lobby could swallow it as they understand the importance of such supportive provisions.
It’s interesting, not all of business sees labour as a cost, perhaps National needs some reminding of the simple fact that without people, an organisation doesn’t run. Protections in redundancy are important, the Labour Government took important steps towards introducing measures to meet the needs of workers and Business New Zealand was prepared to at least consider what this might mean. Mind you, that’s not to say that one of its constituent members, the Northern EMA (ala Aladair Thomson), would at all consider such a thing.
Anyway, it is interesting that she has shut the issue down without even having considered some of the options being discussed in the paper. It is also indicative of her attitude to “people” when the paper doesn’t make hard and fast recommendations, it makes suggestions about things that could be considered.
Not that flash really… A Bill in the House will show some true colors.
Fantastic idea Darien, yet another area where workers don’t have to think for themselves after your happy meddling.
Maybe you can propose some legislation that tells workers were to spend their money and how much to save as well (…oops).
I also love the fawning comment by Kaine that ‘organizations don’t run without people’. That comment is only correct in so far that these people actually contribute something worthwhile to the economic result of that organization, in the context of the market in which it operates. So now you just happily add some further internal barriers to efficient economic operation of a company in order to protect its people from the effects of external market conditions. Just you wait for the resulting effect……
Dimmocarzy – when you truly suffer the domino effect of a dismissal without warning or redundancy payment as my family did, your tune would change.
Question – if the the Public Advisory Report on Redundancy and Restructuring reported back under the last government, and recommended minimum notice and redundancy compensation.
Why didnt labour do something about it back when they were in power.
Im sure that plenty of families have been impacted during the 9 years you were in power.
Any reason that labour left it ‘as is’ for so long if its such an issue?
See, the thing is Cal, Dimmocrazy is probably fine in that regard because they will have something in their contract to protect them in situations like that. Unlike him, organisations such as manufacturing firms or high labour intensive industries that DO rely on people rather than machinery, also tend to have a low-paid workforce with only the minima of what the ERA provides.
People like Democrazy never seem to have the misfortune of having to deal with a $12.55 an hour wage, minimum entitlements and employers who don’t care about the worker as long as the work gets done.
I do have one suggestion though, there are any number of industries with no employment protections, where there are no barriers to productivity, in fact, the employer could realistically not pay staff for months in hard times… Just pop off to Zimbabwe.
Bikerkiwi : Labour did do something about it. We set up the Public Advisory Group and it reported back in July 2008. This was the background work that needed to be done and it set the scene for our manifesto promise in 2008. Labour did other things such as reducing the tax on redundancy payments and providing laws to protect vulnerable workers in situations of contracting out or change of employer.
Also Democrazy, just wonder what economic result you would expect a hospital to make, or Work and Income for that matter? Producitivity is not singularly about worker output (Which in and of itself is investment reliant)
I would love for people like Phil O’Reilly, Kate Wilkinson, ‘Democrazy’ and the like to be laid off from their jobs without notice and no pay and no way that they are going to pay the rent/mortgage.
Or perhaps even have to clean their own offices out rather than have those greedy cleaners who have the call to ask for a few bucks when they are made redundant.
But, as I said before, its those at the bottom of the economic heap who are going to be sent into the economic minefield to clear the path for the elites.
This is a critical area that needs attention in the midst of the recession, IMHO.
The Australian GEERS system has some merits in ensuring contracted payments are actually made in the event of insolvency, but it can set up some perverse incentives to engage in corporate restructuring and let the Government pick up the tab through a GEERS-equivalent.
An example might be Air NZ allowing a subsidiary such as Zeal320 (which contracts for staff but has no assets) to become insolvent simply to avoid the cost of redundancy payments, then re-hire staff into a new entity, in the knowledge that the taxpayer would be picking up the bill for the redundancies.
How about including a provision that made the Directors of the company personally liable for unpaid redundancy payments, and give Inland Revenue the power to collect on these debts after they had been paid out of GEERS. Effectively it would incentivise the Directors to count redundancy payments as first-ranked debt when calculating if the business was insolvent or not, rather than the current situation of allowing staff to be the last in the queue.
To ensure this is not punitive for small businesses, I would also include a provision that allows for a High Court review of the GEERS personal debt for Directors, which would give the Judge the power to discharge the debt without requiring repayment if it were equitable to do so.