Part 6A in the Employment Relations Act means little to most people, but it means a lot for thousands of cleaners, catering workers, orderlies and laundry workers, whose jobs are prone to repetitive contracting out.
After a two year review, the government’s announcement last month that Part 6A of the Employment Relations Act would be limited to workplaces with more than 20 workers sent me looking for why this decision had been made.
The OIA documents I obtained showed that the Government ignored warnings about excluding SMEs from the Department of Labour and Sapere Consultancy, who was contracted by the government earlier this year to determine a “cost benefit analysis.” The idea of excluding SMEs was not covered in earlier papers going right back to 2010, but this year a May 18 Aide Memoire from the Minister asked the department :
Would it be possible to exempt small businesses from Part 6A of the Employment Relations Act 2000?
Both Sapere Research and the Department of Labour criticised the idea of excluding SME’s from Part 6A. Sapere considered this as a possible amendment to Part 6A of the Act but commented that:
“..From what we heard from interviews and found with our subsequent analysis, it seems likely that restricting the special protections to only large employers would be counter-productive and lead to even more perverse outcomes than the current arrangements. This is because it would result in transfer situations where one party had to be compliant and the other did not, leading in all likelihood to a breakdown in the exercising of the provisions at all.
The Department of Labour also concluded it would be ‘‘counter-productive and lead to even more perverse outcomes than the current arrangements’’.
This option was flagged a couple of times in later reports but did not make it into the last of three Cabinet Policy Papers which were presented in or around early September. Then in late September DOL (now MoBIE) was asked to again look into the option of excluding SME’s. They stated that this would reduce compliance costs for SME’s but would add a layer of complexity to Part 6A. They noted that large employers would be undercut by smaller ones in bidding for contracts.
A later paper by MoBIE outlines the plan to prevent large companies from creating smaller entities, by establishing a “test of independence” which they warned would “add another layer of complexity and uncertainty to this process”.
So, there will be a new provision in the Employment Relations Act which removes the rights of more than 6000 workers, adds more complexity and cost to business and will doubtless end up in expensive litigation.
There’s been a campaign from Crest Clean over the year, aided and abetted by others, including Rodney Hide who wrote two articles for the NBR slamming Part 6A. And you don’t have to look far in CrestClean to find a National Party stalwart.
There are interests here that have persuaded the government to go beyond sensible and workable change. That’s not unusual for this lot, but I know who will pay the price for it.