Labour Minister Kate Wilkinson announced this week that new legislation will be introduced before the end of the year to amend the Employment Relations Act 2000 (Act), with the changes to take effect in the latter half of 2013.

Changes to Part 6A

Several changes are proposed to Part 6A of the Act (which aims to provide continuity of employment for employees providing cleaning or catering services, or orderly, caretaking or laundry services in certain sectors, when a business is restructured or sold), including:

  • Small and medium businesses (those with fewer than 20 employees) will be exempt from the provisions of Part 6A where they take over an existing contract, so that they will not be obliged to continue the employment of the previous contractor's employees.  Small and medium employers account for about 25% of those in the affected sectors
  • A requirement for the outgoing employer to forward employees' information to the new employer, such as employment agreements, PAYE, wage and time or leave records
  • A process to help the employers agree on the apportionment of liabilities for accrued service-related entitlements of employees transferring to the new employer
  • 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 new employer)
  • Additional penalties and compliance orders for non-compliance with Part 6A, and provision for litigation in the District Court.

Comment

The changes to Part 6A follow a formal review that was completed some time ago, but until now it has been unclear exactly what the changes would entail. 

Most of the changes address deficiencies in the legislation that were over looked when the legislation was first implemented and are not extensive.  The exemption for small and medium employers will be positive for those businesses in reducing compliance costs and creating more freedom to choose staff.  Opponents will no doubt suggest that the changes will defeat the purpose of Part 6A, which is to protect vulnerable employees.

Other changes

Ms Wilkinson also outlined other proposed amendments to be made to the Act, including:

  • A return to the original position in the 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 at the commencement of employment
  • Changes around the duty of good faith and disclosure of personal information.

Comment

Most of these amendments were announced earlier this year (see our March 2012 and May 2012 legal updates).

One change not previously announced is to the disclosure of personal information, in response to the Employment Court's judgment concerning restructuring at Massey University (V.C. ofMassey University v Wrigley).  In that case, the Court determined that the duty of good faith at s4 of the Act required employers to disclose extensive information to employees when considering changes that could potentially impact on an employee's continued employment.

Ms Wilkinson has promised to address this issue for some time and has indicated that the duty of good faith will be amended to clarify that it does not require employers to provide an employee with access to confidential personal information about another person, or evaluative material about the employee concerned.  This will align the good faith requirement to provide information more closely with the privacy principles in the Privacy Act 1993.  The changes should also provide clarity and certainty about which types of personal information may be disclosed to third parties.

Another amendment that has not been previously addressed is empowering the Employment Relations Authority to declare in certain circumstances that collective bargaining has ended.  This could be useful for employers, depending on the way in which the power is exercised, and will assist in providing certainty with the removal of the requirement to conclude a collective agreement.

The amendment bill will also incorporate the anticipated changes to rest and meal breaks (see our November 2009 legal update) and flexible working arrangements.

The full Beehive press release can be viewed here.