Controversial labour law changes announced

HRM 11 Dec 2012

New Zealand’s cabinet has approved changes to the Employment Relations Act (ERA), in a move that may negatively impact vulnerable workers when their employers undergo restructuring.

Labour Minister Kate Wilkinson announced that small and medium-sized businesses with fewer than 20 employees would no longer be required, under Part 6A of the ERA, to continue the employment of groups of low-paid employees when a business goes through restructuring.

Larger businesses, however, would still need to adhere to the provision with the Act. Wilkinson said this was because they were better able to accommodate Part 6A.

The law was first enacted in 2006 to protect caretakers, cleaners, catering workers, hospital orderlies and laundry workers during tough business periods for companies. It gives low-wage workers the right to retain their jobs and to be transferred to any new contractor on the same terms of employment.

“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,” said Wilkinson.

She added that employees in SMEs account for approximately a quarter of those in affected industries.

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