Part Two: The policy of providing special protections for some employees (subpart 1 of Part 6A)

This section provides background for the second part of the review which addresses the policy to provide special protections for specified groups of employees listed in Schedule 1A of the Employment Relations Act 2000. The review will be considering whether this policy is relevant and desirable in 2009 and we are seeking your views on this matter.

1. Background to the development of Part 6A

Special protections for some groups of employees involved in restructuring were introduced in 2004. The policy intended to manage the potential for disadvantage to employees arising from the renewal of employment agreements during restructuring through the sale, transfer or contracting out of a business, while at the same time retaining the viability and efficiency of the market.

These policy developments followed a review of minimum standards in 2001^[1] that reported that some employees were disadvantaged by the process of contracting out. In particular, the review found evidence that some employees with limited bargaining power were susceptible to having their terms and conditions of employment undermined at a time of restructuring as employment agreements were terminated at the end of each contract for service and new agreements entered into.

Special protections for workers during the transfer of a business are part of many other countries legal frameworks. Following a rise in business transfers in the 1970s, the European Community developed a policy instrument called the Acquired Rights Directive 77/187/EEC that guaranteed the transfer of employees' rights in the event that a business transfer took place. The Directive was implemented in the United Kingdom through the Transfer of Undertakings (Protection of Employment) Regulations 1981 (TUPE) which by 2006 evolved to cover service transfers, a requirement to provide employee information at transfer and clarification around transfer-related dismissals and changes to terms and conditions. In 2001, it was estimated that protective legislation covered some 360 million people worldwide.

The New Zealand legislation drew on the experience of Europe, the United Kingdom and our major trading partners, where transfer provisions were already in place. However, the approach to specifying the category of workers for which the right to transfer applies, as opposed to regulating all business transfers, was different and intended to prevent a problem found in other jurisdictions, where the major cost to business of a transfer scheme has been determining when and how the scheme applies, encouraging avoidance behaviour and litigation.

2. Employees and employers impacted by Part 6A subpart 1

The employees covered by the special protections are those who provide services involving cleaning, food catering, caretaking, or laundry services for the education, health, residential care, public service or local government, airport facility or aviation sectors, or cleaning or food catering services in relation to any other place of work.

It is not possible to ascertain exact numbers of employees and employers affected by Schedule 1A of Part 6A. However, 2009 statistics provide an estimate of numbers by sector and a significant proportion of these are likely to be covered by Part 6A.

Employers: It is estimated that 5,479 employers could be affected by the provisions, including 688 in catering services, 3185 in building and other industrial cleaning services, 112 hospital employers, and 485 in Other Health Care Services, 396 in Other Repair and Maintenance, and 613 in Laundry and Dry-Cleaning Services. Please note this data may include some employers not affected (Statistics New Zealand's Business Statistics 2009).

Employees: Labour Market Statistics for 2008 provide numbers of employees engaged by occupational group although this is not complete and includes independent contractors who are not covered by part 6A. These statistics report there were 30,126 Commercial Cleaners, 2,283 Laundry Workers, 795 Hospital Orderly Workers, and 3,681 Caretakers (Statistics New Zealand's Labour Market Statistics 2008). It is not possible to distinguish catering workers in the education and health sectors from other workers so this data is not included.

Gender: The 2006 census indicates that amongst specific occupational classes such as cleaners and laundry workers (41,142 employees) and food preparation assistants (9,543 employees) women formed the majority, 68% and 64% of the respective total workforces.

Ethnicity: There is some ethnicity data available for specific occupational groups. From this we can determine that of an estimated 36,882 employees who might be affected by Schedule 1A of the Act, approximately 22,926 are of New Zealand European origin, 6,552 are Maori, 3,231 are Pacific, 3,474 are Asian, and 3,780 fall into other categories (Middle Eastern/Latin American/African, and other ethnicity).

3. Issues to consider

To consider the relevance and desirability of the policy of providing special protections to a defined group of workers it is necessary to examine some or all of the following matters:

Part 2 Question 1: Are the issues that led to the introduction of Part 6A still valid? In particular does the specified group of workers experience a disadvantage during restructuring through the sale transfer or contracting out of a business that warrants special protections?

Part 2 Question 2: What categories of employees, if any, should have more protection for continuity of employment than other employees?

Part 2 Question 3: Does the policy meet its objectives of providing protection to the specified group of workers, while at the same time retaining the viability and efficiency of the market?

Part 2 Question 4: Does the policy have any detrimental effects on the employers, employees or the wider community and economy? In particular, how equitable and/or efficient is this policy?

Part 2 Question 5: Are there other ways of addressing the issues of disadvantage that would better meet the objectives and/or which would reduce any detrimental effects?

The range of responses that Government could consider in relation to these special protections include:

• retaining the current provisions
• improving the practical operation of Part 6A, as discussed in the previous section, through amending parts of the legislation and/or raising the level of awareness of the subpart 1 and 2 of Part 6A provisions
• expanding or narrowing the coverage of the special protections
• repealing all, or parts, of subpart 1 and 2 of Part 6A.

Part 2 Question 6: Please provide any other information or views you have about the relevance and desirability of providing special protections for a defined group of workers.