KEY POINTS:
An employment case bought by 30 Hewlett-Packard workers is set to shake up thousands of New Zealand workplaces, as employers prepare to re-organise their super schemes with the introduction of KiwiSaver.
The Employment Relations Authority has decided a personal grievance claim brought by Hewlett-Packard employees should be heard by the Employment Court, partly because of its potential impact on KiwiSaver workplaces.
At the heart of the case is whether an employer can shut down a workplace super scheme without compensating workers who are members.
That an employer can stop making contributions to its super scheme is not in dispute; the dispute is over whether those payments are counted under the terms and conditions of employment.
The case could be heard by the Employment Court as early as September, and employers are keen to see what - if any - amount of compensation they will have to pay out to workers already in work-based super schemes.
"With so much at stake there will inevitably be disputes," says the authority.
Hewlett-Packard says it was allowed to "change" its scheme at any time. The workers agree this can happen, but say they must be compensated if the scheme is axed completely.
The amount of compensation being sought by the HP workers is not known.
In its written decision to send the case to the Employment Court, the Employment Relations Authority lays out the possible implications with the arrival of KiwiSaver.
"The issue of making changes to employer-provided superannuation schemes presently also has a heightened interest for parties beyond those in the immediate matter. The introduction of the state-subsidised KiwiSaver work-based superannuation scheme is likely to result in many workers and employers looking at changes, modification or closure of their existing scheme arrangements... they will also need to look at what processes those existing arrangements allow for change and closure," it says.
"With so much at stake there will inevitably be disputes. Whatever guidance the Court can give now on how to approach provisions for change or modification will, no doubt, be of keen interest to such parties and their advisers. "
Hewlett-Packard, through their lawyer, declined to comment on the case.
Auckland employment lawyer Stephen Langton is representing the Hewlett Packard workers.
He told the Herald On Sunday they had declined to comment, given that the issue was before the court. "In many cases, they have an ongoing employment relationship with the company."
In the determination of the authority, Hewlett-Packard claims that under the terms of employment, it is allowed to withdraw its superannuation plan.
"Further, it says removal of the plan without compensation was justified in the circumstances in any event."
The case has implications for those employers who may decide to wind up their existing scheme, because KiwiSaver provides a useful, Government-endorsed alternative.
The Employment Court's decision may prompt claims for compensation if the older scheme had better provisions than KiwiSaver schemes.
IRD says that KiwiSaver has not been introduced to shut down existing super schemes.
"It is inevitable that the introduction of KiwiSaver will have an impact on the market for registered superannuation schemes. The intention is that KiwiSaver will complement, rather than replace, existing registered schemes,"it says.
Vance Arkinstall, chief executive of the Investment Savings & Insurance Association, says he has not heard of any employers looking to use KiwiSaver's introduction to pull back on existing commitments.
"With KiwiSaver coming along, there is absolutely no doubt many employers are in fact looking at their current superannuation arrangements, they are actually now making decisions as to - do we stick with the scheme we've got at the moment? Do we simply allow our employees to go and join KiwiSaver or do we set up a KiwiSaver-compliant scheme and run it that way?" he says.
"I think what they're all thinking about is - what's the most effective way for us to continue to support our employees and their superannuation savings and how do we get there? Many are trying to find ways of 'how do I manage this without placing too much extra administration on myself and giving the employees the best deal?"'
Claims of employers using KiwiSaver to cut back on super contributions surfaced when Air New Zealand announced it would immediately start contributing up to 4 per cent of workers' pay into KiwiSaver accounts, despite not being legally required to for another four years. The Engineering, Printing and Manufacturing Union welcomed the move, but said it was "cautious about the impact of the move on bargaining" with the airline.
Many of the airline's collective employment agreements already had provisions for contributions to a worker superannuation scheme that exceeded 4 per cent.
EPMU National Secretary Andrew Little said he was "concerned the company will try to cut costs by trading off wage increases against KiwiSaver payments".
"In many cases our members are already getting the employers' contributions they and their predecessors have fought for. We'll be looking very closely at this to make sure Air New Zealand isn't offering our members something less than they're already entitled to in exchange for low pay rises."
Association of Superannuation Funds executive director Bruce Kerr says that in a time of tight labour markets, "any employer reviewing their existing workplace superannuation in light of KiwiSaver would want to ensure that their employment reputation and position in the labour market would not be damaged".
"Our association is seeing employers consider winding up existing workplace superannuation schemes and there are a lot of issues to be considered in that, including the powers of the Trust Deed."
