Unions find fault in employment bill

WELLINGTON - The Employment Relations Bill's continuity of employment clause, which has alarmed employers, is unpalatable to the unions for other reasons.

Clause 66 says every employee covered by a collective agreement remains employed for the life of the agreement unless they are dismissed for just cause. This applies unless the agreement provides an express variation or exclusion to the contrary.

The aim is to provide employment security in situations where the business is sold or employees are contracted out.

Employers either agree to compensate employees for getting out of the continuity of employment obligation, or negotiate with a potential new owner to ensure employees' conditions are retained.

The CTU argues that because the obligation is tied to a collective agreement it could create perverse incentives, including:

Discouraging employers from collective bargaining.

Encouraging employers to shorten the term of collective agreements.

Making low-cost exclusion of clause 66 standard for settlement of any collective contract.

The CTU wants the whole clause scrapped and replaced with a new part of the bill covering transfer of undertakings. It would be based on European laws which:

Transfer the rights and obligations in the owner's employment contract to the buyer.

Prevent the employer or the buyer from dismissing workers solely as a result of the transfer.

Give unions the right to be informed and consulted about the reasons for the transfer and its implications.

Clause 66 has been criticised as preventing an employer from selling a business even if the would-be buyer wanted all the employees.

This is because it appears to provide that the original employer is bound to continue the employment.

The CTU's draft replacement makes both buyer and seller liable for the employer's obligations under the current contract.

Employers Federation chief executive Anne Knowles interpreted clause 66 as being about protecting people where there is no redundancy provision, because of the Court of Appeal decision that there is no legal obligation to pay redundancy.

The CTU said clause 66 was a risky and potentially ineffective means of achieving the Labour Party's policy aim that "where a business or parts of a business are transferred to a new owner, the original employees have a right to be employed on terms and conditions no less favourable than before the transfer, and their service should be deemed continuous.

Workers should only be made redundant for the same reasons that would have applied if the business had not changed hands."

The CTU said that internationally, transfer of undertaking or continuity of employment laws were binding on new employers and generally not tied to collective agreements.