Editorial: Unwary employers take heed

Television journalist Susan Wood must be the luckiest woman alive. The day she started a one-year contract at $450,000 to fill the suddenly vacated shoes of Paul Holmes was the same day Parliament passed an amendment to the Employment Relations Act that has proved fortunate for her. It means a fixed-term contract of employment might no longer mean what the words suggest. Fixed-term contracts have been turned into open-ended commitments for the unwary employer.

Wood, a TVNZ news staff employee over 20 years, had been a stand-in presenter for the Holmes programme on $100,000 a year. When Holmes stormed out over the one-year term offered for his own contract renewal, she was asked to anchor the hastily redesigned programme, Close Up @ 7. The programme was facing the threat of new competition from TV3, who later moved John Campbell into the same time slot, and from Holmes himself, who had joined Prime. TVNZ news head Bill Ralston agreed to give Wood a one-year contract at $450,000, about half Holmes' rate, for a contest that was going to be tough for her.

A year later Holmes had been seen off but TV3's news was drawing viewers from TVNZ. Ralston decided to vary the presentation of Close Up @ 7, using his present political editor Mark Sainsbury as well as Wood, and offered her a contract for next year at $100,000 less than this year. She went to the Employment Relations Authority, which ruled this week that her existing contract will not expire on December 31 despite the fact the contract says it will.

The law passed the day that Wood's existing contract started says that for an employment agreement to end on a specified date the agreement must state the reasons for ending the employment in that way. In industries where performance and public response are highly unpredictable it is obviously impossible to state at the outset why a fixed-term contract might not be extended on the same terms. All sorts of instinctive judgments will come into play at that point. Ideally, programme producers make change before an objective measurement such as a ratings fall hits them.

But under the law as it is now, their hands are tied. If Holmes had known about this, he might never have left. Conceivably Judy Bailey could roll over her $800,000 final year pay-off now. The Rugby Union had better check its players' contracts to ensure they comply. The law is a result of the union movement's efforts to stop employers using fixed-term contracts to avoid the legal difficulties today of dismissing employees under ordinary agreements.

As the law stands Wood can continue on her present terms, unless she agrees to a lower rate, as long as she continues to present the programme, which seems unlikely. The exposure of her salary, and the known wish of her employer to reduce it, compromises her position in the public eye. This is a dispute a television presenter cannot ultimately win in a public forum but her dispute has wider significance. The case will be an eye-opener to employers who have not caught up with the latest changes to industrial law.

It has been made extremely hard to hire a person for a specified period for a job that will continue. The aim was to prevent employers using fixed-term contracts to avoid exposure to claims for unjustified dismissal. But it also means employers cannot reserve their right to vary conditions for reasons they cannot foresee.

The unions and the Government cannot have envisaged that their law would protect the grossly inflated wages of television faces. The Prime Minister, who led the disapproval of those rates, might note that excessive regulation can have perverse results.