Erin Davies: Third bill likely to guide and reassure local authority staff

Opinion

The fate of the 6800-odd employees employed by the eight existing Auckland local authorities will be addressed in the third bill, which is expected to be introduced in November and enacted in May of next year.

The Local Government (Tamaki Makaurau Reorganisation) Act 2009 was introduced into Parliament under urgency on May 13 and despite vigorous debate, was passed on May 16.

There are significant repercussions for all employees employed by the local authorities because their current employer will cease to exist effective October 31, 2010.

The initial draft of the first bill (that became the Reorganisation Act) provided that:

Employees of a local authority as at October 31, 2010 would automatically become employees of the Auckland Council on the same terms and conditions;

And that employees would be unable to claim redundancy compensation by reason of their transfer to the Auckland Council.

Confusingly, the bill also provided that transferred employees would not receive any redundancy payment or benefit if they were transferred to "a suitable alternative position".

This type of inconsistency can create real headaches for affected staff and their current/prospective employer alike. Also, the requirement to offer affected staff "the same terms and conditions of employment" means that there would have been little flexibility for those responsible for creating the new organisational structure for the Auckland Council and for transferring staff to that new structure.

Fortunately, this clause was removed before the Reorganisation Act was passed. This has been interpreted as a sign of the Government's uncertainty about the timing of (the much talked about) rationalisation of existing local authority staff. Whoever will forget Auckland City Mayor John Banks' comments that "40 per cent of the greater Auckland region's 7200 staff could lose their jobs" (a statement he later went back on).

The act requires the Transition Agency to "plan and manage all matters in relation to the reorganisation to ensure that the Auckland Council is ready to function on and from November 1, 2010".

It must develop an organisational structure for the Auckland Council and a change management plan that has "... regard to the existing employment agreements applying to the staff".

Enter trade union leader Laila Harre, who has joined the Transition Agency and will be "engaged on project work involving human resources and change management during the transition".

The agency's obligations to "have regard to existing employment agreements" is presumably designed to give it considerable flexibility in "developing" the change management plan. Importantly, however, the Reorganisation Act does not empower the agency to transfer staff to the Auckland Council.

Although the interim chief executive for the Auckland Council may, once appointed, employ staff for the council, it seems that appointment will not be made until next year. So, until the interim chief executive for the Auckland Council is appointed, there will be no transfer of staff to the Auckland Council.

The moot question is whether, once appointed, the interim chief executive will move to appoint staff from existing local authorities to align with the Transition Agency's organisational structure, or whether all staff will transfer with any "rationalisation" taking place in the months following November 1, 2010.

LEGISLATION ON THE TRANSFER OF STAFF

The (now removed) clause 36 of the bill gave us a few clues about what the Government has in mind. In essence, we can expect to see legislation that ensures that staff are not paid their redundancy entitlements in circumstances where:

* They are offered (and have accepted) an equivalent role with the Auckland Council.

* They are offered (but have rejected) an equivalent role with the Auckland Council.

* They are offered (and have accepted) a different role with the Auckland Council.

For those interested in what the legislation may look like, see sections 30E to 30G of the State Sector Act 1998. In that act, the phrase "equivalent employment" means employment:

* In substantially the same position.

* In the same general locality.

* On terms and conditions of employment that are no less favourable (including any service-related, redundancy and superannuation conditions).

* And on continuous service.

Should legislation along these lines be introduced in the third bill, it is likely to override Part 6A of the Employment Relations Act 2000, which provides protection for employees if their employment is affected by restructuring (including transferring a business to another business or person).

It is also likely to override individual and collective employment agreements, particularly the express terms and conditions that govern the transfer of employment (technical redundancy clauses).

The potential difficulties associated with the "merger" of collective agreements should be resolved by the inclusion of a provision in the third bill that preserves collective agreements covering employees appointed to positions in the Auckland Council following the transfer of the functions performed by those employees.

In that event, we would also expect to see a provision that enables the parties to a collective agreement to agree to modify the effect to which such a provision limits which employees may be bound by a collective agreement.

There is no doubt that the introduction of the third bill will provide some guidance and/or reassurance to staff. It will also enable the Transition Authority to make definitive progress with its organisational structure and change management plan.

* Erin Davies is a partner in Brookfield Lawyers.