Vulnerable Workers

Employment

Changes to the Employment Relations Act 2000, which took effect in 2013 included changes to Part 6A of the Act.

Part 6A is designed to protect vulnerable workers.  Vulnerable workers are a category of employees covering those who provide cleaning, food catering, or laundry services.  The protection provided by Part 6A applies when the business that vulnerable workers work in is transferred, contracted out, or sold.  In those circumstances, vulnerable workers have a right to transfer to the new owner/operator of the business on essentially the same terms and conditions.

The changes introduced to Part 6A include:

  • An exemption for businesses with fewer than 20 employees.  This means that where there is a transfer of a small or medium sized business, the new owner will not be obliged to take on the existing staff.
  • Where Part 6A provisions apply, there will be a requirement introduced for the outgoing employer to provide employee information to the incoming employer.
  • A specific process is to be applied to assist employers in agreeing how liabilities for transferring employees will be apportioned.
  • Vulnerable workers (i.e. transferring employees) will be required to decide whether they wish to transfer to the new employer within 5 working days.
  • Outgoing employers will provide the new employer with an implied warranty that they have not taken any steps which will damage the business of the new employer.  This is to provide protection against things like increasing employee entitlements before the transfer takes place.

The amendments to Part 6A are designed to deal with criticisms of the current structure.  Those criticisms include uncertainty and lack of clarity for prospective employers.  Whether these amendments adequately address those concerns remains to be seen.

In our view, the issue in New Zealand is not one of watering down already quite limited and simplified provisions in respect of this protection, but rather whether protection is required at all.  If it is, then rather than tinkering around the edges of the 6A provisions, shouldn’t we consider implementing comprehensive protection for all employees as applied in Europe under the Acquired Rights Directive?

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