Status of Redundancy Payments Bill

Under the new Standing Orders, this part of the debate is a little different. Essentially, in dealing with clauses 1 and 2, we can assume that the matters around the title and the commencement date have been traversed in the course of the debate, so it is an opportunity to sum up the debate and the issues.

💬 Lindsay Tisch: No!

Yes, indeed it is. I suggest that the member reads his Standing Orders report. He will find that that is exactly what this part of the debate is about.

First of all, I thank members for engaging in the debate. It has been quite robust and has raised some serious issues. Indeed, Opposition issues in respect of the way business will be treated, particularly small business, are matters that this Government has been concerned with and has dealt with in other legislative ways—in particular, in the Construction Contracts Act, which deals with the issue of progressive payments for small contractors.

The Joint Insolvency Committee is still doing quite a bit of work in insolvency law, and I am sure that as that committee progresses its work further announcements will be made to the House—be they in the form of reports or legislation. Of course, that is a matter totally outside the ambit of my remit tonight.

The contents of this bill are encapsulated quite well in its title. It will raise the priority status of redundancy payments under insolvency legislation and within the terms of the Companies Act, in order to ensure that where a company goes into bankruptcy, its employees have the protection of $15,000—being their wages, holiday pay, and any component of a negotiated redundancy agreement.

I want to thank the New Zealand First members for raising two principles in the debate, the first being that a company should not enter into a redundancy agreement unless it intends to honour it—and New Zealand First is prepared to support the bill on that basis. Secondly, they raised the point of the rights of workers in an industry. They outlined a number of industries in which redundancy has become a feature simply by the nature of change in the way work is done, or the incredibly competitive nature of those particular industries as they have tried to survive.

During the debate there has also been discussion about it being a sad thing when companies close. We all know that. We know about the disruptive effect of closures not only on employees, their families, and their communities, but also on the business community. Closures impact on business confidence, and they are something that all of us hope will never occur. Unfortunately, in the nature of business, they do happen.

I am pleased to say that the bill has been well debated in the Committee stage. I think it is right that the commencement clause, clause 2, provides that there is a period of grace for employers to get their heads around the new legislation. By virtue of the fact that the bill comes into effect on the 60th day after it receives the royal assent, it will allow employers and their advisers to do their homework so that they are able to implement it in the way intended.

I find it quite interesting that although we are supposed to be debating the title and the commencement date, Mr Mark Peck did not quite bring himself to talk about the title. I gather from his whole speech that he is exceptionally defensive and apologetic towards small business. So he should be, because this bill once again demonstrates the problem of a Labour Government that does not act out of principle, but tries to be all things to all people. In this legislation, it tries to please employees of a business that goes bankrupt who have negotiated redundancy packages, without thinking about what will happen to the employees of the creditors—the suppliers—of the business that do not get paid. When suppliers cannot get payments from businesses that are in trouble, what happens to their employees?

That further demonstrates what happens when a party like Labour is in Government. It continues not to think about principles, but to act on vested interests—lobbied by the unions of one particular sector—and forgets about the employees of the suppliers that are creditors to those businesses in trouble. Who will protect them? I find it really difficult when a Labour Government introduces a bill that upsets very long-held principles and commercial practices without very good background and analysis.

Some of my colleagues mentioned that it might be a reaction to the closure of freezing works. My, we are reaching back into history! That is the problem of this Labour Government—it still operates in the 1950s and 1960s. It is still fighting the class war, when right now it is the year 2004 and employers understand that their most important business assets are their people.

The National Government’s Employment Contracts Act created a very flexible environment in which individuals could negotiate directly with their employers. Unfortunately, once again we face a Labour Government that operates in the 1950s and is starting to sneakin amendments and changes to legislation that no longer reflect contemporary working conditions in New Zealand.

I want to briefly mention the title, and make the point, which National has been making for a long time, that it should really reflect more closely the intention of the bill. To simply call it the “Status of Redundancy Payments Bill” does not tell a lot of people what the bill is all about. It seems to me that it is more appropriate to call it the “Changing Status of Redundancy Payments Bill” or the “Creating Further Redundancy Payments Bill”.

When Mr Mark Peck mentioned the commencement date, I wondered why the commencement clause refers to this magical figure of the 60th day. I am not too sure what is magical about the 60th day of this legislation being in force. Does it mean that it will take that amount of time to educate employers about what the Labour Government’s plan is, and to inform business of these changes? Will Mr Mark Peck tell the public whether there will be a follow-up? Will there be an assessment of the consequences of this legislation?

The Government says the bill will not change much, so why is it wasting Parliament’s time changing a well-known commercial practice that has been in existence for quite a long while? The National Party will definitely vote against this legislation. It is not a party that believes in a U-turning leader.

This bill is correctly named. I think that the title reflects what it is all about. The Status of Redundancy Payments Bill basically provides for employees who have signed a redundancy agreement with their employer to have a higher status in the pecking order if the firm wants to, needs to, or does go belly up. [Interruption] I cannot see exactly what the member is doing. I wish he would stop echoing like a sparrow at the back.

Over the years, thousands of people have been made redundant in this country. I listed them before, from press cuttings I got from the library. They are people from the meatworks, the sharemarket, the clothing industry, the car industry, the airline industry, the stevedoring industry, and the shipping industry. Thousands of people have been affected, and, without exception, every one of them went home feeling quite distressed and in quite some anguish.

In many cases, when these firms have gone belly up, contractors have lost some money, and some, as a result, have gone into liquidation—but not always. In the main, small businesses that service large businesses survive, because they have their eggs in many baskets. When I was the manager of a stevedoring company, from time to time I was offered the chance to tender for a stevedoring contract from an organisation that was perhaps a little suspect—

💬 Richard Worth: Dodgy.

PETER BROWN:—or dodgy. I would put in a tender, but then I would ask for a financial advance to lessen my risk. Nine times out of ten I would receive such. Occasionally, a company would be reluctant to give me one. I then evaluated whether the risk was greater than I first thought, and it was my choice whether I took the contract.

Small-business people are not dumb. They know the wiles of the world, and the way things operate. I hear National Party members, in particular, talk about employers as if they do not have a clue how to do anything. I wonder whether any National Party members have had any experience in real business, operating at the coalface with people.

💬 Richard Worth: I have.

A lawyer says that he has had experience in real business. It is encouraging to know that a lawyer has had hands-on experience in real business, where he has been dealing with staff in sufficient numbers.

Employed people are entitled to some protection. They go to work daily, and rely heavily on the employer to do things correctly, to look after them, and to offer them some security of employment. This bill moves the redundancy payment one step further, to give them that protection. Nobody wants companies to go bankrupt, nobody wants to see liquidations, nobody wants to see people made redundant, and nobody wants to see contractors lose in these sorts of circumstances, but when those events occur, there needs to be a priority order. This bill changes the current priority order in a fair-minded manner. The cap is $15,000, which embraces holiday pay, wage entitlements, and a redundancy payment. I think that is quite reasonable. I think it offers protection to working people who have signed a redundancy agreement—they get no redundancy if they do not have a signed agreement. There is no gun to an employer’s head to agree to a redundancy agreement. I think that this bill is appropriate, and that the title is appropriate.

I move, That the Committee divide the bill into the Companies Amendment Bill and the Insolvency Amendment Bill, pursuant to Supplementary Order Paper 192.