Employment Relations Amendment Bill

I move, That the Employment Relations Amendment Bill be now read a first time. At the appropriate time I intend to move that this bill be referred to the Transport and Industrial Relations Committee.

The Employment Relations Amendment Bill gives effect to the Government’s intent of ensuring that the terms and conditions of employment for New Zealand’s most vulnerable employees are protected when their work is restructured. The bill also encourages businesses to utilise existing talent, and facilitates productive employment relationships that are built on good faith. The bill balances the need to allow businesses to grow and contribute to New Zealand’s economic transformation with the need to provide protection to specified employees who are particularly disadvantaged when businesses restructure.

In 2004 the Employment Relations Act was amended to introduce a two-tiered system of protection for employees affected by restructurings. Specific groups of employees, such as cleaners and food service workers, were provided with the right to choose to transfer to a new employer on their existing terms and conditions of employment. These groups of employees had been particularly susceptible to, and disadvantaged by, successive changes in contracts. Other employees were given protection through a requirement that their employment agreements contain a provision describing what steps their employer will take to protect employees affected by sale, transfer, or initial contracting-out situations. The intent of those amendments was that the right to choose to transfer should include all situations where a new contractor replaces an existing one, and the specified employee’s work is affected.

In July 2005 the Employment Court’s decision in Gibbs and others v Crest Commercial Cleaning Ltd established that the amended Act does not provide the protection the Government intended in these subsequent contracting situations. That decision highlighted a gap in the protection that the Employment Relations Act was intended to provide. This must be rectified. Specified employees must be ensured of a right to transfer to the new employer on their current terms and conditions of employment in subsequent contracting situations.

This bill ensures that specified groups of employees have the right to choose to transfer when contracting in or contracting out, on the sale or transfer of the employer’s business, and in subsequent contracting situations. This right applies regardless of whether a new contractor intends employees to perform the work. This right to choose to transfer applies regardless of whether the work was at some stage performed in-house. The right also applies whether or not the contract for service was terminated by one of the parties, or just expired. The right does not disappear just because the new contract does not start immediately. There has been no change from the Government’s policy in this area since 2004; the bill implements the Government’s original policy intent.

This bill not only addresses the issues raised by the Employment Court in the Gibbs and others v Crest Commercial Cleaning Ltd case concerning subsequent contracting but also clarifies the practical application of the Act in restructuring situations. By outlining specific scenarios, providing examples of how the bill applies in practice, and introducing specific penalties and remedies for non-compliance, the Government can be certain that the protection it intended to provide is implemented. The court’s decision highlighted certain areas in which the Act is unclear. Additional loopholes have been identified, following the court’s decision, that have the potential to frustrate the original policy intent. The bill closes those loopholes and prevents the use of contracting mechanisms that have the effect of avoiding the Government’s original policy intent.

The use of fixed-term employment agreements linked to the end of a contract for services is one such mechanism. To prevent specified employees from being stripped of the right to choose to transfer when their fixed-term agreement ends at the same time as a restructuring, the bill provides that specified employees whose employment agreements are linked to a contract for service or to an intended restructuring may elect to transfer, even if the fixed term has expired. This means that the obligation to provide specified employees with the right to elect to transfer cannot be avoided through the use of fixed-term employment agreements.

The bill also clarifies how the protection applies when the work is subcontracted. At the moment, the application of Part 6A of the Act to subcontracting situations is not clear. To provide certainty and to ensure that some specified employees are not excluded from protection, simply because work is subcontracted or they work for a subcontractor, the application of protection in subcontracting situations is spelt out in the bill. This, again, is not a policy shift from what was intended in 2004; the bill clarifies the Government’s original intent. These amendments will not prevent businesses from having the freedom to choose how to do their business and whether to contract out work. The amendments will ensure that specified employees are not treated as disposable commodities, to be cast off when a business contracting arrangement comes to an end. To clarify the practical application of the Act, the bill provides that the terms and conditions that transfer to the new employer include all statutory leave entitlements accrued. This ensures that employees can access these rights on transfer.

The bill does not mean that specified employees are assured of jobs for life. This bill affects specified employees at the time of a restructuring. It does not change the usual employment rights of specified employees after they have elected to transfer. Following the transfer, an employee’s terms and conditions can be renegotiated in accordance with the provisions of the Employment Relations Act. Employers and employees can agree in good faith to changes that are satisfactory to both parties. If performance or employment relationship problems arise following transfer, then the mechanisms for employment relationship problem resolution already in place under the Employment Relations Act will apply as usual.

The bill also clarifies that if an employer has surplus staff due to a transfer, employees may be made redundant. In such a case, the employee will get the redundancy entitlements provided for in the employment agreement. If the agreement is silent, then the employee can bargain for redundancy entitlements from the new employer. If the employer and employee cannot agree, they can apply to the Employment Relations Authority for a determination on redundancy entitlements.

The bill delivers on the Government’s original policy intent. It is about providing clarity and certainty to employers and employees, and stability to specified groups of vulnerable employees. It ensures that businesses maintain the freedom to grow, but confirms that employees who are particularly disadvantaged when businesses restructure are protected. I commend this bill to the House.

The law was bad back in 2004, and it is bad now. Let us take, for instance, the current situation—and I appreciate that the Act does not strictly apply here. Let us imagine, for instance, that an airline company wants to change the service provider for the maintenance of its aircraft. This is not an airline company that is just having a change of shareholders but one that wants a different service provider to do its maintenance. Under this bill, that airline company would still be stuck with the very people whom it did not want continuing to do the maintenance. That is a flawed theory.

Labour’s argument is that a special group of people is much more vulnerable than any other group of people: cleaners. I have to ask whether there are hordes of unemployed cleaners around the country, and whether cleaners are actually disadvantaged. It is one thing to be low-skilled and to have modest wages; I acknowledge that cleaners are often in that situation. Cleaning is often part-time work, night work, and so forth. But that of itself does not mean that people in that situation therefore cannot get jobs and are always on the unemployment list—it is not like that. In fact, at various times when I was at university, I did some cleaning jobs, and I am sure many people in Parliament can testify that they also did so. The reality is that those jobs were easy to get. The industry is characterised by relatively high turnover. Cleaning is typically not a job that people want to stay in for long periods of time. It is a falsehood to argue that workers in that industry are uniquely vulnerable and need a job guarantee. It does not matter what the Minister says; that is effectively what will happen.

This legislation is a form of job guarantee, irrespective of whether the person who originally needed cleaners wants to change the people who are doing the job. The employer may say that contractor X is doing a bad job and that a new contractor is needed to do the work, but the Government says that the employer cannot do that.

💬 Chris Auchinvole: Really?

No, the employer cannot do that. The employer is unable to get new cleaners, if that is what is needed, because the original cleaners can say: “Hang on a minute; we just want to transfer over.” The Government says that that applies even in cases such as Gibbs and others v Crest Commercial Cleaning Ltd, which referred to subsequent or second-generation contracting. So it applies not only in a situation where there is simply a change in shareholding but in the situation of a franchise operation where there is a change. The original cleaners will always be able to say that they want to keep cleaning a place, irrespective of whether they are doing a good job. Irrespective of whether the job has been satisfactory, those people are able to stay.

That cuts across business freedom. The Labour Party will say that that sounds all very harsh and unreasonable, and that the National Party is just taking a prejudiced view against people on low incomes. I acknowledge that people in the cleaning industry are on lower incomes. But let us look at the facts of the Gibbs and others v Crest Commercial Cleaning Ltd case. The people were cleaning kindergartens. Kindergartens are not flush with money; they have to be careful with their resources.

💬 Chris Auchinvole: And they have to be well cleaned.

And that is the key point—well cleaned. People do not just change cleaners willy-nilly; there has to be a reason for people to change a cleaner. Perhaps the job is not satisfactory, or it is over-priced. It could be any one of a number of reasons, and I am certain that people with commercial experience know the truth of that. Kindergartens are not noted for being rapacious organisations. They had very good reasons to make the switch, and they did so. They sought to employ Crest Commercial Cleaning, an organisation that did not directly employ cleaners. It used franchise operators, which it then engaged to do the actual cleaning. It was on that point that the court stated the 2004 legislation did not apply—that it would have applied only if Crest had been directly engaging the cleaners, as opposed to operating a franchise operation.

Labour wants to ignore the whole concept of the integrity of contracts. It wants to ignore the whole concept of franchising, and of different arrangements. It just wants to cut across that completely.

💬 Chris Auchinvole: No free enterprise.

We know that the Government does not understand free enterprise. So, in practical terms, this Government is prepared to say to the kindergarten organisations in Dunedin that it is too bad if they have bad cleaners who are not performing as one would reasonably expect them to perform, because they are stuck with them. The Government is telling those organisations that it does not matter what arrangements they make—whether they change firms or try to get franchises to do the work—because they are still stuck with the original people. Where is the incentive for better performance in that? How will people actually improve competitiveness, productivity, and all the things the Government says we need to do in the New Zealand economy? Essentially, people will stop taking those sorts of actions.

National is fundamentally opposed to this legislation. It cuts across commercial reality and across the ability of people to improve their performance. It means that one has to take on, as the new cleaners, the very people to whom people are choosing to say: “Actually, we need a new group of people to do that work.” Only then can one apply all the new tests. Actually, the test was being applied at the time of changing the contract in order to get a different firm. Let us imagine the situation if we did that with regard to carpenters. Let us say we engaged a group of carpenters to build a house, but found halfway through the contract that things were not going in quite the way they were supposed to go, and that we needed to get a new builder. If we went along to the carpenters and told them that the contract was not working and that we needed to get in a new firm to complete the job, those carpenters could say to us that we were perfectly entitled to do so, but that they would still turn up the next day and continue to work on the house, because their jobs would just continue on. That is exactly what Labour proposes in this legislation. Labour thought that the 2004 amendment to the Act was marvellous. Well, it was not marvellous. It has led to a less productive economy.

In the couple of minutes I have remaining, I want to say that this country has a problem with its productivity. Everyone in this Parliament acknowledges that. The way to boost productivity is by boosting skills and competitiveness, by eliminating compliance costs, and by reducing taxes. Labour is failing the test on every one of those. For instance, Australia—the country with which we compare ourselves—spends, under a conservative Government, more than we do on skills training and on building expertise. It puts 1.5 percent of its total wealth into boosting skills. It does that not just in the universities and polytechnics but right across the board, at all levels. This country spends 1.3 percent.

One of the key choices Australia has made is to boost productivity. This country has not made that choice. I ask Labour—because it will have a choice in 2 or 3 weeks—whether it will support a 90-day probation period. Every country in the OECD has done that. Some—for instance, Britain—have a year. New Zealand is the only country that does not have a 90-day probation period, and that holds back productivity. Will the Government do that?

💬 Lindsay Tisch: That will be a test.

It will be a test for the Government. Does it want to have a more competitive economy?

💬 Chris Auchinvole: It says it does.

It says it does, but if this legislation is anything to go by, then the answer can only be no.

Finally, will the Government reduce taxes for hard-working New Zealanders—low-income earners especially—irrespective of their incomes? The answer to all those questions is no, no, no, and no, and that is why so many people are going to Australia.

This is bad law. It was bad in 2004, and it is bad in 2006.

That member spent 10 minutes displaying his utter ignorance of many people’s working realities in this country. I will tell him a few home truths. The people who clean his office and who feed him in Bellamy’s are contracted-out employees. For years and years those people have done those jobs. He said that their industries were high-turnover industries. What would he know? Is he here at midnight watching his office being cleaned? No, he takes it for granted that his office is cleaned nicely for him every time he rolls into it in the morning after eating his breakfast. For years and years under a National Government, workers in the contracting industry were subject to abuse. This legislation seeks to make sure that that does not continue. For years prior to the National Government changing the law, that was the reality. Yes, people could have a contracted-out situation. New contractors could come in and take over a job. They took over the workforce with the existing wages and conditions, then they set about trying to get productivity gains. Most of them did it this way: at the Auckland hospital they simply said to the cleaners who had one ward to clean that they were sorry but they would now have to clean two wards, in the same time and for the same money—and they did it. What better productivity can one get than that?

But were the contractors satisfied with that? No, they were not. They said to those workers that they were still not doing their job well enough and that they were still shirking, even though they had gone from cleaning one ward to two in the same number of hours and for the same money. They were not satisfied with that level of productivity gain, so, as well, the workers were to have their hours cut and were to do their work in an even shorter time.

So all those full-time workers, many of whom had worked there for 20 to 30 years—[Interruption] Wayne Mapp laughs, because he thinks it is a big joke for people who have been hospital cleaners for 30 years to be told they have to do twice as much work in fewer hours for less money. He thinks it is funny. He thinks that those people should be treated with derision, and that is what the National Party does in voting against legislation such as this. Those people are largely Pacific Island and Māori women who have been working in those jobs for 20 to 30 years. Their kids are now achieving academically and are representing us internationally as sportspeople.

Those are the sorts of people we are talking about. They are the people who feed that member and who clean his office while he is comfortably tucked up in bed. When those people are transferred from one contractor to another, they have a right, when they turn up for work the next day, not to be confronted with a contract that says: “Sorry, I’m your new boss. Here’s your new contract. You’re going to work for $10 a week less, or $20 a week less, and have your penal rates and allowances taken off you. If you don’t like it, go away.”

That was the reality under the National Government. Labour does not believe in that sort of absolute rort. If that is the commercial behaviour that Wayne Mapp wants to see in this country, God help us if he is ever on this side of the House making laws! That is the kind of slavery-type situation that the National Party would prefer to see. National members laugh at that, but they have never, ever seen what I have seen as a union official representing those workers—the utter chaos that is created in people’s lives. [Interruption] That new member over there is laughing, too.

💬 Paula Bennett: I think you’re living in bloody Noddy-land.

She knows all about that! She was on a benefit and claims that she knows all about the lives of the low paid. A landlord does not say: “Oh, look, the cleaning contract has just changed, I’m really sorry that you’ve lost 50 bucks a week, I’ll drop the rent.” The bank does not say that people do not have to pay the mortgage any more because their boss has suddenly cut their wages and conditions.

That is the harsh reality of life for those people, and this law seeks to redress that sort of imbalance. It is a good law. We are going to make sure it gets passed and that it protects those most vulnerable workers. They are the people who clean Paula Bennett’s office and Wayne Mapp’s office, and who feed them at Bellamy’s. Those members are happy to see them completely rorted. If members do not believe that that happens, they should ask the people at Bellamy’s what happened when the services were contracted out. Those employees were going out of here in droves, and their wages and conditions were taken off them by the contractors. It is happening right here in this building; it is not just out there where members cannot see it. It happens every night after members have gone home, when people clean members’ offices. Members should go and ask those people for once and not just ignore them or say to them: “Thank you very much for my coffee.” If members thought about those peoples’ wages and conditions and what this law will do to protect them, they would support this bill.

It is my pleasure to take a call on the Employment Relations Amendment Bill. I was heavily involved in the original debate on the Employment Relations Act. That legislation came in under extraordinary urgency in, from memory, early or mid-2000. We worked for 4 days on the trot, with very little sleep, to pass that bill, and this amendment bill is evidence of the fact that passing the original bill under extraordinary urgency was a very stupid thing to have done, indeed. I say that because by my recollection—and Mark Gosche or Ruth Dyson are welcome to correct me on this—this is at least the 12th amendment to the principal Act since it came into force in 2000.

That leads us to one very simple conclusion: that the legislation was appallingly put together in the first instance.

💬 Hon Ruth Dyson: Simon, you’re a lawyer; you know that we would correct it.

Ruth Dyson chips in by saying that I am a lawyer. I cannot think of another piece of legislation, in the 6 and a bit years that I have been in this House, that has required 12 amendments—two per year—in order to get it right. [Interruption] Mark Gosche asks what is wrong with that. I will tell the member what is wrong with that. Labour members should have got the legislation right in the first place—they told us at the time that the Act was perfect in every way. We had applause and people yahooing and congratulating each other when it was passed, and that legislation comes back to the House every time it needs yet another amendment.

The interesting thing is that the Government did not swallow its pride initially and admit it had made a mistake. It took the Employment Court to tell the Government that there had been yet another mistake in the drafting of the Act that would require clarification by yet another amendment. Here we are, with legislation that was poor law to start with. It was poor law because regardless of whether members agreed with the ideological drive behind the Act—and we certainly had a very long and protracted debate over that, particularly during the Committee stage, when, from memory, 11 or 12 parts were debated—it was poorly drafted in the first place. Because it was poorly drafted, it has allowed situations like this to evolve. [Interruption] That member should read her Standing Orders, and then she would know that she cannot move from her seat to a position of advantage in order to interject. She should move back to her own seat. Yet again there is a major problem with the Act that requires the attention of this House—for at least the 12th time, by my count, since it passed into law.

There are concerning things about this bill. Frankly, some of the points Mark Gosche made in his contribution make sense only if the public is of the view that no matter what kind of contract or arrangement two people enter into, it will not count for anything. The Government is simply legislating straight across one of the most important principles of law in this country: the sanctity of contract, or the ability of two consenting adults to enter into a contract for the provision of goods or services. It is an extraordinary situation when the Government decides to introduce legislation that tells young people who want to get into business after coming back from overseas, those who want to set up contracting businesses, and those who want to employ people that when they pick up a contract for the provision of services to a particular business, regardless of the quality of service that was being provided up until that point—which, of course, may be the very reason an organisation or business wishes to let the contract out to a different organisation in the first place—there is no way that the new employer can make any changes of a substantial nature to the workforce.

That is just extraordinary. It essentially suggests to somebody who is prepared to take the risk to get into business, set up contracts, employ people, and make a contribution to the economy by lifting productivity that if that is what the business chooses to do, that is fine, but it must do so with a workforce that it has been decided was not up to scratch. That is just the most extraordinary set of circumstances.

This Government wonders why the flood of people who come back from the UK, New York, and other places around the world stops in Sydney and Melbourne. It wonders why that is the case. I will tell Government members why that is the case, because those people are firmly in the same demographic as myself. They are in their mid to late 30s and keen to set up businesses. They usually have one child, or possibly two children, and they are coming back because they believe that New Zealand offers them a wonderful lifestyle—the opportunity to set up a business and settle down here. But they come and look at the sort of nonsense that is contained in this legislation and say that if their children go to the local kindergarten, and the standard of cleaning at that kindergarten is so bad that the hygiene regulations are being breached, this Parliament is telling them there is nothing the kindergarten can do about that. The kindergarten associations say they want to change the contractors for the provision of those services, but there is nothing they can do about the standard of cleaning.

The most extraordinary thing is that members of the Government, who are sitting there now, sat and listened to the most boring, ill-informed, repetitive speech I have heard in my 6 years in the House. Yet again we heard Helen Clark come to the House and talk about so-called economic transformation—

💬 Dave Hereora: We want to buy in haste.

There is Dave Hereora having a bit of a chip there. That is great; that is his contribution for the next 3 years. So we had Helen Clark come to this House and talk about economic transformation, yet with her other hand the Prime Minister is allowing the introduction of legislation like this, which is the very antithesis of economic transformation. This legislation means there is no incentive for performance, no incentive to improve the services that are provided, no problem if those providing a service are negligent or careless, and nothing an employer or a new provider of those services can do about that. It just seems to me that that is an unrealistic expectation to put on those who proclaim they are the masters of an economic transformation in New Zealand.

Well, that is true, actually, in one very small way: the economic transformation we are seeing with at least the 12th amendment to the Act is one that takes us back to the days when this country’s chances of getting back up the OECD ladder have just taken a serious knock backwards.

I listened intently to that speech, and though the member made some very good points, I thought—fair points—he is wrong on one count, at least. This legislation is not an amendment to the Employment Relations Act; it is an amendment to the amendment to the Employment Relations Act.

New Zealand First has looked at the bill fairly thoroughly, and we cannot support it. That is not to say we do not have sympathy for vulnerable workers. We have, and that is why we are fighting very, very hard to raise the minimum wage. We are very keen to make the minimum wage $12 an hour. We were going along—

💬 Lynne Pillay: What about the cleaners on the ships on the waterfront, Peter?

The honourable member can rest assured that I will get to shipping sooner or later in my speech. I will get to shipping and waterfront work sooner or later—probably sooner than she would care me to.

💬 Lynne Pillay: What about those simple sailors, Peter?

The member is looking at a simple sailor, a very simple sailor. I claim to be nothing else.

I want to go back to the roots of why this bill has been introduced. It has been introduced because Labour Government members did not, in their eyes, get the legislation right a year or so ago. I listened to Mark Gosche’s speech, and it almost brought tears to my eyes, but he did not make one reference—or maybe he made just one reference—to what this bill is about. He was talking about the bill that has already been passed and become an Act that protects vulnerable workers; he was not talking about this set of clauses that address what we might call the Dunedin kindergarten issue.

I want to refresh members’ memories of what happened in Dunedin. The Dunedin Kindergarten Association engaged a cleaning organisation called Southern Cleaning Services. The association members were not happy with the service or quality of cleaning that that organisation gave—that is my understanding—so early in 2005, when the contract expired, the association said thank you very much to the cleaning organisation, and told it that the contract was being put out for tender. The tender was won by an organisation called Crest Commercial Cleaning. It saw no sense in having to employ—I hope I am not doing it a disservice here—employees of Southern Cleaning Services, so it offered the work to contractors, whom it called franchisees, and I gather they have done the work very well since. Since that time, some of the cleaners employed by Southern Cleaning Services have been made redundant, because their jobs had been dependent on the firm having the contract to clean kindergartens. Those workers believed they should have been re-engaged by Crest Commercial Cleaning. They went to court, and they lost.

Should they have lost? Well, I do not know the answer to that. Should they have had an automatic right to job protection—should they have been engaged no matter which company had the main contract? New Zealand First says that, no, we should not be extending that sort of protection to anybody. We do not extend it to normal occupations, so why should we extend it to employees who are not delivering the service that the employer—the kindergarten association in this case—wants?

Let me be absolutely frank: competition is essential for the better economic well-being of this country. We need competition. Competition brings with it innovation, efficiency, and cost-effectiveness. To some degree it drives wages down, but once one achieves the level of service that is worthwhile paying for, the effect is the reverse. So New Zealand First’s position when it comes to vulnerable workers is that, first and foremost, we want the minimum wage increased. We want to give employers some tax benefits, some tax cuts, so that they can afford the increased wages, but we want competition to remain a tool, if one likes, of employers to ensure they get the best service—the best bang for bucks.

I come to the waterfront, because sooner or later I have to talk about it. The waterfront used to consist of pooled labour. When I was a stevedore I had to engage labour from a pool of people. I could not bring in modern equipment any more than my competitor could. I had no say on whether the workers would use it, or whether they would work different hours. The workforce determined the hours and determined the equipment that was used. As a result, our ports did not keep pace with overseas ports, by a long way. In Tauranga, where I come from, we prided ourselves that we had the best port in New Zealand, but when it was compared with ports on a worldwide basis we saw that it was less than satisfactory.

In 1989 all that was changed. We changed the method of employment—employees worked for company A, B, C, D, or whatever, and were part of the team of that company. They were not part of a pool of labour. As a result, modern equipment came in, loading rates went up, discharge rates went up, wages went up to some degree, and everybody was happy. I have to say that the then National Government then passed the Employment Contracts Act, and that put downward pressure on wages, which was most unfair to many working on the waterfront.

So, in essence, New Zealand First will not support this bill, because we believe that it could lead to protection of incompetence or less than quality service. That is our concern. I am not saying that it will do that, but we believe that it will protect incompetence to some degree. It will not affect the big cleaning companies, at all. They are already captured into the market by whatever. But it will affect mum and dad cleaners—the small people—and quite dramatically, and it will put a number of small businesses out of business. The alternative is to ensure that cleaners—if we are talking about cleaners—and other people on low wages get a reasonable wage. That is why New Zealand First members are striving and fighting for a higher minimum wage.

The other issue in this country that should be addressed is casualisation. Many, many industries have moved to casual employment. We believe that there should be some rules around employing people on a casual basis. New Zealand First will have some ideas to present, probably to this Government during this term, on how that can be achieved.

So, in essence, higher wages and controls on casualisation are the answer to the issue of vulnerable workers. [Interruption] That member ought to take a call to make her view known. The answer is not potentially to protect incompetence. New Zealand First members are not prepared to do that. Therefore, we will be voting against this bill.

The Green Party supports this Employment Relations Amendment Bill and hopes that it will work its way very quickly through the necessary processes. We fought hard for the transfer of undertakings provisions in the Employment Relations Act in 2000—the committee process that Dr Mapp remembers so well—and we were really disappointed when the Labour Government of the time felt obliged to remove this clause from the bill before it ever came back to the House. We were delighted then that the Government made a second, more serious attempt at dealing with this thorny issue with the inclusion of Part 6A in the Employment Relations Amendment Act in 2004. We now support the clarification of that legislation so that it achieves what we intended to do all along—protect those who were most vulnerable in the workplace when their jobs are sold out from under them.

The intention of the bill in front of us today is not new at all. Parliament already agreed to it when it passed the Employment Relations Amendment Act in 2004. I am well aware that it is simply an unintentional drafting error that has given rise to this situation. We are here because the Employment Court decided in Gibbs and others v Crest Commercial Cleaning Ltd that the law as currently written did not apply to them. The matter that went to the Employment Court was around cleaners who had been cleaning premises belonging to the Dunedin Kindergarten Association. The cleaning contract was re-tendered and the previous employer, Southern Cleaning Services, lost the contract to another firm, Crest Commercial Cleaning.

As soon as Crest Commercial Cleaning won the contract it gave notice that it did not intend to employ any of the current cleaners, but were going to subcontract to independent franchisees. There can be no doubt that those workers were in a vulnerable situation. There can be no doubt that this situation was similar to that described by many of the submitters to the select committee when we heard evidence on the Employment Relations Amendment Bill. There can be no doubt that the select committee thought that it had drafted a bill that supported vulnerable workers in this situation. As a member of the committee I was there, and I have no doubt that that was our intention. It is for this reason that I believe, forlornly I know, that the bill should be supported by all parties in the House. It simply reinforces the intention we had when we passed that Act in 2004.

The Employment Court case that led to the need for this bill also touches on a number of other aspects of worker vulnerability that are of concern to myself and my Green Party colleagues. One of the issues is the claim by the new contractor, Crest Commercial Cleaning, that it was not going to be employing staff but was going to engage independent franchisees. Whether those independent franchisees were employees by another name, I do not know, but I have my suspicions. However, I am concerned about the growing use of so-called independent subcontractors, and the way in which corporations and larger employers use them to reduce their costs.

We have seen it clearly in the care service industry, and I think that every party—except, perhaps, ACT—has spoken out about the need for the health industry to look at how it employs and pays its carers, who, in many cases, have to pay for their own transport from job to job. As MPs, we get paid for our travel. It is totally outrageous that workers disguised as subcontractors or independent franchisees, earning as little as the minimum wage of $9.50 an hour, or less if they are under 18, are having to pay for their travel between clients. In other cases, they even pay for their own cleaning equipment. It is no wonder that the provision of home-based age and disability care is in almost total meltdown in some parts of the country.

In the 2001 census, there were over 12,000 people working in cleaning services. The Service and Food Workers Union says that the average wage of a cleaner on a collective agreement is $10.40 to $10.60 an hour. That is the rate for a collective. We can safely assume that there are many workers who are on less than that, especially those who are not in a union. They will be on the minimum wage of $9.50 an hour, or even lower if they are unlucky enough to be under 18. Many of those cleaners are doing two to three jobs just to make money to pay the bills and to keep themselves and their families going.

Commercial cleaning is still one of the most undervalued and underpaid occupations in the country. I hope, like Mark Gosche, that all of us here spare a thought from time to time for those invisible workers who leave their families in the middle of the night to come here and make our offices habitable once again.

The bill before us this afternoon does not, and cannot, address all the problems that surround vulnerable workers, but I hope that perhaps, later in the term, we will see more legislation that will offer them greater protection and support. Meanwhile, the Green Party is right behind the bill, and I hope it will progress with considerable speed through the necessary processes.

I have been amused by some of the political commentators who have passed judgment on the performance of Māori Party MPs, suggesting that because my learned colleague from the north, Hone Harawira, and myself have donned a tie, miraculously we have acquired a sense of discipline, an honest work ethic, and a conscientious approach to the endeavours of this House. The reality is that hard work, industry, efficiency, planning, and accomplishment are synonymous with what it is to be Māori. Our earliest documented histories emphasised the advantages of work and of communal effort. Equally, it is evident from any analysis of pre-colonial employment that idleness, clumsiness, and wastefulness were treated with contempt. One of the expressions of that time was: “Mā te werawera o tōu mata e kai ai koe i te haunga ahi o te kai.” That can be interpreted to mean that by the perspiration on one’s face, one will taste the piquant flavour of cooked food. In other words, hard, honest work by all will bring its own rewards.

The rewards of collective prosperity, of unity, and of the well-being of people are values that pass down the generations. In this world view, the possibility of vulnerable employees who are affected by the sale or transfer of a business or the contracting-out of work simply does not fit. For a start, as in the old English adage, the measure of a community is only as strong as its weakest link. Moving down the centuries, I wonder what our tīpuna would have thought of the workplaces of today.

The Māori Party will be supporting the Employment Relations Amendment Bill. We do so in recognition of the fact that quality employment and productivity emerge from a decent work environment and decent wages. A decent work environment means that all staff are valued, including vulnerable workers, and that is exactly how it should be. Mauri mahi, mauri ora; mauri noho, mauri mate. Industry begets prosperity; idleness begets insecurity. Or, through collective effort, supporting all members of the team, we can achieve economic gains and social stability.

To achieve those goals, we now know that employment protection is required to ensure that groups of vulnerable employees are not standing out in the cold. And who are those vulnerable employees? Well, one thing is for sure: they do not get promoted with a glossy career profile, encouraging our children to grow up to be a vulnerable worker. Yet the combined trade unions, the Minister of Labour, and the other Labour Ministers all sing the same song, justifying the introduction of this bill as necessary to protect the terms and conditions and continuity of employment of vulnerable workers.

When we consider the situation for vulnerable workers we are considering the situation for many Māori and Pacific Island workers. In the 1980s, the ruthless economic restructuring driven through by Labour increased Māori unemployment to record levels. I remember when it was 22 percent. The damage caused in the 1980s has left a lasting impact, with the unemployment rate of 7.6 percent for Māori still three times that of Pākehā. That equates to thousands of Māori available for, and seeking, work. Facing the choice between the dole queues or the food banks, many of our people will accept employment that is casualised, lowly paid, and insecure.

The Māori Party members believe that the bill being discussed here today will benefit the many Māori workers and their whānau who are affected by subsequent contracting. Without the amendments that are tabled in this House, vulnerable workers stand to lose employment, and thus their income, to face precarious terms and conditions, or to have changes imposed upon them—such as changing hours of work and increased workload, and associated stress—when there is a contract change. The legislation will overtake the Employment Court decision made last year that said employees did not have employment protection in succession-to-contract situations. Again, this House is facing the dire consequences of an error of lawmaking, much as we saw last week with the Land Transport Amendment Bill.

The legislation amends Part 6A of the principal Act, and relates to the transfer of terms and conditions of certain vulnerable workers when a business is sold or work is contracted out. As this House will recall, last July—and it has been mentioned before—six Dunedin kindergarten cleaners lost their bid to keep jobs, in the first case to test the employment protection provisions included in the legislation in 2004. The workers found themselves out of a job after their employer’s cleaning contract was taken over by another company, Crest Commercial Cleaning, which declined to keep them on. It is all well and good to say that the intent of the original Act was always to protect the terms and conditions, and continuity of employment of vulnerable workers such as cleaners. Well, as the Employment Court in Gibbs and others v Crest Commercial Cleaning Ltd showed, the provisions of the Act were not clear enough to uphold the intention in the event of subsequent contracting.

Once again, as with the land transport error, it is real families, real workers, real situations that suffer because of sloppy drafting. They are workers who are already on low incomes; workers who may already be under pressure as they manage the demands of juggling their employment with childcare, and with whānau and community commitments; workers who may be struggling to manage multiple employment responsibilities, in the stress of trying to supplement low pay and scrabble together enough to put bread on the table. We know that the faces of a lot of these workers are brown. We have been glad to meet with Te Kauwae Kaimahi Rūnanga, which represents the jawbone of Māori trade union workers. We are aware of the huge impact of poverty wages, casualisation insecurities, and cultural undervaluing, all of which go on for far too many workers who are Māori.

The amendments are setting in place a practical solution to a very real problem. The Māori Party is aware that contracting change-overs are happening all the time, and every week low-paid workers are losing their employment as a result. Workers are telling us too often that imposed changes to work hours can, and do, result in job loss. Without the amendments, employers are able to screw down wages and conditions. The bill ensures that employees can now enforce their rights when an employer fails to provide the right to elect to transfer, by providing remedies and penalties for non-compliance. If workers transferring to a new employer are surplus to needs, they have the right to bargain redundancy entitlements from the new employer.

The legislation being laid before us today is a step along the way to assisting our vulnerable workers improve their lot. But it is still only a limp band-aid on a seeping hakihaki—that is like a sore—oozing out over this nation: the spreading sickness of poverty. This Parliament must seek to reduce the gap between low-income taxpayers and the average income for the nation. How often do we need to remind this House that six out of every 10 Māori have an annual income of $20,000 or less, or, putting it another way, that the incomes of Māori people are, on average, $163 less per week than those of Pākehā—$437 compared with $600? The Māori Party has always said that if we are looking for real progress for our workers and families, the most effective policy change would be to increase the minimum wage to $12.50 per hour. This would mean a figure of in the vicinity of $25,000 for those working between 37.5 and 40 hours per week. So while we are happy to support the new amendments in their intention to establish employment protection in succession-to-contract situations, we will not resile from continuing to front the challenge against poverty in Aotearoa. We believe that in a buoyant economy we should expect more people to benefit from employment opportunities and wages that can support real living conditions.

I rise on behalf of United Future to speak on the first reading of the Employment Relations Amendment Bill. I do so understanding that the bill’s intention is to provide protection to vulnerable employees in all change-of-employer situations, including succession to contract and contracting in and contracting out of work. I understand that “vulnerable workers” is a term that mainly applies to those who work as cleaners, and that the aim of the bill is to ensure that benefits are continued, regardless of the changing employment arrangements around the worker. We understand that the bill is being put forward by the Service and Food Workers Union, and we also understand that the trigger for it, as referred to by other speakers, was a particular case involving Dunedin kindergartens that was before the Employment Court in Dunedin—Gibbs and others v Crest Commercial Cleaning Ltd was the name of the case.

United Future has decided not to support the bill, for several reasons. We have several concerns and apprehensions about it, and I will quickly explain them. Firstly, we are unconvinced of the need for this legislation. Most large companies with cleaners have multi-employer contracts with unions, with provisions that already cover succession to contract, and contracting in and contracting out scenarios.

Our second concern is that the employment of an employee who elects to transfer to a new employer would be treated by the amendment as continuous. It is a little unclear at this stage what “continuous” means, and what sort of period of time is covered by the continuous employment provision.

Third, we fear that the bill will force out minor players, by imposing on them the same rules that larger companies have to contend with. Larger companies tend to be able to absorb these kinds of rules and regulations more easily than smaller ones. We are concerned that far from protecting vulnerable workers, the bill could do the reverse and push them out of employment. A number of the smaller players are often small family businesses and, interestingly enough, quite a large number of them are owned by Pacific Island families. Our legislation in this area should be aimed at making it easier for new immigrants to work and to set up their own businesses when they feel ready, not to make that harder than it is at present. We feel that the bill has the potential to keep new players out of the cleaning industry.

The very nature of competition between businesses is that one can out-price, but one can also outperform, competitors. My experience of employing cleaners is that most people who take out a contract for cleaners, rather than being completely constrained by what it will cost, are more interested in the quality of the work that is to be done. I myself, since coming to Parliament, have employed a cleaner—and I would like to say that I pay my cleaner well above the minimum wage, and I hope I am a good employer. To say cleaners are somehow undervalued could not be further from the truth, in my experience. When I go home on a Friday, at the end of a hard day, the most wonderful thing is to walk into my home and see what has been done on my behalf, and I do not begrudge a cent of what I pay. But what I value is the quality of the work that has been done. I do think that when a contractor has not been performing to the standard that was expected, and when that has been communicated and the staff have not complied with that advice, then the contractor should be able to move on and, if necessary in order to make the necessary changes, bring in new staff who will work to the standard that has been set.

United Future will not support the first reading of the bill.

I have much pleasure in speaking in support of this important bill, and I congratulate Minister Dyson on bringing it to the House so promptly. It is a very complex area, and it is very clear that some members of the Opposition do not understand it. I hope I will have the opportunity at the select committee to explain to those members exactly how some of these things work, but I will try to make it clear tonight, if I have the chance.

It is very evident that they do not understand the real world of working as a cleaner, as a food service worker, as an orderly, in our hospitals, in our schools, in our office buildings—in any sort of business where employers and contractors compete in the competitive tendering process on the basis of lower labour costs through reduced wages, cutting hours, or reducing staff numbers. So although my colleague over there might pay above the minimum wage, in this situation I am sure she does not understand that what can happen is that staff hours are reduced.

The purpose of the Employment Relations Amendment Bill is to implement the Government’s intention to provide protection for vulnerable workers in situations where workers are contracted out or a business is restructured. As people have said, the amendments are necessary because of the decision of the Employment Court in Gibbs and others v Crest Commercial Cleaning Ltd. The law does not provide specified workers with the protection the Government intended in situations of subsequent contracting.

The bill was originally introduced in response to the devastating effects of more than a decade of competitive tendering and repetitive contracting-out of the thousands of low-paid workers. Over the last couple of decades a repetitive process of competitive tendering has become the norm as businesses seek ongoing cost reductions, particularly in easily outsourced work, such as cleaning, food services, and orderly and laundry services. Contractors compete on the basis of lower labour costs in a race to the bottom, through reducing wages, reducing staff numbers, or reducing hours.

The effect on those workers has been catastrophic. Workers lose their jobs, often at short notice, in a process that can be repeated up to four times a year. Contractors seek to win contracts by reducing hours of employment, pay and conditions, so even where workers continue to be employed by the incoming contractor, they face “take it or leave it” situations in jobs with less pay and, more often than not, reduced hours of work. Those whose jobs are terminated often have no redundancy compensation protection, and no other jobs to go to.

The proposed bill is not a new idea, and it has been carefully considered over many years by this Government; nor is it an idea that is unique to New Zealand. The UK has had a protection called the transfer of undertakings since the early 1970s, and it is currently in the process of strengthening that legislation. Australia has similar protections for the transmission of business, and it has had them for years. Having listened to Peter Brown, I think he does not understand that the horse has bolted. Part of the legislation will continue to apply, but what will not apply is the situation of subsequent contracting for those vulnerable workers described in the legislation—cleaners, laundry workers, food service workers, and others—where they are already contracted out. Tens of thousands of those workers work in our schools, polytechnics, airports, commercial buildings, Parliament, and aged-care facilities. The Crest Commercial Cleaning decision means that succession-to-contract situations are now explicitly excluded from subpart 2 of Part 6A of the current Act, so the terrible irony is that the most vulnerable workers, who were intended to be covered by this Act, are now left to the vagaries of the market. I accept that there is a balancing act in weighing up protections for workers and the requirements of business, but there is also a requirement to balance the relative powerlessness of workers who have little bargaining power and are more vulnerable.

I will now address some of the things that have been raised. I think Wayne Mapp does not understand the nature of competitive tendering. One cannot just sack a contractor because one does not like the cleaners; it does not work like that. Peter Brown raised the point that this legislation could lead to the acceptance of incompetence and the protection of incompetence. Well, performance is a management issue, and our current labour laws give employers the right to deal with performance issues right now. The other thing that people do not understand is that this protection applies only at the point of transfer. It applies to the workers, so that they have the right to transfer. After that, the incoming employer or contractor has the right to restructure the business, subject to current employment laws.

It is really important for the workers whom we are talking about that this legislative protection proceeds through the House, because it will make a huge difference to tens of thousands of workers, many of whom are women, Māori, Pacific Island, and new migrants. It will mean that they do not have to come to work each day not knowing whether, by the end of the day, they will have to go home and tell their families that they no longer have jobs. I also want to make the point that this is not about preventing contracting-out or undermining competitive tendering.

Debate interrupted.

The House adjourned at 6 p.m.