Employment Relations Amendment Bill

Thank you, Mr Chairman. I rise to speak to the purpose clause of the Employment Relations Amendment Bill. I went into the lobby and referred myself to the principal Act itself, and I must say that in looking at it I am gobsmacked. A member who goes to get this Act from the lobby shelves will find it riddled with red pen markings and flimsy tissue paper additions. It is almost totally impossible for a member to get a good overview of exactly what the law in the principal Act is at this time, because so many changes have been made to it since it came into force.

💬 Paula Bennett: Fifteen amendments.

The Act has had 15 amendments, which is just outrageous. If we look through the Act itself, we find flimsy bits of paper added at various points and markings from a red pen all over the place. It just shows the Committee that when this legislation was first brought into the House, it was done at great speed. It was done without rigorous work being done on it and without attention being paid to detail. Those are the reasons the House comes back time and time again to deal with the changes that need to be made. It would be interesting for members to know exactly how much it costs us to have to turn our attention to patching the mistakes made in the original drafting.

The purpose clause in this bill states that its aim is to clarify the application of a particular clause, especially in respect of specified categories of employees—or vulnerable workers, as this Government likes to call them. As I said when I spoke on this bill previously, this Government thinks that people are vulnerable workers if they work in the food service industry, if they work at the airport, and if they undertake cleaning. But if a Thai immigrant does some tiling—or is charged with tiling half of Samoa, by all accounts—then he is vulnerable in no way.

Members on that side of the Chamber continue to stand there and defend the treatment of that tiler, saying that he was not vulnerable at all but that he was a professional person entering into a professional contract. We all know that it takes great skill to be a tiler, but I do not know how members on the other side of the Chamber can continue day after day to defend what has been done, then, when they come into this Committee, in their next breath go on and on about their concern for vulnerable workers in New Zealand. As members on that side like to say, there is an “h” word for that. Certainly, on this side of the Chamber we are getting sick of that kind of rhetoric, because it does not ring true in terms of what they are actually doing.

We are also hearing here a discussion about how the treatment of these employees can change, and the purpose clause refers to a change of application to succession contracts. It is designed to give one the impression that that is a contract that has been going for some time and will naturally roll over and be renewed. But what this bill does is exactly the opposite. This bill basically negates fixed-term contracts so that people can enter into a contract for service, and although they receive the worst service they have ever experienced in their life they are not able to enjoy the termination of the contract when it finishes.

That is exactly what the Dunedin Kindergarten Association faced. It loyally waited until the end of its contract before deciding to go out and get a new firm to come and do the cleaning. That makes sense to us on this side of the Chamber. The association waited until the end of the contract. It did not break the contract; it loyally decided to stick with the cleaners until it had the legal right to say: “See you later.” But this Government is saying, no, that they can look beyond a fixed-term contract and in fact force that employment relationship to keep going, even after a contract is terminated. If people cannot enter into a fixed-term contract, then that makes it very difficult for small businesses to be able to undertake the kind of work they do.

In 2004 the Prime Minister stood up at the New Zealand Franchise Awards beside CleanTastic Commercial Cleaning, a business franchise that was franchisee of the year. That franchise oversees over 300 mum and dad operations that run very small businesses. They have small contracts and go out and clean our schools and kindergartens. The Prime Minister had her photo taken, got all the credit, and now is ruining its business.

I am speaking to clause 3, “Purpose”, of the Employment Relations Amendment Bill. The purpose of the bill is to substitute a new Part 6A. The title of new Part 6A is “Continuity of employment if employees’ work affected by restructuring”. If people are going to continue employment, they have to work somewhere. If they work somewhere in New Zealand, then “somewhere” is mostly in small business. I think it is important that, in order to understand the purpose of this legislation, we hear what real small business has to say about the Government and its attitude to business in New Zealand. I have had a lot of correspondence from small business because of my role in economic development, and I have randomly chosen one of the notes I have from a small business. I quote from the communication: “We have operated our small business for the past 14 years, employing over 60 staff. The past 4 years have been a nightmare for our business and we believe the reason is partly due to the overall climate and tone that now exists in this country, created by a Government intent on pushing employment policies that are not necessary and are politically correct; and that is way over the top and crazy.” That is a direct quote from a small business that cares. The bit I particularly like—and I will share with members—states: “We believe the only way to get New Zealand back on track is to get rid of the current Government.”

💬 Lindsay Tisch: Say that again!

I will, because it is exceptionally enlightening: “We believe the only way to get New Zealand back on track is to get rid of the current Government.” That person believes employment relations are a nightmare. That person has been in business 14 years and employs over 60 staff, and believes doing business in New Zealand, under the current climate with the current Government policies, is a nightmare.

So I suppose we have to look at what the real purpose of this bill is. Well, it just makes it harder and harder for business in New Zealand, and, in particular, small business. So many small businesses in New Zealand work hard. They want to grow. They do the growing in many cases by winning a contract. They tender and they win a contract. They get excited because it is a successful opportunity for them to grow. But, unfortunately, this bill just puts those small businesses, when they win those contracts, into a very real risk position; in fact, it will set small business up to fail. When small businesses win contracts, they take over all the current liabilities that existed under the previous employer. Those businesses will have no idea about those current liabilities. They will have no idea about what holiday pay is due. They will have no idea about what sick pay has been accumulated. They will have no idea about whether other contract inducements or payments have been put in, because they will not know what was done in the last week or two before the business was purchased. I repeat, small businesses have no choice at all as to what that is.

💬 Peter Brown: Read the Minister’s amendments.

Regarding the Supplementary Order Paper that the gentleman is talking about, I say that someone can come along and make a change a week before and there is no protection for the purchaser, so the purchaser is buying blind. For a small business, that becomes incredibly hard.

When will this Government stop telling business that it does not like business? As the small business operator said in that correspondence to me, it has been a nightmare doing business under the current Government. Signal upon signal that business is not important is being sent. The purpose of this bill is just to continue with another signal that business is not important. Why is that? In their entire working careers before being MPs, nearly all the members on the Government side of the Chamber have been fighting the employer. The employer was the enemy. “Employer” was a horrible word—a very evil word. The tragedy for New Zealand is that that exact same state of mind has transferred through in their role as MPs.

I understand that the purpose of the Employment Relations Amendment Bill is to protect vulnerable workers who are employed when a company is restructured and who are concerned about the security of their jobs. I sympathise with their position, but it is a position that is very common in small companies, which tend to come and go. In those companies the feeling of insecurity when a contract changes hands is similar for employees, the self-employed, and small owner-operators. I want to consider for a moment what this bill will do for very small companies and for the self-employed.

I come from a small-business background, and I know just how important that sector is to our economy. But I also know just how tough it is for someone who is running a small business to make a living. As Mr Tisch and Mr Blumsky have told us, New Zealand is a country of small business. Over 300,000 people are self-employed or owner-operators, 80 percent of our businesses have fewer than five employees, and 97 percent of our businesses have fewer than 20 employees. Those people work enormously long hours, often in substandard conditions, and they cannot claim overtime, or redundancy, or holiday pay. Their jobs and their incomes are totally exposed to local and global economic shifts, and their risks and responsibilities continue, regardless of ill health or misfortune.

The group of small-business people includes men and women of all ages and races. Many of them are new immigrants, or women with children, or people who have been made redundant. Many are naturally entrepreneurial but have low levels of education, and all worry from day to day about their future and the future of those who depend on them. They absolutely qualify for the definition of “vulnerable workers”, and they are just as frightened of changes in the workplace as are those whom this bill protects. They tend to have a heads down, bums up style of operating, and most of their businesses stay small and vulnerable. Often they are family companies, and their real strength is their ability to work hard, to be flexible, and to make the most of opportunities. The real weakness of small businesses is their size. It is almost impossible to make a decent living without some economy of scale. One of the main reasons that New Zealanders work longer and harder for their money than people in almost any other developed country in the world is that our economy is so dominated by such small businesses.

Most small businesses have pretty low aspirations. If small-business people can earn enough to buy a house and a car—and maybe a boat—and get a decent holiday at Christmas, that is enough. The main reason that they do not grow their businesses bigger than that is that it is too hard to do so under this Government. They buckle under the compliance costs and the huge number of rules. Now this Government, in the name of protecting the vulnerable, is making it even harder for them to grow their businesses.

Small businesses tend to have limited resources and they tend to have small teams of very hard-working and focused employees—often the owner’s own family. They have to be smart to survive, and one of the best ways to grow is to take on a new contract. But the only way small businesses can have any security in that arrangement is to be able to deliver the service more efficiently and more effectively than the contractor who went before them. Otherwise the new contractor will be out the door, too. It may be that a new contractor can use some, or even all, of the existing staff and do something differently from the previous contractor to produce a better service, but it is much more likely that the original contract was terminated because of a flaw in the existing system.

So the requirement of this bill that new contractors take over the existing staff is a real problem. We all know that one cannot get a different result if one keeps on doing the same thing. What is more, the main reason that many small businesses believe they can deliver on a new contract is that they know their capabilities and their workers. But this bill demands that sole traders or small owner-operators dump their own loyal employees and pick up those from the previous, failed contractor.

I move, That the question be now put.

I can see very clearly that the Employment Relations Amendment Bill has been drafted by people who have not the slightest idea about business or running a business. The first thing that I want to draw the Committee’s attention to is that this legislation will impose further bureaucracy, red tape, and costs on small businesses. The legislation simply will not work. Any law passed in this House has to be capable of working, irrespective of whether one agrees with the policy intent. This bill is not going to work. For example, the bill assumes that one employer will give commercially sensitive information to its competitor. That is simply not going to happen.

A contractor who wins a tender for a contract is forced to take on the employees of the company that lost the tender. The contractor has to make redundant his or her own employees, who may have worked for that contractor for many years, and to take on the staff of the business that previously held the contract. Contractors cannot keep both sets of employees. Under this amendment bill, they are forced to keep the new employees.

I see this bill as a very high cost on small businesses in the Wairarapa electorate. The Wairarapa electorate has many small businesses and this bill is simply adding red tape and cost on to them. It comes on the back of this Government’s intention that every employee have 4 weeks’ leave. Let us work through that issue. I know of a company, for example, in Pahiatua that has 30 employees. Having to provide 4 weeks’ leave a year means that it needs to employ another staff member to cover the extra 30 weeks’ leave it has to provide under the framework being imposed by this Government. Where does that money come from? It will come from the bottom line. It is simply a cost being imposed on the business.

This sort of legislation, which is being imposed by the members opposite—who just laugh and would not know a business if they tripped over one—will simply send our small companies to the wall. Let us take the example of a shearing contractor in the Wairarapa. He buys up an existing contractor, and he has to take over the staff. What use is that to him? How is that fair to his own employees, who may have worked for him for years? He has to chuck them out. It is absolute nonsense. Where is the value added from this legislation? There is none. The legislation is simply red tape and adding costs to business. That is very, very unsatisfactory.

Let us come back to the situation of a company taking over a contract. A businessman who has a cleaning contract in a retirement village may decide that, as he is about to lose the contract, he will fix the new guy by doubling, trebling, or even quadrupling the pay rates of his employees. How does the buyer know that that will not happen? Suddenly the buyer might be faced with paying cleaners $100 an hour because of some smart work by the outgoing contractor that would be entirely plausible and possible under this legislation.

I do not believe that this legislation makes the slightest bit of sense whatever. The National Party is going to oppose every clause in this bill. We are very, very concerned that employees will lose their jobs because the companies they have been working for simply are thrown out of business because of impossible conditions being imposed by people who have never been in business. I think companies have the right to decide whom they will contract to provide their services. They have a right to decide what is best for their business. It should not be imposed by central government. This legislation is a total nonsense. It does not support our workers, who need the protection of a free and open market.

I move, That the question be now put.

I raise a point of order, Mr Chairperson. I think it would be appropriate that we have a debate covering all clauses 3A, 4, 5 and 6. The substantive nature of the debate is in clause 4, new Part 6A, and I seek leave for that purpose.

The CHAIRPERSON (Hon Clem Simich): Leave has been sought for that course to be followed. Is there any objection? There appears to be none. There will be a wide-ranging debate on clause 3A, clause 4, clause 5, new clause 5A, new clause 5B, new clause 5C, and clause 6, with relevant amendments.

Clauses 3A to 5, new clauses 5A to 5C, and clause 6