Anger builds over 'poorly drafted' employment law

By Ben Chapman-Smith

Crest Clean boss Grant McLauchlan has called for a Ministerial Inquiry into the performance of the Employment Court of New Zealand. Photo/ Supplied
Crest Clean boss Grant McLauchlan has called for a Ministerial Inquiry into the performance of the Employment Court of New Zealand. Photo/ Supplied

A major cleaning company is furious that it has been left waiting on an Employment Court decision for over a year because of a controversial piece of employment legislation.

Dunedin based Crest Commercial Cleaning has called for a Ministerial Inquiry into the performance of the Employment Court of New Zealand after waiting over 12 months for a dispute to be resolved.

"It is simply unacceptable for parties to have to wait for nearly a year to have a Judgement made by a Judge of the Employment Court, said Grant McLauchlan, managing director of CrestClean.

"The main reason for the delay is the poorly drafted and controversial Part 6A of the Employment Relations Act 2000."

In Doran vs Crest, Roger Terence Doran went to the Employment Relations Authority in August 2010 claiming he was unjustifiably dismissed by Crest on July 31 2009.

Doran had been employed by Hills Cleaning Service to clean premises in Nelson, which Crest was then contracted to clean from August 1.

He claimed Crest was obliged to take on his contract from Hills Cleaning Service, under Part 6A. Crest did not continue his contract.

The Employment Relations Authority ruled the case needed to go to the Employment Court because of "the significance that the Court's decisions will have on a large number of employees affected or potentially affected".

More than a year on, Crest is angry that it is still waiting for a decision.

Part 6A sets out the rules around what happens to employees when their work is affected by restructuring, such as in Doran's case.

It covers industries such as cleaning, and food and laundry services, where work is often contracted and employees can be left vulnerable to restructuring or redundancy.

McLauchlan said Part 6A is "vague and confusing" about the rules around employee transfers.

"The problem is there's no definition around it and it affects us every time we win a contract"

"Under 6A, we're obliged to take these employees on without any knowledge of their relationship with their previous employer. It's shocking and frustrating."

The essence of the issue in contention is whether Doran was given a 'reasonable opportunity' to ask for his contract to be carried over, and whether Crest was provided with 'sufficient notice' of that request.

Crest claimed Doran asked to have his employment continued on July 31 2009, the final day of business of the old contractor.

That is simply not enough time, the company said.

It had assembled its team three days before takeover and when it received Doran's request, they were simply not in a position to act on it.

For business planning purposes, notice received that late is no notice at all, Crest said.

The ERA agreed with Crest that the phrases 'reasonable opportunity' and 'sufficient notice' in Part 6A were unclear and needed reviewing by the Employment Court.

"I am satisfied that there are important questions of law to be considered in relation to this matter and that those questions of law are likely to arise other than incidentally," the ERA member said.

Employment Law Specialist Garry Pollak said Part 6A was "probably the worst part of the Employment Relations Act", that it was "deficient" and "terribly drafted".

Legislation to protect vulnerable workers in the cleaning and catering sectors was very important but Part 6A badly missed the mark, he said.

One of the major flaws of the act was that it did not specify what happened to employees' accrued entitlements when a contract ended, Pollak said.

"What's happening now is outgoing employers are hanging onto employees' holiday pay when their contract is up."

The legislation provides no clarity around which types of employees are actually vulnerable, he said.

"It covers tens of thousands of employees but we're all confused about who it covers and who it doesn't.

"There's no definition of vulnerable workers in the Act so who can transfer to the new employer and who can't is something of a mystery."

In one case last year, a worker on "very good remuneration" was able to transfer his agreement to the new employer, who was obliged to continue his pay at the same rate, said Pollock.

McLauchlan said his company won 40 to 50 contracts a month, and until a decision was made on Doran vs Crest, it was left with a growing number of similar cases needing resolution.

"It's costing us money because there are other cases lining up behind this requiring mediation and arbitration."

CrestClean said it was aware of other businesses suffering as a result of the long wait for rulings.

"The Minister in charge of the Employment Court Chester Borrows should be concerned that extensive delays by the Court are costing businesses hundreds of thousands of dollars to address these issues - money that would be better spent growing businesses and employing people," McLauchlan said.

The Government needed to step in and launch an inquiry into the Employment Court and attempt to find out how and why these delays are occurring.

Alongside Crest, other players pushing for Government to review the law are catering and hospitality service Spotless, head of ISS Services and Building Services Contractors New Zealand Brian Young, and chief executive of the Hospitality Association Bruce Robertson.

Bill Hodge, Associate Professor of Law at Auckland University, earlier in the year addressed the Annual Industrial and Employment Relations Summit, where he referred to "a series of disastrous cases" decided under Part 6A.

"In my view, the only way for this area of the law is repeal, in its entirety, of Part 6A," he said.

McLauchlan said it had already lobbied Government to review the law for two to three years.

"The Government is more than aware of this part of the law. If they are happy to let this legislation sit as it is then they should resource up the employment court," McLauchlan said.

Part 6A was required by law to be reviewed after 2009. Labour Minister Kate Wilkinson called for submissions on it in February 2010.

"The discussion document offers a chance for employers and employees in affected industries to offer feedback on whether Part 6A is working," Wilkinson said at the time.

"If there is a need for improvement or if aspects of the provisions are not relevant in the current environment I will be happy to look at suitable amendments."

McLauchlan said "two years later we're still here and Kate Wilkinson is still to finalise that review".

He said the Government was "sitting on its hands" and called the legislation "a mess".

"You can read the Act right the way through and end up back at the start again."

A spokesperson for Wilkinson said the minister was still considering recommendations made by the Department of Labour on Section 6A.

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