KEY POINTS:
Employers remain in the dark over whether they can close down company superannuation schemes in favour of KiwiSaver if their contributions are part of a worker's employment conditions after a test case was settled out of court.
A personal greivance claim by 30 Hewlett-Packard workers over the closure
of their employee superannuation scheme without compensation was due to be settled by the end of this week after a two-week hearing in the Employment Court.
But on Friday the two parties agreed to try a judicial settlement conference and after two days they reached a final agreement.
Lawyer Stephen Langton, who represented the HP employees, said a decision had been reached where all parties were satisfied but he could not talk about the conditions of the agreement because of confidentiality clauses. Langton said the case was particularly sensitive because all of the claimants were existing employees.
While the core case was not based on KiwiSaver issues Langton said the company had argued that the pending KiwiSaver arrangement - where employers will have to contribute to the scheme from April next year - was one of the reasons it was opting to close down its super scheme.
"The case raised a lot of issues that were not all in the KiwiSaver context."
Langton said the two main parts to the case were first, what employees say they were told about the value of superannuation for them as part of their employment agreements, and whether they were therefore terms of their employment and secondly, if they were not terms of their employment, were they still unjustifiably disadvantaged as a result of the closure of the scheme.
"If the employer contribution is a benefit that someone is receiving - can an employer just remove it without compensation?" He said all of the issues raised by the case had been resolved.
But Simpson Grierson employment law specialist John Rooney said the decision to resolve the case out of court would leave many feeling disappointed.
"There will be a number of employers potentially facing the same issue. All of those companies have had to look at their situation and say 'what are we going to do now'? The fact that HP has settled out of court won't really help people one way or another."
Rooney said any company which had superannuation contributions as part of their conditions of employment would potentially face problems if they tried to close a company scheme without the approval of members.
He said legislation that is currently before Parliament to amend the KiwiSaver Act would go part of the way towards addressing it by exempting some employers from making contributions to both their company super fund and a KiwiSaver fund if their scheme met certain conditions.
"But it has been somewhat disappointing - it has really allowed the exception to apply to other government department schemes but has not extended that to the private sector."
Rooney said the KiwiSaver legislation had been drafted without giving much thought to the employment problems."In my mind they have made it very complicated for employers."
Bruce Kerr, executive director of the Association of Superanuation Funds - the body which represents workplace super schemes - said there had been a high level of industry interest in the case but he was not aware of many companies in the same situation
"The evidence I am seeing is employers are either honouring an existing arrangement with staff and modifying that scheme, adding a KiwiSaver bolt on or merging it into a mastertrust and winding up the scheme. But I can't say we are hearing much about complete wind-ups."
The Business Herald understands an application was made to wind up HP's superannuation fund in June last year following a decision to offer staff the opportunity to move their savings across to a mastertrust in January 2006. The wind down of the fund is still in progress but it is understood that the employees are likely to have their benefits paid out.
COMPANY SCHEMES
* There are around 350 registered corporate super schemes.
* Around 3500 companies provide a super scheme option through a mastertrust.
* This is where companies combine under one fund manager.
