Redundancy claims revisited in new bill

By PAULA OLIVER

Parliament is revisiting a proposal to make redundancy payments a preferential claim when a company goes into liquidation, just two years after it was dismissed by a comprehensive law review.

Today, MPs will hear oral submissions on the Status of Redundancy Payments Bill, a private member's bill put forward by Labour backbencher Mark Peck.

The bill, drawn from a ballot and introduced in November last year, amends the Companies Act to elevate redundancy payments to the same preferential status as wages and holiday pay when a company goes under.

It also removes the $6000 limit on unpaid wages, salaries and holiday pay that an employee can receive when a company goes into liquidation or receivership.

The bill has attracted criticism from business groups who claim that it would mean workers' payments were too heavily favoured at the expense of other unsecured creditors such as suppliers.

Business New Zealand executive director Anne Knowles said that if suppliers or tradesmen were put at the end of the queue when creditor money was dished out they could end up sparking further business closures.

The bill has drawn further criticism for revisiting a topic already heavily canvassed by the Insolvency Law Review in 2001.

The issue of priority for redundancy payments was among the first topics it investigated, and after considering submissions the review team recommended against the proposal.

Associate Commerce Minister Laila Harre did not change the pecking order of creditors in November 2001 when she announced policy decisions relating to the review - although she did move to increase the $6000 limit on employee payments to $15,000.

Financial Services Federation executive director Justin Kerr said yesterday that it was madness to have a bill revisit the redundancy topic so soon after it was last looked at.

Because it is a private member's bill the level of support for the proposed changes is unknown.

Green MP Sue Bradford told Parliament during the bill's first reading in March this year that her party would back it and she hoped Labour would too.

She said she believed there needed to be more protection for employees' redundancy entitlements when a company went under.