Darien Fenton's bill likely to struggle

Darien Fenton, Associate Labour spokesperson, on Sunday released a media statement that she will introduce a private member's bill providing for minimum notice and compensation for redundancy. The statement said this is based on the recommendations of the Public Advisory Group on Restructuring and Redundancy, which reported to the previous Government last year. Her statement was covered in detail in this post on the Scoop  website.

Here is a copy of the draft bill, supplied by Ms Fenton's office. It requires employers to pay four weeks' pay for the first full year of service, followed by two weeks for every year or part year thereafter, up to a maximum of 26 weeks. It also provides for a minimum notice period of four weeks in redundancy situations. There is a one year qualifying service requirement for both entitlements.

The bill is generous by international standards. It appears there is no cap on the amount of a week's pay, as there is in some other countries, for example the UK. And in Australia, according to the Public Advisory Group, the redundancy pay entitlement is limited to 12 weeks' pay (rather than the 26 week maximum in the bill).

The bill is very much in "first draft" form, and would no doubt be fleshed out substantially by the select committee process. However, it is unlikely to get that far. Ms Fenton says in her press release that the Public Advisory Group's report "has been on the desk of Labour Minister Kate Wilkinson since last November. I asked her weeks ago what action she was taking on it, and she replied that she was 'considering' it".

Not exactly promising.

There is a ballot process for the introduction of private member's bills. Even if the bill survives that process, it is likely to be defeated at its first reading. The Government's manifesto  commitments in this area do not include redundancy compensation, which is a controversial subject to say the least. The Government will no doubt say that it has various initiatives in place to assist redundant employees, and this is a step too far in this environment, in terms of the impact on employers.

Obviously everyone will have their own views on this subject (here are some that I have previously expressed). However, if Labour was really that keen to introduce compulsory redundancy pay, there was nothing to stop them doing so while in Government. Admittedly the recession has been a recent development, but a downturn was always going to come along sooner or later. They did have nine years in power.

 

Greg Cain

Greg Cain is an employment lawyer at Minter Ellison Rudd Watts.

 

 

Pictured: Darien Fenton, Photo / Glenn Jeffrey