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Redundancy protection – it’s only fair

Written By: - Date published: 3:00 pm, September 11th, 2009 - 20 comments
Categories: employment, unemployment, Unions, workers' rights - Tags: ,

A coalition of unions, Labour, the Greens, the Maori Party, and community groups has come together to support Darian Fenton’s Redundancy Protection Bill.

There’s a website, facebook group, petition, and other ways you can get involved. The Bill, due to be debated later this month, would set a minimum level of redundancy protection for all workers.

We’re not talking anything lavish – just fair protection. The bill provides for four weeks’ notice before redundancy, plus compensation of four weeks for the first year of service and two weeks for every year thereafter, capped at 26 weeks.

It’s only fair that workers and their families have some recognition of service to tide them over while they try to find a new job. This is more important than ever at a time when unemployment is rising by 2000 a week. Take the story of Jonathan Smith on the campaign website:

At age 25, being made redundant was the last thing Jonathan expected. But with Telecom’s decision to change contractors he finds himself out of a job next Friday with no redundancy pay to tide him over.

“The stress is the worst thing,” says Jonathan. “We’ve all given years of service but now we’re out in the cold, no jobs, nothing. It’s really depressing, seeing everyone’s morale just go down the drain.””Personally I’m lucky to be able to stay with my partner’s parents, but there’s a lot of guys here who’ll have real trouble keeping up with the mortgage and the bills.”

It’s not right that people like Jonathan who have worked hard and given their loyalty to a company can find themselves out on the street with nothing (and isn’t it heartwarming that his thoughts aren’t selfish but for his fellow workers). It’s people like Jonathan that this Bill is all about.

It’s up to National whether this Bill passes and workers get basic protection to help them out if their job disappears. At the very least, they must vote to send it to select committee so MPs get a chance to hear what happens to workers and their families when they lose their jobs and have no redundancy protection as a safety net.

Now, before the righties whine about the cost, let’s get some facts on the table. Four out of five union members have redundancy protections already and it doesn’t send their employers’ out of business. In contrast, very few non-unionised workers have protection, especially people in low-paid work who are most at risk of losing their jobs.

We would only be following the rest of the world in establishing redundancy protections. Nearly every other OECD country has them and Australia has just strengthened theirs to the same 4+2 formula as is in this Bill. If we want to be as successful as other countries, shouldn’t we be following their lead?

Thinking about this, I reckon the biggest thing apart from the substance of the bill is to see the broad left coalition – Lab, Greens, Maori, unions, community groups – coming together again. It’s the shape of the next Government, right there in one campaign.

20 comments on “Redundancy protection – it’s only fair ”

  1. vidiot 1

    If it’s such an essential piece of legislation, why wasn’t it brought in under the previous government ? Oh that’s right they were more concerned with the big picture (ETS) than the common person.

    • Pascal's bookie 1.1

      The partisan sniping is fascinating v, but do you support the idea or not?

      cause if not, that line of attack is pretty fucking weak.

      • vidiot 1.1.1

        I am sure if Labour had concentrated on local affairs / policies that appealed to middle NZ (in their last term), they would have done a lot better at the polls last November. Fringe policies only have imho a limited appeal.

    • Bright Red 1.2

      why wasn’t every problem that ever existed solved by the First Labour government? That’s my question.

  2. NeillR 2

    If Labour hadn’t fucked up the economy we wouldn’t need a bill like this.

    • Armchair Critic 2.1

      Either you don’t know what you are talking about, or you spelled “fixed” wrong. Hint, it doesn’t have a “u”, a “c” or a “k” in it.
      Good to see you agree the bill is needed.

    • Bright Red 2.2

      What a dumb thing to say.

      Drought. Housing bubble burst. Oil spike. World Financial crisis. – they’re what stuffed the economy.

      Give one argument as to how it’s labour’s fault

  3. ieuan 3

    I agree with vidiot, why didn’t Labour bring this in during the last government?

    As an employer it surprises me that there is not a minimum level of redundancy pay set by law in employment contracts.

    • Daveo 3.1

      Because Dyson fucked around. Trevor got onto it, got the Public Advisory Group report done and then put it into the election manifesto – too late by then though.

      Great to see Darien Fenton getting onto this. She’s one of the few in there really battling for working people.

  4. Strathen 4

    I don’t have an issue with this coming in.

    The negatives I see are when businesses make people redundant earlier because of the cost involved. There could be instances where trading through the negative times could save jobs, but a responsible employer will probably make a job redundant earlier to ensure there is money there to pay the employee out.

    Personally I didn’t accept jobs that didn’t have this clause in the contract. I was taught young about certain things I needed in my contract, or to get extra pay if they’re omitted. I’d like to see contract awareness raised in our schools and possibly added to the curriculum. I’d like to see a lot more real life skills added to the schools, but that’s another topic altogether.

    • Maynard J 4.1

      The extra cost only accrues on an annual basis (extra two weeks’ redundancy pay) so I do not think people will get laid off earlier. unless they can pick the bubbles bursting a few years before the rest of us but choose not not make hay while the sun shines!

  5. Bright Red 5

    So. Let’s just get this straight. Aside from vidiot etc running distraction, the right doesn’t actually have any objection to redundancy protection? Awesome.

    You shold make sure National listens to you.

  6. National would do well to support this Bill through to Select Committee, the idea certainly has merit and would afford protection to those who need it most. One potential downside is the commencement date. If employers were required to pay from the date of the Royal Assent then there could be an employer outcry, this could be mitigated if there is plenty of time between National announcing their intention to pass it into law and the actual passage. One downside is that empoyers might want to make people redundant just prior to the Bill becoming law, which can easily be countered by making it retrospective from the date the policy was adopted by the Government as is sometimes the case with taxation legislation.

    What I would like to see is an employee redundancy fund established alongside these protections. The Bill, as currently drafted, places all the burden on the employer where, with a bit of quid pro quo, it could garner support from all sides. A clause authorising all empoyers to levy no more than 1% from each employee salary (and it they do levy it must come from everyone employed by the Company – that includes management and Directors) which is to be ringfenced in a separate redundancy account, an account which is also protected against insolvency claims in the event the company goes into liquidation.

    • Daveo 6.1

      If you did that you’d just be forcing workers to fund their own redundancy, which may not even eventuate. You’d also be effectively taking away the redundancy rights of people who’ve already negotiated them.

      Redundancy is a recognition of service. If the boss makes you redundant then the boss should pay. Other countries do it and it works fine for them, I don’t see why New Zealand should be any different.

    • Daveo 6.2

      Something else I have to wonder – would you require CEOs who get massive severance payouts to to fund it themselves through a pay cut? Or does that only apply to workers?

      • Everyone would contribute – even the CEO. So if a CEO was earning $7m per year, then he would contribute $70,000 each year to the fund, a worker of $50,000 only $500 and one on $30,000 just $300. So it is the ones at the top who will be funding the redundancy.

        Why do you think a CEO is not a worker? Sure, they only put in 80-100 hours per week for the company, but i guess it does not count as work. Its easy stuff right? As for their severance payments, I do not believe in them – but it is an example of a worker negotiating a good package for themselves, something the unions are all for. The Redundancy Bill is not a negotiated agreement between employer and employee, it will be forced on employers, so it is only reasonable that the it is approached in a good faith manner.

        And how on earth does it take away peoples redundancy rights? It is not the be all for the Company – it is a contingency fund. This way, all workers can be assured that there is something for them if the company goes under or has to make people redundant. It is similar to a superannuation fund.

  7. graham 7

    typical labour all power to the unions we out of power as soon as they get elected they tell the unions to get stuffed

  8. malcolmm 8

    What are the downsides of this legislation?

    I think it’ll harm the unemployed. You’re only looking at one side of it: Person has a job, then gets made redundant, then gets their redundancy money. Nice.

    Other side: Person is unemployed. Small company trying to grow and needs staff. Chance of going bust or needing to downside in the next 2 years? Pretty high. So the 8+ extra weeks of notice + redundancy pay is a significant potential cost for the employer. Where does that money come from? Either the employer puts off employing or they can only offer less money.

    The legislation artificially increases the price of employing someone. Increase the price and you lower demand. So less jobs.

    Say I want a job and am happy to work for X. And employer is happy to pay X. Lovely, we can do a deal and I get a job. But now the government comes long and says, well if Malcolm is happy to work for X, we’re going to make the employer pay more than X, by forcing them to pay out if they need to get rid of me. So the government is buggering up my little deal with the employer by inflating my price.

    It might seem trivial, but the legislation increases the cost of employing, at the very time when a lot of people are looking for jobs. That’s bad.



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