The Government plans to limit a provision protecting vulnerable workers such as cleaners, orderlies and caterers to large workplaces with more than 20 employees.
The provision - Part 6A of the Employment Relations Act - prevents groups of low paid workers from having their pay and conditions reduced for the same job, or being replaced by cheaper contractors, when the work is re-tendered or a company sold. It was introduced by the former Labour government in 2006.
Cabinet yesterday signed off on the changes that will be part of the Government's wider reform of labour laws which include giving employers more power in collective bargaining.
Labour Minister Kate Wilkinson said a review of Part 6A found "significant operational issues" around transferring employees’ entitlements and information to the new employer.
“Proposed amendments will fix these issues and provide more certainty and clarity for employers while at the same time protecting key benefits for affected employees."
The review also found larger businesses had been able to adapt better to the provision while small and medium sized businesses faced greater proportional costs, she said.
That was why Cabinet had agreed to exempt small and medium businesses, which the Government estimated accounted for approximately a quarter of those in affected industries.
Unions have been quick to condemn the proposals, labelling them "cynical and nasty".
Service and Food Workers Union national secretary John Ryall disputed the minister's estimate small and medium businesses made up about a quarter of affected workplaces.
"The reality is that the majority of employers in the industry are small and medium enterprises and this opens the door to massive exploitation of the lowest paid workers in New Zealand.”
Council of Trade Unions secretary Peter Conway said the changes were designed to reduce the wages and conditions of workers in New Zealand.
Labour's industrial relations spokeswoman Darien Fenton said the Government was gutting the provision.
"They are making it completely unworkable."
The rights of thousands of workers who were currently protected were being removed, she said.
"All those workers have just been told that the Government thinks a return to a downward spiral of cuts to wages, hours and jobs is an acceptable way of doing business and treating workers. The changes are mean-spirited and petty."
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