The Government is being accused of gutting a provision protecting vulnerable workers and removing the rights of thousands of low-paid workers.

After a two-year review by the former Labour Department, the Cabinet has agreed to restrict Part 6A of the Employment Relations Act to workplaces with more than 20 staff.

Part 6A prevents groups of low- paid workers - such as cleaners, caterers, orderlies and laundry staff - 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 firm is sold. It was introduced by the former Labour government in 2006.

Labour Minister Kate Wilkinson said the review found "significant" operational issues around transferring employees' entitlements, and larger businesses were better able to absorb the costs associated with the Part 6A provision. The proposed changes would give businesses more certainty while protecting staff, she said.

The department, now the Business, Innovation and Employment Ministry, found that up to 29,000 workers were covered by Part 6A and the exclusion of small and medium companies would exempt about a quarter of those.

However, those figures have been disputed by unions and Labour. They say small and medium firms make up about 50 per cent of the affected industries and the changes will encourage restructuring so that companies are not captured by the Part 6A provision.

Unions quickly condemned the proposals, with the Service and Food Workers Union's national secretary, John Ryall, describing them as "cynical and nasty".

"This opens the door to massive exploitation of the lowest-paid workers in New Zealand."

Council of Trade Unions secretary Peter Conway said small and medium businesses would now have an incentive to undercut other tenderers by slashing employees' terms and conditions. "This is a 'race to the bottom' that mistreats some of our most vulnerable workers," he said.

Labour's industrial relations spokeswoman, Darien Fenton, said workers at every commercial cleaning site, commercial building, school, rest home and some airports would lose their protection. "The Government is making this completely unworkable."

Building Services Contractors, which represents 70 cleaning companies, agreed it "ain't going to work". Its president, Patrick Lee- Lo, said his organisation believed the Part 6A provision should apply to all workers, because it lifted the quality of the industry.

"This is really disappointing. The Government has played right into the hands of some of the franchises which are operating, because most of those have less than 20 staff."

The Government had addressed some of its concerns about ensuring previous employers transfer money for accrued entitlements to new employers, he said.

But Business NZ said the changes were a "commonsense solution". Its chief executive, Phil O'Reilly, said they would not have a significant impact on employment processes.

The "good faith" framework of the legislation would remain, with improvements to some of the details on bargaining and contract processes, he said.

The Greens say the Government's changes fly in the face of recent court victories for workers.

Franchise firm Crest Cleaning - which has lobbied the Government to scrap the Part 6A provision - has had to pay an Auckland couple more than $14,000 and a Nelson cleaner nearly $5000 this year after losing Part 6A cases in the Employment Court.

The changes are part of legislation enacting wider reforms signalled in May, including allowing employers to walk away from collective bargaining, opt out of multi-employer negotiations, deduct the pay of partly striking workers and initiate collective bargaining.

- © Fairfax NZ News

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