New Zealand HR
HRM Guide Updates

Misgivings About Restart

December 17 2008 - Prime Minister John Key this week announced a NZ$50 million assistance package aimed at families hit by redundancy as the global economic slump hits New Zealand. Backdated to November 8,2008 the 'ReStart' package will cover up to 70,000 employees losing their jobs and should benefit low-income families and people who cannot meet mortgage payments after being made redundant.

Social Development Minister Paula Bennett, said that the package was designed to give some breathing space to families hit by redundancy. Assistance includes NZ$60 a week for families with up to three children who are no longer eligible for the In-Work tax credit, together with an extra NZ$15 a week for each additional child.

Up to NZ$100 a week is additionally available to people who qualify for the maximum accommodation supplement. Payments will start in the New Year and only apply to people made redundant. People who left their jobs for other reasons are not covered.

The Engineering, Printing and Manufacturing Union (EPMU) said that the Government's 'ReStart' package is welcome but is no substitute for a real redundancy package.

While around 85 per cent of EPMU collective agreements have redundancy clauses providing redundant workers with the means to cope financially while they look for work, the four out of five non-unionised New Zealand employees do not have legal minimum redundancy entitlement.

According to Andrew Little, EPMU national secretary, the cost of laying off workers should fall on employers rather than taxpayers. He points to many international precedents for a minimum redundancy entitlement.

"While the government's measure offers some small amount of help it pales in comparison to the real benefits of the legal minimum notice and minimum redundancy policies that dozens of other countries have in place.

"We can't ignore the fact that our nearest trading partner and the host of many of our departing workers, Australia, now has national employment standards which provide for mandatory minimum redundancy rights with a sliding scale based on the size of the business.

"As the economy has worsened we've seen tangible benefits of redundancy clauses as members who have been made redundant are able to continue to pay their mortgages and their grocery bills while they seek other work."

On average, EPMU agreements' redundancy packages offer 6 weeks wages for the first year of service and 2 weeks for each other year with 4 weeks notice. This is in line with the average in the Victoria University and Department of Labour databases of New Zealand collective agreements.

The Child Poverty Action Group also says that National's package extending the In-Work Tax Credit to families where earners shows that families cannot meet basic costs under the present system.

CPAG spokesperson Susan St John said:

"CPAG has always argued that the IWTC should be available to all low-income families, including families on benefits. National's proposal is, we believe, a partial endorsement of that view.

"This is a welcome first step, but this package does not go nearly far enough. The In-Work Tax Credit is a payment of at least $60 a week for children that all low income families need, not just those who meet an arbitrary work test. It is of no assistance to those made redundant prior to the election, and creates a further division between the 'deserving' and 'undeserving' poor.

"While some families with children under National will get this payment, what of those families who are presently denied the In-Work Tax Credit, and what happens to children after the 16 weeks is up?"

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