OCS Statement – 10 August 2012
Supreme Court Decision - Redundancy
Yesterday, the Supreme Court handed down its decision in a long running dispute between OCS and the New Zealand Service & Food Workers’ Union (“SFWU”). This dispute related to the right to bargain for redundancy compensation and entitlements
where there has been a transfer of undertaking (change of contract situation) and the collective agreement excludes
redundancy payments.
This dispute arose out of the change of cleaning contract for Massey University, where OCS successfully took over the
contract from the incumbent cleaning companies. This occurred in 2010. At the time of transfer, the contract scope was
such that OCS had to perform the contract at significantly reduced hours per person than what had previously been done.
OCS consulted extensively with the SFWU and affected staff to make the necessary workplace changes, and consulted with a
view to retaining staff or keeping the potential number of redundancies to a minimum. These negotiations were not
successful. Despite statements in the media, OCS did not lock out the affected staff during this process.
When it became clear that redundancies would have to be made, OCS then attempted to bargain with the SFWU, as directed
by the Employment Court, in respect of non monetary entitlements. OCS did so in good faith. OCS’s position was that
because the collective agreement specifically excluded the payment of redundancy compensation, OCS was not required to
bargain this component. The SFWU rejected OCS’s bargaining on non monetary entitlements, as the Union wished only to
discuss and bargain for monetary compensation.
Yesterday’s Supreme Court decision vindicates OCS’ position on the right to bargain for monetary compensation when the
collective agreement expressly excludes it. The Supreme Court however did state that employers are required to bargain
with affected staff for redundancy entitlements other than monetary compensation. In the particular circumstances of
this case, that is what OCS did. There is however a need for guidance, either by Parliament or the Courts, as to what
“redundancy entitlements” other than monetary compensation are.
The SFWU is claiming in the media that it has secured a “victory” in the Supreme Court. OCS strongly disagrees with this
assertion. The SFWU has failed in its principle aim of gaining additional payments for employees by reason of redundancy
where compensation has been specifically excluded. Nonetheless, OCS recognises that there are no “winners” when the
prospect of redundancy is involved. OCS does not make these decisions lightly and does so only after consultation with
affected employees and the Union concerned.
ENDS